10-Q 1 d552393d10q.htm 10-Q 10-Q
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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, 2018

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  
Emerging growth company      

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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 March 14, 2018, was 1,000, par value $0.01 per share.

 

 

 


Table of Contents

INFOR, INC.

Form 10-Q

Index

 

PART I.

 

FINANCIAL INFORMATION

     2  

Item 1.

 

Financial Statements (unaudited)

     2  
 

Condensed Consolidated Balance Sheets at January  31, 2018 and April 30, 2017

     2  
 

Condensed Consolidated Statements of Operations for the three and nine months ended January 31, 2018 and 2017

     3  
 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended January 31, 2018 and 2017

     4  
 

Condensed Consolidated Statements of Cash Flows for the nine months ended January 31, 2018 and 2017

     5  
 

Notes to Condensed Consolidated Financial Statements

     6  

Item 2.

 

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

     45  

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

     70  

Item 5.

  Other Information      70  

Item 6.

  Exhibits      70  
  Signatures      71  

 


Table of Contents

Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q for the quarter ended January 31, 2018 (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 (the SEC), including our Annual Report on Form 10-K for our fiscal year ended April 30, 2017, filed with the SEC on June 26, 2017 (our Annual Report on Form 10-K).

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/investors/), 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 “About-Investors” 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)

 

ASSETS    January 31,
2018
    April 30,
2017
 

Current assets:

    

Cash and cash equivalents

   $ 357.1     $ 305.8  

Accounts receivable, net

     480.2       446.6  

Prepaid expenses

     156.9       161.1  

Income tax receivable

     26.4       24.9  

Other current assets

     20.5       26.5  

Deferred tax assets

     —         36.3  
  

 

 

   

 

 

 

Total current assets

     1,041.1       1,001.2  

Property and equipment, net

     147.4       161.5  

Intangible assets, net

     704.9       774.6  

Goodwill

     4,719.8       4,488.0  

Deferred tax assets

     81.6       71.8  

Other assets

     94.8       95.4  
  

 

 

   

 

 

 

Total assets

   $ 6,789.6     $ 6,592.5  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

    

Current liabilities:

    

Accounts payable

   $ 70.1     $ 105.1  

Income taxes payable

     27.8       34.0  

Accrued expenses

     371.1       478.0  

Deferred tax liabilities

     —         1.0  

Deferred revenue

     1,134.1       1,016.5  

Current portion of long-term obligations

     33.9       32.4  
  

 

 

   

 

 

 

Total current liabilities

     1,637.0       1,667.0  

Long-term debt, net

     5,823.4       5,618.5  

Deferred tax liabilities

     61.4       91.5  

Other long-term liabilities

     253.4       209.8  
  

 

 

   

 

 

 

Total liabilities

     7,775.2       7,586.8  
  

 

 

   

 

 

 

Commitments and contingencies (Note 15)

    

Stockholders’ deficit:

    

Common stock, $0.01 par value; 1,000 shares authorized; 1,000 shares issued and outstanding at January 31, 2018 and April 30, 2017

     —         —    

Additional paid-in capital

     1,303.2       1,215.2  

Receivable from stockholders

     (59.2     (59.2

Accumulated other comprehensive (loss) income

     (38.8     (278.2

Accumulated deficit

     (2,199.5     (1,881.6
  

 

 

   

 

 

 

Total Infor, Inc. stockholders’ deficit

     (994.3     (1,003.8

Noncontrolling interests

     8.7       9.5  
  

 

 

   

 

 

 

Total stockholders’ deficit

     (985.6     (994.3
  

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 6,789.6     $ 6,592.5  
  

 

 

   

 

 

 

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
January 31,
    Nine Months Ended
January 31,
 
     2018     2017     2018     2017  

Revenues

        

Software license fees

   $ 75.2     $ 81.4     $ 225.9     $ 237.6  

SaaS subscriptions

     138.1       100.1       393.3       290.9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Software license fees and subscriptions

     213.3       181.5       619.2       528.5  

Product updates and support fees

     356.4       347.8       1,062.7       1,051.0  
  

 

 

   

 

 

   

 

 

   

 

 

 

Software revenues

     569.7       529.3       1,681.9       1,579.5  

Consulting services and other fees

     206.8       177.3       629.7       542.8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     776.5       706.6       2,311.6       2,122.3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Cost of software license fees (1)

     11.5       14.8       33.3       44.2  

Cost of SaaS subscriptions (1)

     57.6       43.3       169.1       123.2  

Cost of product updates and support fees (1)

     59.6       59.3       179.7       180.5  

Cost of consulting services and other fees (1)

     169.0       145.0       505.4       430.4  

Sales and marketing

     123.9       112.4       394.2       349.5  

Research and development

     126.0       111.9       366.2       335.4  

General and administrative

     105.8       54.1       230.3       156.6  

Amortization of intangible assets and depreciation

     95.8       58.0       206.8       172.9  

Restructuring costs

     1.7       7.8       11.9       37.5  

Acquisition-related and other costs

     5.4       (1.2     18.2       6.6  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     756.3       605.4       2,115.1       1,836.8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     20.2       101.2       196.5       285.5  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other expense, net:

        

Interest expense, net

     78.4       79.2       238.9       239.4  

Other (income) expense, net

     126.8       (16.8     262.2       8.4  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     205.2       62.4       501.1       247.8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax

     (185.0     38.8       (304.6     37.7  

Income tax provision (benefit)

     (18.4     0.8       12.5       22.3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (166.6     38.0       (317.1     15.4  

Net income attributable to noncontrolling interests

     0.2       0.4       0.8       0.4  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Infor, Inc.

   $ (166.8   $ 37.6     $ (317.9   $ 15.0  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(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
January 31,
    Nine Months Ended
January 31,
 
     2018     2017     2018     2017  

Net income (loss)

   $ (166.6   $ 38.0     $ (317.1   $ 15.4  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss):

        

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

     118.9       (1.8     236.8       (73.6

Change in defined benefit plan funding status, net of tax

     (0.5     (0.1     (0.3     2.4  

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

     —         1.7       2.8       4.9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income (loss)

     118.4       (0.2     239.3       (66.3
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     (48.2     37.8       (77.8     (50.9
  

 

 

   

 

 

   

 

 

   

 

 

 

Noncontrolling interests comprehensive income (loss)

     0.2       0.2       0.7       0.1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to Infor, Inc.

   $ (48.4   $ 37.6     $ (78.5   $ (51.0
  

 

 

   

 

 

   

 

 

   

 

 

 

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,
 
     2018     2017  

Cash flows from operating activities

    

Net income (loss)

   $ (317.1   $ 15.4  

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization

     206.8       172.9  

Provision for doubtful accounts, billing adjustments and sales allowances

     25.4       16.5  

Deferred income taxes

     (11.3     (8.0

Non-cash loss (gain) on foreign currency

     262.5       8.4  

Non-cash interest

     16.9       20.8  

Equity-based compensation expense

     41.7       7.3  

Other

     (4.9     (1.5

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

    

Prepaid expenses and other assets

     23.7       14.7  

Accounts receivable, net

     (16.9     (14.0

Income tax receivable/payable, net

     4.7       (10.4

Deferred revenue

     37.0       39.7  

Accounts payable, accrued expenses and other liabilities

     (86.4     (116.4
  

 

 

   

 

 

 

Net cash provided by operating activities

     182.1       145.4  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Acquisitions, net of cash acquired

     (68.8     (170.9

Purchase of other investments

     (0.3     (0.1

Change in restricted cash

     4.7       (0.1

Purchases of property, equipment and software

     (73.8     (60.0
  

 

 

   

 

 

 

Net cash used in investing activities

     (138.2     (231.1
  

 

 

   

 

 

 

Cash flows from financing activities

    

Equity contributions

     75.0       144.0  

Dividends paid

     (23.7     (111.5

Distributions under tax sharing arrangement

     —         (9.1

Payments on capital lease obligations

     (2.1     (3.2

Proceeds from issuance of debt

     1,176.5       —    

Payments on long-term debt

     (1,190.2     (78.8

Deferred financing and early debt redemption fees paid

     —         (0.8

Purchase of noncontrolling interests

     —         (138.0

Deferred purchase price and contingent consideration

     (41.4     —    

Other

     (2.9     (1.9
  

 

 

   

 

 

 

Net cash used in financing activities

     (8.8     (199.3
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     16.2       (8.7
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     51.3       (293.7

Cash and cash equivalents at the beginning of the period

     305.8       705.7  
  

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

   $ 357.1     $ 412.0  
  

 

 

   

 

 

 

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 a global provider of enterprise software and services. 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, 2017, and other amounts presented herein as of April 30, 2017, 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, 2017, included in our Annual Report on Form 10-K.

 

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Noncontrolling Interests

We consolidate our majority-owned subsidiaries and reflect noncontrolling interests on our Condensed Consolidated Balance Sheets for the portion of those entities that we do not own as a component of consolidated equity separate from the equity attributable to Infor, Inc.’s stockholders. The 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).

The noncontrolling interest that we report as equity on our Condensed Consolidated Balance Sheets relates to a minority interest held in an international subsidiary of GT Nexus, which we acquired in fiscal 2016 (the GT Nexus Acquisition).

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.

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 17, 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 fiscal 2018 and fiscal 2017 relate to our fiscal years ended April 30, 2018 and 2017, respectively. References to future years also relate to our fiscal years ending April 30.

Revision of Prior Period Financial Statements

In connection with the preparation of our consolidated financial statements for fiscal 2017, we identified and corrected an error in the manner in which we were classifying amounts related to the tax allocation agreement between Infor, Inc. and GGC Software Parent, LLC and Infor Software Parent LLC, our parent companies, (the Tax Allocation Agreement). See Note 2 to the financial statements included in our Annual Report on Form 10-K, Summary of Significant Accounting Policies – Income Taxes. Historically, Infor recorded the differential between our parent’s tax attributes utilized under the separate return method for tax allocation purposes and the amounts paid to our parent under the Tax Allocation Agreement, whereby Infor pays our parent for their

 

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attributes on the consolidated tax return, which will differ from our calculation under the separate return method, as a current asset in income tax receivable on our Consolidated Balance Sheets. This differential should be recorded as a distribution under the Tax Allocation Agreement and recorded as a decrease in additional paid-in capital on our Consolidated Balance Sheets when cash paid exceeds the benefit received, and as a capital contribution when the benefit exceeds the cash paid under the terms of the Tax Allocation Agreement.

In accordance with accounting guidance found in ASC 250-10 (SEC Staff Accounting Bulletin No. 99, Materiality), we assessed the materiality of these changes and concluded that they were not material to any of our previously issued financial statements. In accordance with accounting guidance found in ASC 250-10 (SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), we revised our previously issued financial statements to correct the effect of the error in the current filing.

Correction of this error resulted in a $9.1 million change in classification from cash flows from operating activities to cash flows from financing activities in our Condensed Consolidated Statement of Cash Flows for the nine months ended January 31, 2017. The revision had no impact on our previously issued Condensed Consolidated Statement of Operations for the three and nine months ended January 31, 2017.

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, 2017, 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.

U.S. Federal Tax Reform

In December 2017, the U.S. government enacted comprehensive tax reform legislation commonly known as the Tax Cuts and Jobs Act (the 2017 Tax Act) that instituted fundamental changes to the taxation of multinational corporations. See Note 13, Income Taxes.

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 12 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.

We also provide software and SaaS-related consulting 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 services, hosting services and fees related to Inforum, our customer event.

 

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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, 2017

   $ 15.4  

Provision

     10.7  

Write-offs and recoveries

     (7.6

Currency translation effect

     0.8  
  

 

 

 

Balance, January 31, 2018

   $ 19.3  
  

 

 

 

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, 2017

   $ 12.2  

Provision

     14.7  

Write-offs

     (10.8

Currency translation effect

     0.6  
  

 

 

 

Balance, January 31, 2018

   $ 16.7  
  

 

 

 

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 currency exchange loss of $126.7 million and a net foreign currency exchange gain $16.8 million for the three months ended January 31, 2018 and 2017, respectively. In the first nine months of fiscal 2018 and 2017, we recognized net foreign currency exchange losses of $262.1 million and $8.2 million, respectively.

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 12, Debt.

 

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Adoption of New Accounting Pronouncements

On May 1, 2017, we adopted the FASB guidance on simplifying the balance sheet presentation of deferred taxes. Under this guidance, deferred tax assets and deferred tax liabilities are 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. We adopted this guidance on a prospective basis. The adoption of this guidance only impacted the presentation on our consolidated balance sheets and related disclosures and did not have an impact on our results of operations or cash flows.

On May 1, 2017, we adopted the FASB guidance related to the classification of certain cash receipts and cash payments in the statement of cash flows. This guidance addressed eight specific cash flow issues with the objective of reducing the existing diversity in practice. The guidance was to be effective for the first interim period within annual periods beginning after December 15, 2017 (our fiscal 2019), with early adoption permitted. We elected to early adopt this guidance in the first quarter of fiscal 2018. Our existing cash flow presentation practices related to the applicable issues were consistent with this guidance, and the adoption had no impact on our cash flows, financial position or results of operations.

On May 1, 2017, we adopted the FASB guidance related to improvements to employee share-based payment accounting which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, and classification in the statement of cash flows. In addition, this guidance allows companies to make a policy election regarding the impact of forfeitures. Forfeitures can either be estimated to determine the amount of compensation expense to recognize each period or recognized when they occur. We have elected to recognize forfeitures when they occur. The adoption of this guidance had no impact on our financial position, results of operations or cash flows.

On August 1, 2017, we adopted the FASB guidance related to 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 is 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 was to be applied prospectively and was effective for annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods (our fiscal 2021). Early adoption was permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We elected to early adopt this guidance in the second quarter of fiscal 2018 when we performed our annual test for goodwill impairment. Upon adoption, we adjusted our goodwill testing procedures accordingly. The adoption of this guidance had no impact on our financial position, results of operations or cash flows.

On November 1, 2017, we adopted the FASB 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 was to be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods (our fiscal 2019). Early adoption was permitted. We elected to early adopt this guidance in the third quarter of fiscal 2018. The adoption of this guidance had no impact on our financial position, results of operations or cash flows.

We believe that no other new accounting guidance was adopted during the first nine months of fiscal 2018 that would be relevant to the readers of our financial statements.

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 (full retrospective), or retrospectively with the cumulative effect of initial application recognized at the date of adoption (modified retrospective). We will adopt the standard beginning in the first quarter of fiscal 2019 on May 1, 2018, using a modified retrospective approach, with the cumulative effect of initially applying the new standard recognized in retained earnings at the date of adoption. We will continue to evaluate the impact on our financial position, results of operations, and cash flows, through the end of fiscal 2018. We believe the new standard will impact the following policies and practices:

 

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    Recognition of software license revenue related to term licenses upon delivery of the software, rather than over the term of the arrangement;

 

    Accounting for deferred commissions including costs that qualify for deferral and the amortization period;

 

    The removal of the current limitation on contingent revenue may result in revenue being recognized earlier for certain contracts; and

 

    The removal of the current residual method of allocating software license fees within a multiple element arrangement may impact reported revenues.

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 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 have no impact on our financial position or our results of operations.

In March 2017, the FASB issued guidance to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. Under this guidance, the service cost component of the net periodic benefit cost is to be presented in the same income statement line item as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost are to be presented outside of the subtotal of operating income on the income statement and allows only the service cost component of net benefit costs to be eligible for capitalization. This guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods (our fiscal 2019), with early adoption permitted as of the beginning of a fiscal year for which interim or annual statements have not been issued. This guidance is to be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. We do not expect that this guidance will have a material impact on our results of operations.

In February 2018, the FASB issued guidance which will permit entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reforms under the 2017 Tax Act to retained earnings. Entities can elect to apply the guidance retrospectively or in the period of adoption. This guidance is effective for fiscal years beginning after December 15, 2018 (our fiscal 2019), and interim periods therein, with early adoption permitted. We do not expect that the adoption of this guidance will have a material impact on our financial position, results of operations or cash flows.

 

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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 2018

Birst

On May 31, 2017, we acquired Birst, Inc. (Birst) for $71.0 million, net of cash acquired and including contingent consideration of $0.3 million recorded at the time of the purchase (the Birst Acquisition). The total purchase price may also include up to an additional $29.7 million if certain future performance conditions are met during the 2017 and 2018 calendar years. Based in San Francisco, California, Birst is a pioneer of cloud-native, business intelligence (BI), analytics, and data visualization with approximately 260 employees and more than 300 customers worldwide. Birst is a unique, comprehensive platform for sourcing, refining, and presenting standardized data insights at scale to drive business decisions. Birst connects the entire enterprise through a network of virtualized BI instances on top of a shared common analytical fabric. Birst spans ETL (extract, transform, and load), operational reports, dashboards, semantic understanding, visualization, smart discovery, and data blending to form a rich, simplified end-to-end BI suite in the cloud. The Birst Acquisition provides Infor a cloud BI platform which will significantly expand our analytical applications. The Birst Acquisition was partially funded through new capital contributions made to an affiliate of Infor’s parent company by certain of our equity holders, an affiliate of Koch Industries, Inc. (Koch Industries), investment funds affiliated with Golden Gate Capital, and our senior executives. See Note 18, Related Party Transactions—Equity Contributions.

The Birst Acquisition was not significant for financial reporting purposes, and the related results were not material to our results for the three and nine months ended January 31, 2018.

We have recorded approximately $31.5 million of identifiable intangible assets and $47.5 million of goodwill related to the Birst Acquisition. The acquired intangible assets relating to Birst’s trade name, existing technology, customer relationships, and acquired favorable leases are being amortized over their weighted average estimated useful lives of approximately two, four, nine, and five years, respectively. We have determined that the goodwill arising from the Birst Acquisition will not be deductible for tax purposes.

Fiscal 2017

Ciber

On March 31, 2017, we acquired certain assets of Ciber, Inc. (Ciber) related to Ciber’s business of selling and delivering professional services in connection with Infor’s software products, for $15.0 million (the Ciber Acquisition). Based in Greenwood Village, Colorado, Ciber is a longtime Infor services partner specializing in consulting and services around our HCM and financials products and has been recognized as an Infor Services Partner of the Year on multiple occasions. The Ciber Acquisition helped expand our professional service organization’s capabilities in these key solution areas by adding approximately 180 highly-skilled professionals.

We have recorded approximately $5.5 million of identifiable intangible assets and $6.7 million of goodwill related to the Ciber Acquisition. The acquired intangible assets relating to Ciber’s customer relationships are being amortized over their weighted average estimated useful lives of approximately five years. We have determined that the goodwill arising from the Ciber Acquisition will be deductible for tax purposes.

Accentia

On March 13, 2017, we acquired Accentia Middle East (Accentia), a longtime Infor services partner and exclusive reseller and provider of consulting services across the Middle East, North Africa, and India, for $17.7 million, net of cash acquired (the Accentia Acquisition). Based in Cairo, Egypt, Accentia has approximately 80 employees, additional offices in Dubai (UAE), Jeddah (Saudi Arabia), Tunis (Tunisia), and Pune (India), and customers in 17 countries across the region. Accentia has significant expertise in the local market and specializes in Infor M3, our comprehensive, centralized ERP solution for medium to large enterprises in the manufacturing, distribution, and equipment industries. The Accentia Acquisition significantly expanded Infor’s presence in the region.

We have recorded approximately $5.5 million of identifiable intangible assets and $12.3 million of goodwill related to the Accentia Acquisition. The acquired intangible assets relating to Accentia’s customer relationships are being amortized over their weighted average estimated useful lives of approximately seven years. We have determined that a portion of the goodwill arising from the Accentia Acquisition will be deductible for tax purposes.

 

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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 that we paid in the second quarter of fiscal 2018 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 enabled us to accelerate delivery of our Infor CloudSuite Retail suite of enterprise applications.

We have recorded approximately $15.1 million of identifiable intangible assets and $47.7 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.

Predictix

On June 27, 2016, we acquired the remaining issued and outstanding capital stock in LogicBlox-Predictix Holdings, Inc. (Predictix) for approximately $125.5 million, net of cash acquired (the Predictix Acquisition). This was in addition to the 16.67% equity interest we acquired in the third quarter of fiscal 2016 for $25.0 million. 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 complemented and further expanded offerings under Infor CloudSuite Retail, our suite of enterprise applications delivered in the cloud and designed for today’s retailing landscape. The Predictix Acquisition was partially funded through a new capital contribution made to an affiliate of Infor’s parent company by certain of our equity holders, investment funds affiliated with Golden Gate Capital and investment funds affiliated with Summit Partners L.P. (Summit Partners). See Note 18, Related Party Transactions- Equity Contributions.

We have recorded approximately $37.0 million of identifiable intangible assets and $118.8 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 $22.1 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 brought decades of experience of Infor M3 consulting services that expanded and enhanced Infor’s professional services’ capabilities, particularly in the large and growing European Infor M3 customer base.

We have recorded approximately $9.0 million of identifiable intangible assets and $19.0 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.

The operating results related to our acquisitions have been included in our Condensed Consolidated Financial Statements from their respective acquisition dates.

Our estimates of fair value and resulting allocation of purchase price related to the acquisitions of Birst, Ciber, and Accentia, are preliminary as of January 31, 2018. 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. The measurement period ends on the earlier of one year after the acquisition date or the date we receive the information about the facts and circumstances that existed at the acquisition date. Subsequent adjustments, if necessary, will be recognized during the period in which the amounts are determined.

 

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Bankruptcy-Remote Special Purpose Entity

Platform Settlement Services, LLC (PSS), a wholly-owned subsidiary which we acquired in the GT Nexus Acquisition in fiscal 2016, is a bankruptcy-remote special purpose entity. PSS was established for the purpose of facilitating the settlement of transactions between GT Nexus Platform 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 $77.8 million and $46.9 million at January 31, 2018 and April 30, 2017, 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 2017 acquisitions included additional contingent cash consideration payable to the sellers if certain performance conditions were met as detailed in the applicable agreement. During the third quarter of fiscal 2018, we paid the remaining contingent consideration of $2.8 million to the sellers and there were no amounts outstanding related to this agreement as of January 31, 2018. As of April 30, 2017, we had recorded a liability for the estimated fair value of this contingent consideration arrangement totaling approximately $1.7 million.

The purchase consideration related to the Birst Acquisition, 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. During the first nine months of fiscal 2018, we paid contingent consideration of $15.5 million under these contingent consideration arrangements, and the potential undiscounted amount of future payments that we may be required to make related to these arrangements is between $0.0 and $46.5 million. As of January 31, 2018, and April 30, 2017, we had recorded liabilities for the estimated fair value of these contingent consideration arrangements totaling approximately $3.8 million and $23.8 million, respectively.

The contingent consideration liabilities are included in accrued expenses and other long-term liabilities on our Condensed Consolidated Balance Sheets.

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, 2017

   $ 1,389.5      $ 2,767.8      $ 330.7      $ 4,488.0  

Goodwill acquired

     47.5        0.2        0.1        47.8  

Currency translation effect

     39.3        130.9        13.8        184.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance, January 31, 2018

   $ 1,476.3      $ 2,898.9      $ 344.6      $ 4,719.8  
  

 

 

    

 

 

    

 

 

    

 

 

 

Goodwill acquired during the first nine months of fiscal 2018 totaled $47.8 million and related primarily to the Birst Acquisition. See Note 3, Acquisitions.

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 2018, as of September 30, 2017. This assessment did not indicate impairment for any of our reporting units. We believe there was no impairment of our goodwill and no indication of potential impairment existed as of January 31, 2018. We have no accumulated impairment charges related to our goodwill.

 

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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, 2018 and April 30, 2017:

 

     January 31, 2018  
     Fair Value Measurements Using Inputs Considered as         
(in millions)    Level 1      Level 2      Level 3      Fair Value  

Liabilities

           

Contingent consideration

   $ —        $ —        $ 3.8      $ 3.8  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —        $ —        $ 3.8      $ 3.8  
  

 

 

    

 

 

    

 

 

    

 

 

 
     April 30, 2017  
     Fair Value Measurements Using Inputs Considered as         
(in millions)    Level 1      Level 2      Level 3      Fair Value  

Liabilities

           

Contingent consideration

   $ —        $ —        $ 25.5      $ 25.5  

Derivative instruments

     —          4.6        —          4.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —        $ 4.6      $ 25.5      $ 30.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

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, perpetual license revenues and/or SaaS subscription 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. See Note 3, Acquisitions – Contingent Consideration.

 

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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. The interest rate swaps matured in the second quarter of fiscal 2018 and no related amounts were outstanding as of January 31, 2018. See Note 16, Derivative Financial Instruments.

We have had no transfers of assets/liabilities into or out of Levels 1, 2 or 3 during fiscal 2018 or fiscal 2017. 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, 2017

   $ 25.5  

Contingent consideration

     0.3  

Settlements

     (18.3

Total (gain) loss recorded in earnings

     (4.3

Currency translation effect

     0.6  
  

 

 

 

Balance, January 31, 2018

   $ 3.8  
  

 

 

 

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, 2018, 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, except for the impairment of certain of our capitalized software costs discussed below in Note 7, Impairment of Capitalized Software.

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, 2018 and April 30, 2017, 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). As of January 31, 2018 and April 30, 2017, the total carrying value of our long-term debt was approximately $5.9 billion and $5.7 billion, respectively, and the estimated fair value of our long-term debt was approximately $6.0 billion and $5.8 billion, respectively.

6. Accounts Receivable, Net

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

 

(in millions)    January 31,
2018
     April 30,
2017
 

Accounts receivable

   $ 436.7      $ 408.9  

Unbilled accounts receivable

     62.8        53.1  

Less: allowance for doubtful accounts

     (19.3      (15.4
  

 

 

    

 

 

 

Accounts receivable, net

   $ 480.2      $ 446.6  
  

 

 

    

 

 

 

 

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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. Impairment of Capitalized Software

We capitalize certain costs related to our software developed or obtained for internal use in accordance with ASC 350-40, Intangibles—Goodwill and Other—Internal Use Software. We evaluate these long-lived assets for impairment whenever circumstances arise that indicate the carrying amount of an asset may not be recoverable. The carrying value of the applicable asset is compared to the undiscounted future cash flows the asset is expected to generate. If the asset is considered to be impaired, the carrying value is compared to the estimated fair value, based on projected discounted future cash flows, and this difference is recognized as an impairment.

During the third quarter of fiscal 2018, changes in facts and circumstances associated with a shift in strategic focus and reduced profitability expectations for certain of our Infor CloudSuite Retail offerings triggered an analysis of the capitalized costs related to these offerings. As a result of this analysis, we determined that the carrying value of these assets was not fully recoverable and we recorded impairment charges of $45.9 million during the third quarter of fiscal 2018, which reduced their carrying value to $12.4 million. The impairment charges were recorded as a component of amortization of intangible assets and depreciation in our Condensed Consolidated Statements of Operations. We did not recognize any impairment charges related to our internal use capitalized software assets during fiscal 2017. As of January 31, 2018, the adjusted carrying value of these long-lived assets is included in property and equipment, net, on our Condensed Consolidated Balance Sheets.

8. Intangible Assets, Net

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

 

     January 31, 2018      April 30, 2017         
     Gross                    Gross                    Estimated  
     Carrying      Accumulated             Carrying      Accumulated             Useful Lives  
(in millions)    Amounts      Amortization      Net (1)      Amounts      Amortization      Net      (in years)  

Customer contracts and relationships

   $ 2,089.3      $ 1,515.3      $ 574.0      $ 2,003.7      $ 1,374.4      $ 629.3        2 - 15  

Acquired and developed technology

     1,190.7        1,066.4        124.3        1,130.7        991.2        139.5        1 - 11  

Tradenames

     141.6        136.9        4.7        137.7        131.9        5.8        1 - 20  

Acquired favorable leases

     2.2        0.3        1.9        —          —          —          5  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

   $ 3,423.8      $ 2,718.9      $ 704.9      $ 3,272.1      $ 2,497.5      $ 774.6     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

(1) Net intangible assets increased from April 30, 2017 to January 31, 2018 by approximately $11.3 million due to cumulative foreign currency translation adjustments, reflecting changes in the exchange rates of the currencies of the applicable underlying entities.

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

 

     Three Months Ended
January 31,
     Nine Months Ended
January 31,
 
(in millions)    2018      2017      2018      2017  

Customer contracts and relationships

   $ 25.6      $ 26.6      $ 78.3      $ 82.1  

Acquired and developed technology

     9.6        19.2        35.6        57.1  

Tradenames

     0.8        0.7        2.5        2.1  

Acquired favorable leases

     0.1        —          0.3        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 36.1      $ 46.5      $ 116.7      $ 141.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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The estimated future annual amortization expense related to these intangible assets as of January 31, 2018, was as follows:

 

(in millions)       

Fiscal 2018 (remaining 3 months)

   $ 36.4  

Fiscal 2019

     135.8  

Fiscal 2020

     123.5  

Fiscal 2021

     114.9  

Fiscal 2022

     70.7  

Fiscal 2023

     54.6  

Thereafter

     169.0  
  

 

 

 

Total

   $ 704.9  
  

 

 

 

9. Accrued Expenses

Accrued expenses consisted of the following for the periods indicated:

 

(in millions)    January 31,
2018
     April 30,
2017
 

Compensation and employee benefits

   $ 177.0      $ 185.7  

Taxes other than income

     36.2        24.4  

Royalties and partner commissions

     38.6        44.9  

Litigation

     2.5        2.5  

Professional fees

     11.1        38.6  

Subcontractor expense

     7.7        8.7  

Interest

     58.6        77.4  

Restructuring

     7.9        16.5  

Asset retirement obligations

     2.6        1.7  

Deferred rent

     3.5        3.6  

Deferred acquisition payments

     3.8        41.1  

Other

     21.6        32.9  
  

 

 

    

 

 

 

Accrued expenses

   $ 371.1      $ 478.0  
  

 

 

    

 

 

 

10. 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. 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 Applications, LP (Infor Enterprise) and IGS Holding LP (IGS Holding), affiliates of the parent company of Infor. 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 for equity-classified awards and to other long-term liabilities for liability-classified awards on our Condensed Consolidated Balance Sheets.

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
January 31,
     Nine Months Ended
January 31,
 
(in millions)    2018      2017      2018      2017  

Cost of software license fees and subscriptions

   $ 0.1      $ —        $ 0.4      $ —    

Cost of product updates and support fees

     0.1        0.1        1.5        0.2  

Cost of consulting services and other fees

     0.7        —          2.4        0.1  

Sales and marketing

     1.9        0.3        16.7        1.3  

Research and development

     1.6        0.1        6.4        0.6  

General and administrative

     1.5        0.7        14.3        5.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 5.9      $ 1.2      $ 41.7      $ 7.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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IGS Holding Class D Management Incentive Units

In the second and third quarters of fiscal 2018, IGS Holding granted management incentive units (MIUs) to certain executive officers and non-executive employees of Infor, pursuant to the IGS Holding LP Agreement of Limited Partnership (IGS LP Agreement) and certain MIU agreements. These MIUs are for 319.7 million Class D non-voting units (Class D Units) and vest over four years. We have recorded equity compensation expense of $4.6 million and $12.3 million in the three and nine months ended January 31, 2018, respectively, related to these grants.

Pursuant to the IGS LP Agreement, holders of the Class D Units are entitled to participate in distributions from IGS Holding to the extent such distributions are in excess of specified incentive hurdles, each of which is in excess of the total equity value on the date of issuance.

Further, each holder of Class D Units is entitled to put these units to IGS Holding for cash settlement as follows:

 

    On each of the eighth, ninth, tenth and eleventh anniversaries of the effective date of the Koch Equity Development LLC (KED) investment in Infor (February 17, 2017), each executive officer may put 25% of the Class D Units held by him or her.

 

    On each of July 1, 2020, July 1, 2021, July 1, 2022 and July 1, 2023, each non-executive employee may put 25% of the Class D Units held by him or her.

The settlement price for such units will be equal to the fair market value as of each respective settlement date.

Upon the termination of a Class D Unit holder’s employment with Infor for any reason: (a) all unvested Class D Units held as of the termination date shall expire and be immediately forfeited and canceled in their entirety; and (b) all vested Class D Units held will be subject to repurchase by IGS Holding.

Modification of Infor Enterprise Management Incentive Units

In the second quarter of fiscal 2018, the outstanding Infor Enterprise Class C MIUs with repurchase features that function as in-substance forfeiture provisions were modified to remove the repurchase features. The removal of these features made these awards probable of vesting. In accordance with applicable FASB guidance, we treated this as a modification and recorded incremental equity compensation expense of $27.3 million in the second quarter of fiscal 2018 related to these modified awards.

In addition, the Infor Enterprise Class C MIUs were amended to allow holders to put 25% of units held to Infor Enterprise for cash settlement on each of July 1, 2018, July 1, 2019, July 1, 2020 and July 1, 2021. The settlement price for such units will be equal to the fair market value as of each respective settlement date.

11. 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 2018 Restructuring Charges

During the first nine months of fiscal 2018, we incurred restructuring costs of $11.2 million related to employee severance costs primarily for personnel actions taken in our professional services and sales organizations in our EMEA and Americas regions and facilities charges related to exiting or consolidating space in facilities in the Americas and EMEA regions. During the first nine months of fiscal 2018, we made cash payments of approximately $7.5 million related to these actions. We expect to complete the remainder of these actions during the remainder of fiscal 2018.

 

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Fiscal 2018 Acquisition-Related Charges

During the first nine months of fiscal 2018, we incurred restructuring costs of $0.2 million in employee severance costs related to the Birst Acquisition and we made cash payments of approximately $0.2 million. Actions related to these restructuring activities have been completed.

Fiscal 2017 Restructuring Charges

During fiscal 2017, we incurred restructuring costs for employee severance costs related to personnel actions across all functions and all geographic regions, primarily in the Americas and EMEA, and for facility charges related to exiting or consolidating space in facilities primarily in the Americas region. During the first nine months of fiscal 2018, we recorded adjustments to these restructuring costs of $0.2 million and we made cash payments of approximately $12.6 million related to these actions. We expect to complete these actions during the remainder of fiscal 2018.

Fiscal 2017 Acquisition-Related Charges

During fiscal 2017, we incurred acquisition-related restructuring costs related to the operations of our fiscal 2017 acquisitions. These restructuring charges included employee severance costs related to redundant positions and facility charges related to exiting or consolidating space. During the first nine months of fiscal 2018, we recorded restructuring cost reversals of $0.1 million and we made cash payments of $0.2 million related to these actions. We expect to complete these actions during the remainder of fiscal 2018.

Previous Restructuring and Acquisition-Related Charges

Prior to fiscal 2017, we had completed certain restructuring activities related to our ongoing operations as well as a series of acquisition-related restructuring actions. During the first nine months of fiscal 2018, we recorded adjustments to the restructuring costs of $0.4 million and we made cash payments of $2.2 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, 2018. The adjustments to costs in the tables below consist of adjustments to the accrual that were accounted for as an adjustment to current period earnings (Expense) or adjustments to the accrual that were related to the impact of fluctuations in foreign currency exchange rates (Foreign Currency Effect):

 

                   Adjustment to Costs                          Total  
     Balance                   Foreign            Balance      Total Costs      Expected  
     April 30,      Initial            Currency      Cash     January 31,      Recognized      Program  
(in millions)    2017      Costs      Expense     Effect      Payments     2018      to Date      Costs  

Fiscal 2018 restructuring

                     

Severance

   $ —        $ 10.6    $ —       $ 0.3    $ (7.3   $ 3.6    $ 10.6    $ 10.6

Facilities and other

     —          0.6      —         —          (0.2     0.4      0.6      0.6
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total fiscal 2018 restructuring

     —          11.2      —         0.3      (7.5     4.0      11.2      11.2
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Fiscal 2018 acquisition-related

                     

Severance

     —          0.2      —         —          (0.2     —          0.2      0.2
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total fiscal 2018 acquisition-related

     —          0.2      —         —          (0.2     —          0.2      0.2
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Fiscal 2017 restructuring

                     

Severance

     13.1      —          (0.4     0.7      (11.5     1.9      37.1      37.1

Facilities and other

     1.9      —          0.6     —          (1.1     1.4      3.1      3.1
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total fiscal 2017 restructuring

     15.0      —          0.2     0.7      (12.6     3.3      40.2      40.2
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Fiscal 2017 acquisition-related

                     

Facilities and other

     0.5      —          (0.1     —          (0.2     0.2      0.6      0.6
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total fiscal 2017 acquisition-related

     0.5      —          (0.1     —          (0.2     0.2      0.6      0.6
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Previous restructuring

                     

Severance

     0.8      —          (0.1     0.1      (0.4     0.4      15.8      15.8

Facilities and other

     2.5      —          0.1     —          (0.9     1.7      5.6      5.6
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total previous restructuring

     3.3      —          —         0.1      (1.3     2.1      21.4      21.4
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Previous acquisition-related

                     

Severance

     0.1      —          (0.1     —          —         —          40.4      40.4

Facilities and other

     2.5      —          0.5     —          (0.9     2.1      5.1      5.1
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total previous acquisition-related

     2.6      —          0.4     —          (0.9     2.1      45.5      45.5
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total restructuring

   $ 21.4    $ 11.4    $ 0.5   $ 1.1    $ (22.7   $ 11.7    $ 119.1    $ 119.1
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

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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
January 31,
     Nine Months Ended
January 31,
 
(in millions)    2018      2017      2018      2017  

License

   $ 1.0      $ 1.3      $ 4.2      $ 3.9  

Maintenance

     —          0.6        0.7        7.9  

Consulting

     0.2        2.8        4.6        8.6  

General and administrative and other functions

     0.5        3.1        2.4        17.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total restructuring costs

   $ 1.7      $ 7.8      $ 11.9      $ 37.5  
  

 

 

    

 

 

    

 

 

    

 

 

 

12. Debt

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

 

     January 31, 2018     April 30, 2017  
(in millions)    Principal
Amount
    Net
Amount (1)
    Contractual
Rate
    Principal
Amount
    Net
Amount (1)
    Contractual
Rate
 

First lien Term B-6 due February 1, 2022

   $ 2,131.0     $ 2,078.0       4.44   $ 2,147.1     $ 2,084.9       3.90

First lien Euro Term B-1 due February 1, 2022

     —         —         —         1,089.7       1,082.8       3.75

First lien Euro Term B-2 due February 1, 2022

     1,244.0       1,238.2       3.25     —         —         —    

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

     500.0       488.2       5.75     500.0       485.0       5.75

6.5% senior notes due May 15, 2022

     1,630.0       1,622.2       6.50     1,630.0       1,621.1       6.50

5.75% senior notes due May 15, 2022

     434.5       430.7       5.75     381.4       377.1       5.75

Deferred financing fees, debt discounts and premiums, net

     (82.2     —           (97.3     —      
  

 

 

   

 

 

     

 

 

   

 

 

   

Total long-term debt

     5,857.3       5,857.3         5,650.9       5,650.9    

Less: current portion

     (33.9     (33.9       (32.4     (32.4  
  

 

 

   

 

 

     

 

 

   

 

 

   

Total long-term debt - non-current

   $ 5,823.4     $ 5,823.4       $ 5,618.5     $ 5,618.5    
  

 

 

   

 

 

     

 

 

   

 

 

   

 

(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, 2018 and April 30, 2017 was 4.96% and 4.89%, 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, 2018:

 

Fiscal 2018 (remaining 3 months)

   $ 8.5  

Fiscal 2019

     33.9  

Fiscal 2020

     33.9  

Fiscal 2021

     533.9  

Fiscal 2022

     3,264.7  

Fiscal 2023

     2,064.6  

Thereafter

     —    
  

 

 

 

Total

   $ 5,939.5  
  

 

 

 

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, 2017, included in our Annual Report on Form 10-K, for a description of each amendment (First Amendment through Eighth Amendment).

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, $11.8 million of letters of credit have reduced the amount available under the Revolver to $108.2 million as of January 31, 2018. 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.

Term Loans

On February 6, 2017, we entered into a $2,147.1 million term loan (the Tranche B-6 Term Loan). Interest on the Tranche B-6 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-6 Term Loan matures on February 1, 2022.

On February 6, 2017, we entered into a €1,000.0 million term loan (the Euro Tranche B-1 Term Loan). Interest on the Euro Tranche B-1 Term Loan is based on a fluctuating rate of interest determined by reference to an Adjusted LIBOR rate, plus a margin of 2.75% per annum, with an Adjusted LIBOR floor of 1.0%. The Euro Tranche B-1 Term Loan matures on February 1, 2022.

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.

 

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Refinancing Amendment

On November 22, 2017, we entered into Amendment No. 9 to our Credit Agreement, with Bank of America, N.A., as administrative agent, and certain other existing and new lenders. This amendment provided for, among other modifications to the Credit Agreement, the refinancing of the outstanding balance of our first lien Euro Tranche B-1 Term Loan with the proceeds of a new €1,002.0 million term loan (the Euro Tranche B-2 Term Loan).

Interest on the Euro Tranche B-2 Term Loan is based on a fluctuating rate of interest determined by reference to an Adjusted LIBOR rate, plus a margin of 2.25% per annum, with an Adjusted LIBOR floor of 1.00%. This was a 50 basis point reduction in the effective rate related to the Euro Tranche B-2 Term Loan as compared to the Euro Tranche B-1 Term Loan discussed above. The Euro Tranche B-2 Term Loan matures on February 1, 2022, which is unchanged compared to the original maturity date of the Euro Tranche B-1 Term Loan.

Proceeds from the Euro Tranche B-2 Term Loan were used to refinance the outstanding principal of our Euro Tranche B-1 Term Loan, together with accrued and unpaid interest and applicable fees.

Senior Notes

Our 6.5% and 5.75% senior notes (the Senior Notes) include $1,630.0 million in aggregate principal amount of our 6.5% Senior Notes and €350.0 million in aggregate principal amount of our 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 existing and future 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

Our 5.75% first lien senior secured notes (the Senior Secured Notes) include $500.0 million in aggregate principal 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. The Senior Secured Notes mature on August 15, 2020. 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.

Unrestricted Subsidiary

As of January 31, 2018, we did not have any Unrestricted Subsidiaries as defined by the Credit Agreement and the indentures governing our Senior Notes and Senior Secured Notes.

Deferred Financing Fees, Debt Discounts and Premiums

As of January 31, 2018 and April 30, 2017, deferred financing fees, net of amortization, related to our Term Loans, Senior Notes, and Secured Senior Notes of $67.0 million and $78.9 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 $0.7 million and $1.2 million as of January 31, 2018 and April 30, 2017, respectively, which were reflected on our Condensed Consolidated Balance Sheets in other assets. These deferred financing fees are being amortized over the applicable life of the Term Loans, the Senior Secured Notes and Senior Notes under the effective interest method. For the three months ended January 31, 2018 and 2017, we amortized $4.2 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 2018 and 2017, we amortized $12.4 million and $15.9 million, respectively, in deferred financing fees.

In addition, we have recorded debt discounts, net of premiums and accumulated amortization, of $15.2 million and $18.4 million as of January 31, 2018 and April 30, 2017, respectively, as a direct reduction of the carrying amount of our long-term debt.

 

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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 HoldCo 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, 2018 and April 30, 2017, 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 18, 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.

13. Income Taxes

Income taxes have been provided in accordance with ASC 740, Income Taxes (ASC 740). 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, including changes in tax rates.

On December 22, 2017, the U.S. government enacted the 2017 Tax Act. The 2017 Tax Act includes numerous changes to the U.S. tax code that affect our business, including among other things: permanently reducing the U.S. federal corporate tax rate from 35.0% to 21.0%; limiting various business deductions including interest expense; modifying the maximum deduction of net operating loss generated in tax years beginning after December 31, 2017; creating a provision to tax global intangible low-taxed income (GILTI) based on the Company’s annual aggregate foreign subsidiaries’ income in excess of certain qualified business asset investment returns; a base-erosion anti-abuse tax (BEAT); a tax on foreign-derived intangible income (FDII); and imposing a one-time repatriation tax on deemed repatriated earnings and profits of U.S.-owned foreign subsidiaries (Transition Tax).

Certain provisions of the 2017 Tax Act will impact Infor in fiscal 2018 including the lower U.S. federal corporate tax rate. The reduction in the U.S. federal corporate tax rate was effective as of January 1, 2018, resulting in a blended fiscal 2018 statutory rate for Infor of approximately 30.3% based on pre- and post- 2017 Tax Act rates, and in future fiscal years our statutory rate will be 21.0%. Other significant provisions will be effective at the beginning of fiscal 2019 including the interest limitation provisions and the GILTI provisions.

In transitioning to the new reformed tax system, the 2017 Tax Act imposes a one-time tax on the deemed repatriation of earnings of certain foreign subsidiaries that were previously tax deferred. The Transition Tax requires the Company to include certain untaxed foreign earnings of non-U.S. subsidiaries in our fiscal 2018 taxable income. Such foreign earnings are generally subject to a one-time tax at 15.5% on the amount held in cash or cash equivalents, and at 8.0% on the remaining non-cash amounts.

 

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The impact on income taxes due to a change in legislation is required to be recognized in the period in which the law is enacted under the authoritative guidance of ASC 740. However, in conjunction with the 2017 Tax Act, on December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which provides guidance on accounting for the tax effects of the 2017 Tax Act. SAB 118 directs taxpayers to consider the impact of the 2017 Tax Act as “provisional” when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain federal and state income tax effects of the 2017 Tax Act.

As of January 31, 2018, we had not completed our accounting for the tax effects of the 2017 Tax Act. As described below, however, we made provisional estimates of the effects on our existing deferred tax balances and of the one-time Transition Tax. The Transition Tax did not have a significant impact on our Condensed Consolidated Financial Statements for the quarter ended January 31, 2018, as a result of the valuation allowance maintained against the Company’s U.S. deferred tax assets. However, the provisional estimates associated with the reduction in the U.S. federal corporate tax rate from 35.0% to 21.0% impacted the ending deferred tax assets, deferred tax liabilities and valuation allowance associated with indefinite-lived intangible assets and liabilities as of January 31, 2018.

The ultimate impact of the 2017 Tax Act may materially differ from these provisional amounts, due to, among other things, additional analyses, changes in interpretations and assumptions that we have made and additional regulatory guidance that may be issued. SAB 118 allows for recording provisional amounts during a one-year measurement period, similar to the measurement period used when accounting for business combinations. The measurement period ends no later than one year from the date of enactment of the 2017 Tax Act, which for the Company will be in the third quarter of fiscal 2019. The activity related to these items will be recorded during the one-year measurement period as allowed under SAB 118 when reasonable estimates can be made, or when the effect of the activity is known. We will also continue to refine provisional balances and make adjustments during the measurement period as allowed under SAB 118, as a result of future changes in interpretation, available information, assumptions we have made, further refinement of our calculations, and/or issuance of additional guidance; these adjustments could be material. Additional information currently unavailable that is needed to complete the Transition Tax analysis includes, but is not limited to, information related to historical entity rationalizations and historical tax returns, and tax documentation related to historical acquisitions for the final determination of the untaxed foreign earnings subject to the Transition Tax.

In accordance with SAB 118, we recorded a net provisional non-cash tax benefit of $24.9 million associated with a write-down of indefinite-lived intangible deferred tax assets and liabilities in our results of operations for the quarter ended January 31, 2018. The tax benefit was recorded as a result of the permanent reduction of the U.S. federal corporate tax rate from 35.0% to 21.0%. We are still completing our calculation of the impact of these changes on our deferred tax balances. We also completed a provisional estimate of the Transition Tax, which we estimated to be $76.4 million. Due to the Company’s full U.S. valuation allowance, this provisional estimate did not have a significant impact on our Condensed Consolidated Financial Statements for the quarter ended January 31, 2018. We have not provided foreign withholding taxes on the undistributed earnings of our foreign subsidiaries as such earnings are expected to be reinvested indefinitely, with the exception of certain previously taxed earnings under Subpart F, which were accrued during the fourth quarter of fiscal 2017 as a result of the Koch Industries investment in Infor. We currently intend to use existing net operating losses to offset the estimated tax liability, but will further evaluate whether to elect to pay the Transition Tax over a period of eight years as permitted by the 2017 Tax Act. We have also adopted an accounting policy, as provided by the FASB in their January 10, 2018 Board Meeting, to account for the tax effects of GILTI in the periods that we are subject to such tax. Therefore, we will not be recording the tax effect of deferred tax assets and liabilities associated with the GILTI tax.

We also assessed whether our U.S. deferred tax asset valuation allowance is affected by various aspects of the 2017 Tax Act (e.g., deemed repatriation of deferred foreign income related to the Transition Tax, future GILTI inclusions, and limitation on interest expense). As we have recorded provisional amounts related to certain portions of the 2017 Tax Act, any corresponding change in the deferred tax asset valuation allowance is also provisional. However, we have determined that the 2017 Tax Act does not change our current assertion that our U.S. deferred tax assets are not “more likely than not to be realized”, thus we have maintained our valuation allowance for U.S. deferred tax assets as of January 31, 2018, based on this provisional estimation.

 

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

 

     Three Months Ended
January 31,
    Nine Months Ended
January 31,
 
(in millions, except percentages)    2018     2017     2018     2017  

Income tax provision (benefit)

   $ (18.4   $ 0.8     $ 12.5     $ 22.3  

Effective income tax rate

     9.9     2.1     (4.1 )%      59.2

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, state 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 2018 compared to the third quarter of fiscal 2017 was primarily driven by an increase in U.S. tax losses subject to a full valuation allowance, an increase in the valuation allowance for various foreign deferred tax assets, a reduction in the amount of unrecognized tax benefits, and a reduction in U.S. deferred tax liabilities as a result of the 2017 Tax Act.

The change in our effective tax rate for the first nine months of fiscal 2018 compared to the corresponding period of fiscal 2017 was primarily driven by an increase in U.S. tax losses subject to a full valuation allowance, a reduction in the amount of unrecognized tax benefits, a reduction in U.S. deferred tax liabilities as a result of the 2017 Tax Act, and an increase in the valuation allowance for various foreign deferred tax assets.

During the upcoming twelve months ending January 31, 2019, we expect a net reduction of approximately $20.4 million of unrecognized tax benefits, primarily due to the expiration of statutes of limitation in various jurisdictions.

Our deferred tax assets were $81.6 million and $108.1 million as of January 31, 2018 and April 30, 2017, 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.

We continued to examine various tax structuring alternatives that may be executed during the remainder of fiscal 2018, which could provide additional positive evidence in our valuation allowance considerations that may result in further foreign valuation releases. This includes actions that we may take in response to the enactment of the 2017 Tax Act. Additionally, certain U.S. and foreign valuation allowances could be impacted during fiscal 2018 as a result of the KED investment that was consummated on February 17, 2017.

As of January 31, 2018, we continue to consider available cash balances that existed at the end of fiscal 2017 related to undistributed pre-fiscal 2018 earnings and profits of certain U.S.-owned foreign subsidiaries to be indefinitely reinvested with certain limited exceptions. However, as a result of the 2017 Tax Act, pursuant to SAB 118, we are reassessing our intentions related to our indefinite reinvestment assertion as part of our provisional estimates. Should we decide to no longer indefinitely reinvest such earnings outside the U.S., we would have to adjust the income tax provision in the period such determination is made.

14. 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:

 

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

Balance, April 30, 2017

   $ (259.4    $ (16.0    $ (2.8    $ (278.2
  

 

 

    

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss)

     236.8        (0.3      2.8        239.3  

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

     0.1        —          —          0.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

     236.9        (0.3      2.8        239.4  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance, January 31, 2018

   $ (22.5    $ (16.3    $ —        $ (38.8
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Funded status of defined benefit pension plan is presented net of tax benefit of $3.7 million and $3.4 million as of January 31, 2018 and April 30, 2017, respectively.
(2) Derivative instruments unrealized gain (loss) is presented net of tax benefit of $1.8 million as of April 30, 2017.

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)           Income Tax         

Three Months Ended

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

January 31, 2018

        

Foreign currency translation adjustment

   $ 118.9      $ —        $ 118.9  

Change in funded status of defined benefit plans

     (0.8      0.3        (0.5
  

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss)

   $ 118.1      $ 0.3      $ 118.4  
  

 

 

    

 

 

    

 

 

 

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 gain (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
  

 

 

    

 

 

    

 

 

 
(in millions)           Income Tax         

Nine Months Ended

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

January 31, 2018

        

Foreign currency translation adjustment

   $ 236.8      $ —        $ 236.8  

Change in funded status of defined benefit plans

     (0.6      0.3        (0.3

Derivative instruments unrealized gain (loss)

     (0.1      —          (0.1

Reclassification adjustments:

        

Amortization of derivative instruments unrealized loss

     4.7        (1.8      2.9  
  

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss)

   $ 240.8      $ (1.5    $ 239.3  
  

 

 

    

 

 

    

 

 

 

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
  

 

 

    

 

 

    

 

 

 

 

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15. 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 $15.4 million and $13.9 million for the three-month periods ended January 31, 2018 and 2017, respectively. For the first nine months of fiscal 2018 and 2017, total rent expense for operating leases was $45.9 million and $42.8 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 $7.7 million and $9.0 million as of January 31, 2018 and April 30, 2017, respectively.

Litigation

From time to time, we are subject to litigation in the normal course of business. In accordance with applicable FASB guidance, we accrue for litigation exposure when a loss is probable and estimable, and we provide disclosures of matters for which the likelihood of material loss is at least reasonably possible. As of January 31, 2018 and April 30, 2017, we had accrued $48.2 million and $2.5 million, respectively, related to current litigation matters, which are included in accrued expenses and other long-term liabilities on our Condensed Consolidated Balance Sheets. We expense all legal costs to resolve regulatory, legal, tax or other matters in the period incurred and include such costs in general and administrative expenses in our Condensed Consolidated Statements of Operations.

Felleskjøpet Agri SA (FKA) initiated legal proceedings against Infor (Steinhausen) II GmbH (Infor Steinhausen), a wholly-owned subsidiary of the Company, in Norway claiming damages of up to $53.1 million (NOK 420.0 million) related to the suspension and delay of an ERP implementation project. Infor Steinhausen denied FKA’s claims and asserted counterclaims. A trial was conducted in November-December 2017. Subsequent to quarter end, on February 9, 2018, the court rendered its judgment finding Infor responsible for breach of contract and gross negligence, denying Infor’s counterclaims and awarding FKA certain damages plus applicable interest and legal costs. In addition, on February 23, 2018, FKA filed a motion seeking to amend the judgment to increase the damages awarded by $5.3 million (approximately NOK 42.0 million). We considered these to be Type I subsequent events and recorded litigation costs of $44.7 million (approximately NOK 353.8 million) in the third quarter of fiscal 2018 in relation to these actions. Infor disputes the judgment and will pursue an appeal where it will vigorously contest the lower court’s findings through a re-presentation of all witness testimony and evidence in a de novo proceeding before the appeals court. We continue to believe we have meritorious defenses to FKA’s claims, however, given the inherent unpredictability of litigation, we cannot at this time estimate the final outcome of the appeal of this lawsuit.

We are subject to various other legal proceedings and the risk of litigation by employees, customers, patent owners, suppliers, stockholders or others through private actions, class actions, administrative proceedings or other litigation. While the outcome of these claims cannot be predicted with certainty, we believe that, based on information presently available, the resolution of any such legal matters existing as of January 31, 2018, will not have a material adverse effect on our financial position, results of operations or cash flows.

Guarantees

We typically grant our customers a warranty that guarantees that our product will substantially conform to Infor’s current specifications for 90 days from the delivery date. We also indemnify our customers from third-party claims of intellectual property infringement relating to the use of our products. Infor’s standard software license agreements contain liability clauses that are limited in amount. We account for these clauses under ASC 460, Guarantees. We 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, 2018 and April 30, 2017.

16. Derivative Financial Instruments

We 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 12, 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 and they were highly effective from their inception through maturity. These interest rate swaps had an effective date of March 31, 2015, with a 30-month term which expired on September 29, 2017, and had a 1.25% floor.

 

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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  
(in millions, except percentages)    Notional
Amount
     Derivative
Base
   

Classification

Asset (Liability)

   January 31,
2018
     April 30,
2017
 

Accounting cash flow hedges:

             

Interest rate swap

   $ 425.3        2.4725   Accrued expenses    $ —        $ (2.0

Interest rate swap

     212.6        2.4740   Accrued expenses      —          (1.1

Interest rate swap

     212.6        2.4750   Accrued expenses      —          (1.1

Interest rate swap

     94.5        2.4725   Accrued expenses      —          (0.4
  

 

 

         

 

 

    

 

 

 

Total

   $ 945.0        Total, net asset (liability)    $ —        $ (4.6
  

 

 

         

 

 

    

 

 

 

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:

 

     Statement of    Three Months Ended
January 31,
    Nine Months Ended
January 31,
 
(in millions)   

Operations Location

   2018      2017     2018     2017  

Accounting cash flow hedges:

            

Interest rate swaps

            

Effective portion - gain (loss) recognized in OCI

      $ —        $ (0.2   $ (0.1   $ (1.0
     

 

 

    

 

 

   

 

 

   

 

 

 

(Gain) loss reclassified from AOCI into net income

   Interest expense, net    $ —        $ 3.0     $ 4.7     $ 9.0  
     

 

 

    

 

 

   

 

 

   

 

 

 

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, 2018, there were no amounts included in accumulated other comprehensive income (loss) related to our derivative instruments to be reclassified into earnings during the next 12 months.

17. 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.

 

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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.

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, 2018

        

Revenues

   $ 214.9     $ 356.7     $ 207.3     $ 778.9  

Cost of revenues

     69.0       59.5       168.3       296.8  

Direct sales and other costs

     106.9       —         —         106.9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin

   $ 39.0     $ 297.2     $ 39.0     $ 375.2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin %

     18.1     83.3     18.8     48.2

January 31, 2017

        

Revenues

   $ 181.9     $ 348.0     $ 177.4     $ 707.3  

Cost of revenues

     58.1       59.2       145.0       262.3  

Direct sales and other costs

     98.1       —         —         98.1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin

   $ 25.7     $ 288.8     $ 32.4     $ 346.9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin %

     14.1     83.0     18.3     49.0

 

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(in millions, except percentages)    Reportable Segment  

Nine Months Ended

       License         Maintenance       Consulting             Total        

January 31, 2018

        

Revenues

   $ 626.2     $ 1,063.9     $ 630.8     $ 2,320.9  

Cost of revenues

     202.0       178.2       503.0       883.2  

Direct sales and other costs

     321.7       —         10.6       332.3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin

   $ 102.5     $ 885.7     $ 117.2     $ 1,105.4  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin %

     16.4     83.3     18.6     47.6

January 31, 2017

        

Revenues

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

Cost of revenues

     167.4       180.3       430.3       778.0  

Direct sales and other costs

     294.0       —         12.6       306.6  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin

   $ 69.0     $ 871.4     $ 100.0     $ 1,040.4  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin %

     13.0     82.9     18.4     49.0

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
January 31,
     Nine Months Ended
January 31,
 
(in millions)    2018      2017      2018      2017  

Reportable segment revenues

   $ 778.9      $ 707.3      $ 2,320.9      $ 2,125.0  

Purchase accounting revenue adjustments (1)

     (2.4      (0.7      (9.3      (2.7
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 776.5      $ 706.6      $ 2,311.6      $ 2,122.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reportable segment sales margin

   $ 375.2      $ 346.9      $ 1,105.4      $ 1,040.4  

Other unallocated costs and operating expenses (2)

     257.5        179.9        690.2        544.5  

Amortization of intangible assets and depreciation

     95.8        58.0        206.8        172.9  

Restructuring costs

     1.7        7.8        11.9        37.5  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations

     20.2        101.2        196.5        285.5  

Total other expense, net

     205.2        62.4        501.1        247.8  
  

 

 

    

 

 

    

 

 

    

 

 

 

Income (loss) before income tax

   $ (185.0    $ 38.8      $ (304.6    $ 37.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(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, 2018

           

Software license fees

   $ 37.8      $ 29.6      $ 7.8      $ 75.2  

SaaS subscriptions

     97.2        25.1        15.8        138.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software license fees and subscriptions

     135.0        54.7        23.6        213.3  

Product updates and support fees

     223.5        104.8        28.1        356.4  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software revenues

     358.5        159.5        51.7        569.7  

Consulting services and other fees

     101.4        89.7        15.7        206.8  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 459.9      $ 249.2      $ 67.4      $ 776.5  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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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  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(in millions)    Geographic Region  
Nine Months Ended    Americas      EMEA      APAC      Total  

January 31, 2018

           

Software license fees

   $ 123.0      $ 79.5      $ 23.4      $ 225.9  

SaaS subscriptions

     287.5        61.4        44.4        393.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software license fees and subscriptions

     410.5        140.9        67.8        619.2  

Product updates and support fees

     673.2        306.3        83.2        1,062.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software revenues

     1,083.7        447.2        151.0        1,681.9  

Consulting services and other fees

     326.6        252.9        50.2        629.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 1,410.3      $ 700.1      $ 201.2      $ 2,311.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

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  
  

 

 

    

 

 

    

 

 

    

 

 

 

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, 2018

   $ 106.8      $ 24.0      $ 16.6      $ 147.4  

April 30, 2017

   $ 131.5      $ 17.9      $ 12.1      $ 161.5  

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

 

     Three Months Ended
January 31,
     Nine Months Ended
January 31,
 
(in millions)    2018      2017      2018      2017  

United States

   $ 416.3      $ 402.9      $ 1,276.7      $ 1,211.2  

All other countries

     360.2        303.7        1,034.9        911.1  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 776.5      $ 706.6      $ 2,311.6      $ 2,122.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

 

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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)    2018      2017  

United States

   $ 104.8      $ 129.5  

All other countries

     42.6        32.0  
  

 

 

    

 

 

 

Total long-lived tangible assets

   $ 147.4      $ 161.5  
  

 

 

    

 

 

 

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.”

18. Related Party Transactions

Our largest investors are our Sponsors, Golden Gate Capital, Summit Partners and since fiscal 2017 an affiliate of Koch Industries. The following is a summary of our transactions with our Sponsors and other related parties.

Sponsor Management and Other Fees

We have entered into advisory agreements with Golden Gate Capital and Summit Partners 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, certain other services and the reimbursement of reasonable out-of-pocket expenses. These advisory agreements are for an initial term of ten years with the annual management fees payable to Golden Gate Capital and Summit Partners on a quarterly basis. In addition, Infor Enterprise, Golden Gate Capital and Summit Partners have entered into a similar advisory agreement with KED, the investment and acquisition subsidiary of Koch Industries. Under these advisory agreements, the total contractual annual management fee due is approximately $8.0 million which is payable to our Sponsors based on the provisions in the applicable agreements. We recognized 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 applicable expenses rendered under the advisory agreements for the periods indicated:

 

     Three Months Ended
January 31,
     Nine Months Ended
January 31,
 
(in millions)    2018      2017      2018      2017  

Golden Gate Capital

   $ 0.7      $ 1.4      $ 2.8      $ 4.3  

Summit Partners

     0.1        0.6        0.7        1.7  

Koch Industries

     1.0        —          3.0        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Total management fees and expenses

   $ 1.8      $ 2.0      $ 6.5      $ 6.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

At January 31, 2018, approximately $1.6 million, $0.7 million, and $0.5 million of the Sponsor management fees remained unpaid related to Koch Industries, Golden Gate Capital, and Summit Partners, respectively.

In addition, under the advisory agreements the Sponsors may be entitled to receive transaction fees in relation to certain consummated transactions including among others, acquisitions and financing transactions. In the first quarter of fiscal 2018 we expensed buyer transaction fees in connection with the Birst Acquisition of $0.4 million, $0.3 million and $0.1 million paid to Koch Industries, Golden Gate Capital and Summit Partners, respectively. In connection with the Predictix Acquisition we expensed buyer transaction fees of approximately $1.1 million paid to Golden Gate Capital and $0.4 million paid to Summit Partners in the first quarter of fiscal 2017. The buyer transaction fees related to the Birst Acquisition and Predictix Acquisition were included in acquisition-related and other costs in our Condensed Consolidated Statement of Operations in the applicable periods.

 

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Related Party Operating Activity

Revenues and Expenses

In the normal course of business, we may sell products and services to companies owned by our Sponsors. Revenues from companies affiliated with Golden Gate Capital, Summit Partners, and Koch Industries are recognized according to our revenue recognition policy as described in Note 2, Summary of Significant Accounting Policies. Revenues from Golden Gate Capital-owned companies were approximately $0.5 million and $1.9 million in the three and nine months ended January 31, 2018, respectively, and $0.2 million and $1.2 million in the comparable periods of fiscal 2017. We had revenues of less than $0.1 million from companies owned by Summit Partners in the first nine months of fiscal 2018 and less than $0.1 million to companies owned by Summit Partners in the first nine months of fiscal 2017. Revenues from companies affiliated with Koch Industries were approximately $6.1 million and $16.6 million in the three and nine months ended January 31, 2018, respectively. Koch Industries was not a related party in the corresponding prior periods of fiscal 2017.

In addition, we made payments to companies owned by Golden Gate Capital for products and services of $0.2 million and $2.4 million in the third quarter and first nine months of fiscal 2018, respectively, and $2.4 million and $10.0 million in the comparable periods of fiscal 2017. We made payments to companies owned by Summit Partners for products and services of less than $0.1 million and $0.2 million in the third quarter and first nine months of fiscal 2018, respectively, and $0.0 million and $0.2 million in the comparable periods of fiscal 2017. We made an insignificant amount of payments to Koch Industries affiliated companies in the first nine months of fiscal 2018.

Koch SaaS Agreements

In fiscal 2018, we entered into a SaaS subscription agreement with Flint Hills Resources, LLC, an affiliate of Koch Industries, under which Flint Hills Resources agreed to a five-year subscription to our EAM software. This agreement totals approximately $11.8 million with SaaS subscription revenues of approximately $2.4 million per year. In addition, we entered into other SaaS subscription agreements with affiliates of Koch Industries for various Infor software products over terms from one to five years. These agreements totaled approximately $2.0 million with average SaaS subscription revenues of approximately $0.2 million per year. All of these agreements were entered into at our customary rates.

In the fourth quarter of fiscal 2017, we entered into a SaaS subscription agreement with Koch Business Solutions, LP (KBS) under which KBS agreed to a five-year subscription to our CloudSuite HCM and CloudSuite Financials software, both at our customary rates. This agreement totals approximately $43.3 million. SaaS subscription revenues of $6.8 million are expected to be recognized in the first year and approximately $9.1 million per year over each of the remaining four years under the agreement.

Equity Contributions

In the first quarter of fiscal 2018, we completed the Birst Acquisition. See Note 3, Acquisitions – Fiscal 2018—Birst. In conjunction with the Birst Acquisition, certain of our Sponsors and senior executives made new capital contributions to Infor Enterprise, an affiliate of the parent company of Infor, of $75.0 million, which was contributed as equity to Infor, Inc. The proceeds from the new equity contribution were used to fund the Birst Acquisition purchase consideration.

In the fourth quarter of fiscal 2017, an affiliate of Koch Industries completed the purchase of more than $2 billion of preferred and common equity of certain affiliates of the Company under the definitive agreement we originally disclosed in the second quarter of fiscal 2017. Under this agreement, our existing shareholders, including Golden Gate Capital, Summit Partners and certain members of management, maintain control of the Company. In conjunction with the purchase, representatives of Koch Industries have been appointed to hold five of the eleven directors on Infor’s board.

In the first quarter of fiscal 2017, we completed the Predictix Acquisition. See Note 3, Acquisitions – Fiscal 2017—Predictix. In conjunction with the Predictix Acquisition, certain of 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.

 

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Due to/from Affiliates

Infor, through certain of our subsidiaries, had net receivables from our affiliates, HoldCo and GGC Software Parent, LLC, of $59.2 million as of January 31, 2018, and $59.2 million as of April 30, 2017. These receivables arose primarily due to our payment of deferred financing fees and interest related to certain acquired debt of HoldCo and activity related to the Tax Allocation Agreement, discussed below. These receivables are included in receivable from stockholders in the equity section on our Condensed Consolidated Balance Sheets.

We have entered into a Tax Allocation Agreement with GGC Software Parent, LLC, and HoldCo. Infor is included in the GGC Software Parent, LLC 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. In the first nine months of fiscal 2018 we did not make any payments under the Tax Allocation Agreement and we made payments of $9.1 million during the corresponding period last year.

Dividends Paid to Affiliates

Fiscal 2018

In October 2017, HoldCo elected to pay the semi-annual interest due related to the HoldCo Notes of approximately $26.7 million in cash (i) with $3.0 million cash on-hand, and (ii) with amounts we funded through dividend distributions from Infor to HoldCo of $23.7 million which were accrued as of October 31, 2017. The dividends were paid on November 1, 2017.

Fiscal 2017

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

19. 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 12, 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, 2018 and April 30, 2017, 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, 2018 and 2017, and our Condensed Consolidating Statements of Cash Flows for the nine months ended January 31, 2018 and 2017.

 

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During the fourth quarter of fiscal 2017, we identified and corrected an error in the manner in which we were classifying amounts related to the Tax Allocation Agreement. Previously, such amounts were presented as a current asset in income tax receivable on our Consolidated Balance Sheets and as an operating activity in our Consolidated Statements of Cash Flows. These amounts are now presented as a decrease in additional paid-in capital and as a financing activity. Presentation in the applicable prior period’s Consolidated Balance Sheets and Consolidating Statements 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. See Note 1, Nature of Business and Basis of Presentation – Revision of Prior Period Financial Statements.

In the second quarter of fiscal 2018, LogicBlox, which was previously designated as an “Unrestricted Subsidiary”, was designated as a “Restricted Subsidiary” and was subsequently merged into Infor (US), Inc. Accordingly, it is included in the Subsidiary Issuer column retrospectively for all periods presented below. See Note 12, Debt – Unrestricted Subsidiary.

Condensed Consolidating Balance Sheets

 

     January 31, 2018  
(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

   $ —       $ 47.0   $ —        $ 310.1    $ —       $ 357.1

Accounts receivable, net

     —         219.4     12.8      248.0      —         480.2

Prepaid expenses

     —         110.4     2.7      43.8      —         156.9

Income tax receivable

     —         11.2     0.2      15.0      —         26.4

Other current assets

     —         4.9     —          15.6      —         20.5

Affiliate receivable

     —         96.7     133.8      153.7      (384.2     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current assets

     —         489.6     149.5      786.2      (384.2     1,041.1

Property and equipment, net

     —         104.9     —          42.5      —         147.4

Intangible assets, net

     —         601.9     0.3      102.7      —         704.9

Goodwill

     —         2,968.3     62.6      1,688.9      —         4,719.8

Deferred tax assets

     —         —         0.4      81.6      (0.4     81.6

Other assets

     —         28.8     2.9      63.1      —         94.8

Affiliate receivable

     —         123.7     —          185.0      (308.7     —    

Investment in subsidiaries

     —         2,096.5     —          —          (2,096.5     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ —       $ 6,413.7   $ 215.7    $ 2,950.0    $ (2,789.8   $ 6,789.6
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

              

Current liabilities:

              

Accounts payable

   $ —       $ 48.0   $ —        $ 22.1    $ —       $ 70.1

Income taxes payable

     —         —         —          27.8      —         27.8

Accrued expenses

     —         180.9     3.5      186.7      —         371.1

Deferred revenue

     —         659.2     23.5      451.4      —         1,134.1

Affiliate payable

     29.4     293.7     1.5      59.6      (384.2     —    

Current portion of long-term obligations

     —         33.9     —          —          —         33.9
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current liabilities

     29.4     1,215.7     28.5      747.6      (384.2     1,637.0

Long-term debt

     —         5,823.4     —          —          —         5,823.4

Deferred tax liabilities

     —         29.8     —          32.0      (0.4     61.4

Affiliate payable

     58.2     185.0     —          65.5      (308.7     —    

Other long-term liabilities

     —         66.5     2.5      184.4      —         253.4

Losses in excess of investment in subsidiaries

     906.7     —         —          —          (906.7     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     994.3     7,320.4     31.0      1,029.5      (1,600.0     7,775.2

Total Infor, Inc. stockholders’ equity (deficit)

     (994.3     (906.7     184.7      1,911.8      (1,189.8     (994.3

Noncontrolling interests

     —         —         —          8.7      —         8.7
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total stockholders’ equity (deficit)

     (994.3     (906.7     184.7      1,920.5      (1,189.8     (985.6
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities and stockholders’ equity (deficit)

   $ —       $ 6,413.7   $ 215.7    $ 2,950.0    $ (2,789.8   $ 6,789.6
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

36


Table of Contents
     April 30, 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

   $ —       $ 88.9   $ —        $ 216.9    $ —       $ 305.8

Accounts receivable, net

     —         238.9     14.5      193.2      —         446.6

Prepaid expenses

     —         120.9     2.2      38.0      —         161.1

Income tax receivable

     —         9.8     0.2      14.9      —         24.9

Other current assets

     —         10.4     —          16.1      —         26.5

Affiliate receivable

     —         88.0     114.0      52.9      (254.9     —    

Deferred tax assets

     —         22.8     0.9      12.7      (0.1     36.3
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current assets

     —         579.7     131.8      544.7      (255.0     1,001.2

Property and equipment, net

     —         129.5     —          32.0      —         161.5

Intangible assets, net

     —         661.3     0.8      112.5      —         774.6

Goodwill

     —         2,914.8     62.5      1,510.7      —         4,488.0

Deferred tax assets

     0.1     —         —          71.8      (0.1     71.8

Other assets

     —         31.2     2.4      61.8      —         95.4

Affiliate receivable

     —         116.3     —          127.8      (244.1     —    

Investment in subsidiaries

     —         1,749.5     —          —          (1,749.5     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 0.1   $ 6,182.3   $ 197.5    $ 2,461.3    $ (2,248.7   $ 6,592.5
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

              

Current liabilities:

              

Accounts payable

   $ —       $ 74.8   $ —        $ 30.3    $ —       $ 105.1

Income taxes payable

     —         —         —          34.0      —         34.0

Accrued expenses

     —         296.2     3.8      178.0      —         478.0

Deferred tax liabilities

     0.1     —         —          1.0      (0.1     1.0

Deferred revenue

     —         635.0     22.7      358.8      —         1,016.5

Affiliate payable

     29.4     160.1     0.4      65.0      (254.9     —    

Current portion of long-term obligations

     —         32.4     —          —          —         32.4
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current liabilities

     29.5     1,198.5     26.9      667.1      (255.0     1,667.0

Long-term debt

     —         5,618.5     —          —          —         5,618.5

Deferred tax liabilities

     —         76.7     0.8      14.1      (0.1     91.5

Affiliate payable

     58.2     127.8     —          58.1      (244.1     —    

Other long-term liabilities

     —         77.0     2.7      130.1      —         209.8

Losses in excess of investment in subsidiaries

     916.2     —         —          —          (916.2     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     1,003.9     7,098.5     30.4      869.4      (1,415.4     7,586.8

Total Infor, Inc. stockholders’ equity (deficit)

     (1,003.8     (916.2     167.1      1,582.4      (833.3     (1,003.8

Noncontrolling interests

     —         —         —          9.5      —         9.5
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total stockholders’ equity (deficit)

     (1,003.8     (916.2     167.1      1,591.9      (833.3     (994.3
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities and stockholders’ equity (deficit)

   $ 0.1   $ 6,182.3   $ 197.5    $ 2,461.3    $ (2,248.7   $ 6,592.5
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

37


Table of Contents

Condensed Consolidating Statements of Operations

 

     Three Months Ended January 31, 2018  
(in millions)    Infor, Inc.
(Parent)
    Infor (US), Inc.
(Subsidiary Issuer)
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Revenues:

            

Software license fees

   $ —       $ 32.6   $ 1.9   $ 40.7   $ —       $ 75.2

SaaS subscriptions

     —         109.6     2.4     26.1     —         138.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software license fees and subscriptions

     —         142.2     4.3     66.8     —         213.3

Product updates and support fees

     —         202.0     8.0     146.4     —         356.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software revenues

     —         344.2     12.3     213.2     —         569.7

Consulting services and other fees

     —         87.7     5.5     113.6     —         206.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —         431.9     17.8     326.8     —         776.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

            

Cost of software license fees

     —         5.9     —         5.6     —         11.5

Cost of SaaS subscriptions

     —         48.7     0.4     8.5     —         57.6

Cost of product updates and support fees

     —         30.3     0.6     28.7     —         59.6

Cost of consulting services and other fees

     —         76.3     3.5     89.2     —         169.0

Sales and marketing

     —         71.1     5.1     47.7     —         123.9

Research and development

     —         74.0     1.6     50.4     —         126.0

General and administrative

     —         37.2     0.1     68.5     —         105.8

Amortization of intangible assets and depreciation

     —         85.9     0.1     9.8     —         95.8

Restructuring costs

     —         0.7     —         1.0     —         1.7

Acquisition-related and other costs

     —         7.8     —         (2.4     —         5.4

Affiliate (income) expense, net

     —         12.8     0.2     (13.0     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     —         450.7     11.6     294.0     —         756.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     —         (18.8     6.2     32.8     —         20.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other expense, net:

            

Interest expense, net

     —         78.4     —         —         —         78.4

Affiliate interest (income) expense, net

     —         1.7     —         (1.7     —         —    

Other (income) expense, net

     —         118.4     0.1     8.3     —         126.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     —         198.5     0.1     6.6     —         205.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax

     —         (217.3     6.1     26.2     —         (185.0

Income tax provision (benefit)

     —         (24.2     (0.1     5.9     —         (18.4

Equity in (earnings) loss of subsidiaries

     166.6     (26.5     —         —         (140.1     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (166.6     (166.6     6.2     20.3     140.1     (166.6

Net income (loss) attributable to noncontrolling interests

     —         —         —         0.2     —         0.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Infor, Inc.

   $ (166.6   $ (166.6   $ 6.2   $ 20.1   $ 140.1   $ (166.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

38


Table of Contents
     Three 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

   $ —       $ 37.4   $ 0.6   $ 43.4   $ —       $ 81.4

SaaS subscriptions

     —         86.9     1.1     12.1     —         100.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software license fees and subscriptions

     —         124.3     1.7     55.5     —         181.5

Product updates and support fees

     —         208.1     7.8     131.9     —         347.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software revenues

     —         332.4     9.5     187.4     —         529.3

Consulting services and other fees

     —         81.2     4.0     92.1     —         177.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —         413.6     13.5     279.5     —         706.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

            

Cost of software license fees

     —         9.2     —         5.6     —         14.8

Cost of SaaS subscriptions

     —         37.0     —         6.3     —         43.3

Cost of product updates and support fees

     —         32.3     0.7     26.3     —         59.3

Cost of consulting services and other fees

     —         65.8     3.7     75.5     —         145.0

Sales and marketing

     —         64.5     5.9     42.0     —         112.4

Research and development

     —         67.8     1.4     42.7     —         111.9

General and administrative

     —         34.3     —         19.8     —         54.1

Amortization of intangible assets and depreciation

     —         45.7     0.3     12.0     —         58.0

Restructuring costs

     —         4.4     —         3.4     —         7.8

Acquisition-related and other costs

     —         1.1     —         (2.3     —         (1.2

Affiliate (income) expense, net

     —         19.4     (1.1     (18.3     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     —         381.5     10.9     213.0     —         605.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     —         32.1     2.6     66.5     —         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

     —         (37.2     2.6     73.4     —         38.8

Income tax provision (benefit)

     —         (9.5     2.9     7.4     —         0.8

Equity in (earnings) loss of subsidiaries

     (38.0     (65.7     —         —         103.7     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     38.0     38.0     (0.3     66.0     (103.7     38.0

Net income (loss) attributable to noncontrolling interests

     —         —         —         0.4     —         0.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Infor, Inc.

   $ 38.0   $ 38.0   $ (0.3   $ 65.6   $ (103.7   $ 37.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

39


Table of Contents
     Nine Months Ended January 31, 2018  
(in millions)    Infor, Inc.
(Parent)
    Infor (US), Inc.
(Subsidiary Issuer)
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Revenues:

            

Software license fees

   $ —       $ 107.9   $ 4.6   $ 113.4   $ —       $ 225.9

SaaS subscriptions

     —         323.2     6.8     63.3     —         393.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software license fees and subscriptions

     —         431.1     11.4     176.7     —         619.2

Product updates and support fees

     —         607.4     25.3     430.0     —         1,062.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software revenues

     —         1,038.5     36.7     606.7     —         1,681.9

Consulting services and other fees

     —         286.7     16.6     326.4     —         629.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —         1,325.2     53.3     933.1     —         2,311.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

            

Cost of software license fees

     —         19.2     0.1     14.0     —         33.3

Cost of SaaS subscriptions

     —         144.2     0.6     24.3     —         169.1

Cost of product updates and support fees

     —         93.9     2.0     83.8     —         179.7

Cost of consulting services and other fees

     —         238.0     10.8     256.6     —         505.4

Sales and marketing

     —         235.5     19.0     139.7     —         394.2

Research and development

     —         219.0     4.2     143.0     —         366.2

General and administrative

     —         119.5     0.2     110.6     —         230.3

Amortization of intangible assets and depreciation

     —         174.9     0.4     31.5     —         206.8

Restructuring costs

     —         3.7     —         8.2     —         11.9

Acquisition-related and other costs

     —         19.3     —         (1.1     —         18.2

Affiliate (income) expense, net

     —         45.2     0.9     (46.1     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     —         1,312.4     38.2     764.5     —         2,115.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     —         12.8     15.1     168.6     —         196.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other expense, net:

            

Interest expense, net

     —         238.9     —         —         —         238.9

Affiliate interest (income) expense, net

     —         4.0     —         (4.0     —         —    

Other (income) expense, net

     —         224.5     0.2     37.5     —         262.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     —         467.4     0.2     33.5     —         501.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax

     —         (454.6     14.9     135.1     —         (304.6

Income tax provision (benefit)

     —         (24.9     (0.3     37.7     —         12.5

Equity in loss (earnings) of subsidiaries

     317.1     (112.6     —         —         (204.5     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     (317.1     (317.1     15.2     97.4     204.5     (317.1

Net income (loss) attributable to noncontrolling interests

     —         —         —         0.8     —         0.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Infor, Inc.

   $ (317.1   $ (317.1   $ 15.2   $ 96.6   $ 204.5   $ (317.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

   $ —       $ 125.0   $ 2.7   $ 109.9   $ —       $ 237.6

SaaS subscriptions

     —         256.6     2.3     32.0     —         290.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software license fees and subscriptions

     —         381.6     5.0     141.9     —         528.5

Product updates and support fees

     —         621.7     23.9     405.4     —         1,051.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software revenues

     —         1,003.3     28.9     547.3     —         1,579.5

Consulting services and other fees

     —         247.7     13.6     281.5     —         542.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —         1,251.0     42.5     828.8     —         2,122.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

            

Cost of software license fees

     —         28.4     —         15.8     —         44.2

Cost of SaaS subscriptions

     —         105.2     0.1     17.9     —         123.2

Cost of product updates and support fees

     —         94.9     2.1     83.5     —         180.5

Cost of consulting services and other fees

     —         191.0     10.3     229.1     —         430.4

Sales and marketing

     —         207.6     16.2     125.7     —         349.5

Research and development

     —         200.7     4.7     130.0     —         335.4

General and administrative

     —         98.8     0.2     57.6     —         156.6

Amortization of intangible assets and depreciation

     —         133.4     1.1     38.4     —         172.9

Restructuring costs

     —         6.9     —         30.6     —         37.5

Acquisition-related and other costs

     —         7.8     —         (1.2     —         6.6

Affiliate (income) expense, net

     —         39.1     (4.0     (35.1     —         —