☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
For the fiscal year ended June 30, 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: 001-38028 |
Delaware | 47-2398593 | |||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Title of each class | Name of each exchange on which registered | |
Common Stock, par value $0.01 per share | NASDAQ Global Select Market |
☐ | Large accelerated filer | ☒ | Accelerated filer | |||||
☐ | Non-accelerated filer | (Do not check if a smaller reporting company) | ☐ | Smaller reporting company | ||||
☐ | Emerging growth company |
Page | ||
• | general economic conditions; |
• | a reduced demand for our information technology solutions; |
• | a decrease in spending on technology products by our federal and local government clients; |
• | the availability of products from vendor partners and maintenance of vendor relationships; |
• | the role of rapid innovation and the introduction of new products in our industry; |
• | our ability to compete effectively in a competitive industry; |
• | the termination of our client contracts; |
• | the failure to effectively develop, maintain and operate our information technology systems; |
• | our inability to adequately maintain the security of our information technology systems and clients’ confidential information; |
• | investments in new services and technologies may not be successful; |
• | the costs of litigation and losses if we infringe on the intellectual property rights of third parties; |
• | inaccurate estimates of pricing terms with our clients; |
• | failure to comply with the terms of our public sector contracts; |
• | any failures by third-party contractors upon whom we rely to provide our services; |
• | any failures by third-party commercial delivery services; |
• | our inability to retain or hire skilled technology professionals and key personnel; |
• | the disruption to our supply chain if suppliers fail to provide products; |
• | the risks associated with accounts receivables and inventory exposure; |
• | the failure to realize the entire investment in leased equipment; |
• | our inability to realize the full amount of our backlog; |
• | our acquisitions may not achieve expectations; |
• | fluctuations in our operating results; |
• | potential litigation and claims; |
• | changes in accounting rules, tax legislation and other legislation; |
• | increased costs of labor and benefits; |
• | our inability to focus our resources, maintain our business structure and manage costs effectively; |
• | the failure to deliver technical support services of sufficient quality; |
• | the failure to meet our growth objectives and strategies; |
• | ineffectiveness of our internal controls; |
• | the risks pertaining to our substantial level of indebtedness; |
• | the ability to manage cybersecurity risks; and |
• | the other factors discussed in the section of this Annual Report entitled “Risk Factors.” |
• | Large Service Providers: Global service providers have scale and consulting capabilities but are not middle-market focused and generally do not provide all aspects of the IT value chain. We combine the scale, talent, technical expertise, and high-value services of the large service providers with end-to-end solution capabilities and a strategic middle-market focus. |
• | Local and Regional Providers: Though local and regional providers often have strong local relationships, many of them have historically been focused on one or two IT areas. As IT complexity has increased, these providers have attempted to transition from a siloed approach toward a multi-technology and multi-vendor approach. However, the relatively small scale of local and regional providers makes investments across multiple, integrated technology stacks financially prohibitive and, as a result, these competitors are increasingly getting left behind as they lack the professional and managed services capabilities in digital infrastructure, cloud, IoT, and cybersecurity. Also, lack of capability and financial scale often excludes these providers from executing on larger, multi-geography projects and relationships and developing advanced services. |
• | Boutique Specialists: Many boutique specialists focus in one distinct solution area rather than developing deep capabilities across the full range of IT challenges facing clients today. These firms are also typically sub-scale in terms of geographic coverage limiting their abilities to service larger, multi-location/multi-national customers. Our technical know-how across technologies and vendors, combined with our scale and broad client base, gives us the ability to deliver end-to-end offerings to much larger and more diverse end markets. As technologies continue to grow in complexity and interdependency, these providers will struggle to service client’s needs. |
• | Resellers: Rather than focusing principally on product resale, we focus on consulting, solution delivery, and ongoing services that allow us to develop long-lasting client relationships. Our lifecycle engagement model focuses on a holistic approach that includes high-value services and end-to-end solutions. |
• | conduct business with our clients, including delivering services and solutions; |
• | manage our inventory and accounts receivable; |
• | purchase, sell, ship and invoice our products and services efficiently and on a timely basis; and |
• | maintain our cost-efficient operating model while expanding our business in revenue and in scale. |
• | the imposition of additional trade law provisions or regulations; |
• | the imposition of additional duties, tariffs and other charges on imports and exports; |
• | foreign currency fluctuations; |
• | natural disasters affecting any of our suppliers’ facilities; |
• | restrictions on the transfer of funds; |
• | dependence on an international supply chain; |
• | the financial instability or bankruptcy of manufacturers; |
• | significant labor disputes, such as strikes; and |
• | product or component shortages or significant failures. |
• | our operating and financial performance and prospects; |
• | our quarterly or annual earnings or those of other companies in our industry; |
• | changes in earnings estimates or recommendations by securities analysts, if any, or termination of coverage of our common stock by securities analysts; |
• | our failure to meet estimates or forecasts made by securities analysts, if any; |
• | conditions that impact demand for our products and services; |
• | future announcements concerning our business or our competitors’ businesses; |
• | the public’s reaction to our press releases, other public announcements and filings with the SEC; |
• | market and industry perception of our success, or lack thereof, in pursuing our growth strategy; |
• | strategic actions by us or our competitors, such as acquisitions or restructurings; |
• | changes in government and environmental regulation; |
• | changes in accounting standards, policies, guidance, interpretations or principles; |
• | arrival and departure of key personnel; |
• | the number of our publicly traded shares; |
• | sales of common stock by us, the Apollo Funds, members of our management team or any other party; |
• | adverse resolution of new or pending litigation against us; |
• | changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events; and |
• | material weakness in our internal controls over financial reporting. |
• | that a majority of the Board of Directors consists of independent directors, as defined under the rules of the NASDAQ; |
• | that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and |
• | that we have a nominating and governance committee composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. |
• | classify our Board of Directors so that only some of our directors are elected each year; |
• | do not permit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; |
• | delegate the sole power of a majority of the Board of Directors to fix the number of directors; |
• | provide the power of our Board of Directors to fill any vacancy on our board, whether such vacancy occurs as a result of an increase in the number of directors or otherwise; |
• | authorize the issuance of “blank check” preferred stock without any need for action by stockholders; |
• | impose limitations on the ability of our stockholders to call special meetings and act by written consent; and |
• | establish advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted on by stockholders at stockholders’ meetings. |
• | limit our ability to obtain additional financing in the future for working capital, capital expenditures and acquisitions; |
• | make it more difficult for us to satisfy our obligations under the terms of our financing arrangements; |
• | make it more difficult to comply with the obligations of our debt instruments, including restrictive covenants and borrowing conditions, the failure of which could result in an event of default under the agreements governing our other indebtedness; |
• | limit our ability to refinance our indebtedness on terms acceptable to us or at all; |
• | limit our flexibility to plan for and to adjust to changing business and market conditions in the industry in which we operate and increase our vulnerability to general adverse economic and industry conditions; |
• | require us to dedicate a substantial portion of our cash flow from operations to make interest and principal payments on our debt, thereby limiting the availability of our cash flow to fund future investments, capital expenditures, working capital, business activities, acquisitions and other general corporate requirements; |
• | limit our ability to obtain additional financing for working capital and capital expenditures to fund growth or for general corporate purposes, even when necessary to maintain adequate liquidity, particularly if any ratings assigned to our debt securities by rating organizations were revised downward; |
• | subject us to higher levels of indebtedness than our competitors, which may cause a competitive disadvantage and may reduce our flexibility in responding to increased competition; and |
• | expose us to the risk of increased interest rates, as certain of our borrowings, including borrowings under our Credit Agreement and our accounts receivable securitization facility, are at variable rates of interest. |
• | borrow money or guarantee debt; |
• | create liens; |
• | pay dividends on or redeem or repurchase stock or other securities; |
• | make investments and acquisitions; |
• | enter into or permit to exist contractual limits on the ability of our subsidiaries to pay dividends to us; |
• | enter into new lines of business; |
• | enter into transactions with affiliates; and |
• | sell assets or merge with other companies. |
• | sales of assets; |
• | sales of equity; |
• | reduction or delay of capital expenditures, strategic acquisitions, investments and alliances; or |
• | negotiations with our lenders to restructure the applicable debt. |
Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Price Range of Common Stock | |||||||
High | Low | ||||||
Fiscal Year Ended June 30, 2017 | |||||||
Third Quarter (from March 10, 2017) | $ | 15.59 | $ | 13.26 | |||
Fourth Quarter | 16.38 | 12.75 | |||||
Fiscal Year Ended June 30, 2018 | |||||||
First Quarter | $ | 15.18 | $ | 12.75 | |||
Second Quarter | 19.49 | 13.98 | |||||
Third Quarter | 19.74 | 13.87 | |||||
Fourth Quarter | 16.51 | 11.97 |
Index | 3/10/2017 | 3/31/2017 | 6/30/2017 | 9/30/2017 | 12/31/2017 | 3/31/2018 | 6/30/2018 | |||||||||||||||||||||
Presidio, Inc. | $ | 100.00 | $ | 108.67 | $ | 100.42 | $ | 99.30 | $ | 134.53 | $ | 109.75 | $ | 91.93 | ||||||||||||||
S&P 1500 Index | $ | 100.00 | $ | 99.80 | $ | 102.76 | $ | 107.32 | $ | 114.33 | $ | 113.51 | $ | 117.66 | ||||||||||||||
S&P 1500 IT Consulting & Other Services Index | $ | 100.00 | $ | 98.13 | $ | 96.65 | $ | 99.68 | $ | 107.25 | $ | 110.83 | $ | 109.25 |
Predecessor | Successor | |||||||||||||||||||||||
Fiscal Year Ended June 30, 2014 | July 1, 2014 to February 1, 2015 | November 20, 2014 to June 30, 2015 | Fiscal Year Ended June 30, | |||||||||||||||||||||
2016 | 2017 | 2018 | ||||||||||||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||||||||||||||
Revenue | $ | 2,266.0 | $ | 1,392.8 | $ | 985.5 | $ | 2,714.9 | $ | 2,817.6 | $ | 2,858.0 | ||||||||||||
Cost of revenue | 1,812.0 | 1,103.5 | 788.5 | 2,174.3 | 2,231.7 | 2,273.0 | ||||||||||||||||||
Gross Margin | 454.0 | 289.3 | 197.0 | 540.6 | 585.9 | 585.0 | ||||||||||||||||||
Operating expenses | 362.5 | 262.5 | 186.4 | 441.7 | 477.8 | 470.0 | ||||||||||||||||||
Operating income | 91.5 | 26.8 | 10.6 | 98.9 | 108.1 | 115.0 | ||||||||||||||||||
Interest expense | 34.3 | 21.4 | 46.7 | 81.9 | 72.5 | 46.0 | ||||||||||||||||||
Loss on disposal of business | — | — | — | 6.8 | — | — | ||||||||||||||||||
Loss on extinguishment of debt | 2.7 | 7.5 | 0.7 | 9.7 | 28.5 | 14.8 | ||||||||||||||||||
Other (income) expense, net | (2.4 | ) | (0.2 | ) | 0.1 | 0.1 | 0.1 | (0.3 | ) | |||||||||||||||
Total interest and other expense | 34.6 | 28.7 | 47.5 | 98.5 | 101.1 | 60.5 | ||||||||||||||||||
Income (loss) before income taxes | 56.9 | (1.9 | ) | (36.9 | ) | 0.4 | 7.0 | 54.5 | ||||||||||||||||
Income tax expense (benefit) | 24.4 | 3.2 | (12.6 | ) | 3.8 | 2.6 | (79.7 | ) | ||||||||||||||||
Net income (loss) | $ | 32.5 | $ | (5.1 | ) | $ | (24.3 | ) | $ | (3.4 | ) | $ | 4.4 | $ | 134.2 | |||||||||
Earnings (loss) per share: | ||||||||||||||||||||||||
Basic | $ | (0.35 | ) | $ | (0.05 | ) | $ | 0.06 | $ | 1.46 | ||||||||||||||
Diluted | $ | (0.35 | ) | $ | (0.05 | ) | $ | 0.05 | $ | 1.39 | ||||||||||||||
Weighted average shares used to compute earnings (loss) per share: | ||||||||||||||||||||||||
Basic | 70,010,538 | 71,117,962 | 77,517,700 | 91,891,295 | ||||||||||||||||||||
Diluted | 70,010,538 | 71,117,962 | 81,861,839 | 96,227,578 | ||||||||||||||||||||
Statement of cash flows data: | ||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 53.3 | $ | 74.5 | $ | (1.6 | ) | $ | 86.1 | $ | 51.0 | $ | 192.0 | |||||||||||
Net cash used in investing activities | (74.4 | ) | (71.3 | ) | (678.9 | ) | (322.0 | ) | (101.6 | ) | (162.1 | ) | ||||||||||||
Net borrowings (repayments) on floor plan facility | 20.5 | (29.0 | ) | 50.8 | 20.9 | 41.6 | (54.3 | ) | ||||||||||||||||
Other financing activities | 0.5 | 24.3 | 718.0 | 159.7 | 3.5 | 33.9 | ||||||||||||||||||
Net cash provided by (used in) financing activities | 21.0 | (4.7 | ) | 768.8 | 180.6 | 45.1 | (20.4 | ) | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | (0.1 | ) | $ | (1.5 | ) | $ | 88.3 | $ | (55.3 | ) | $ | (5.5 | ) | $ | 9.5 | ||||||||
Other financial data: | ||||||||||||||||||||||||
Adjusted Revenue (1) | 2,149.9 | 1,323.4 | 940.8 | 2,683.7 | 2,818.2 | 2,858.1 | ||||||||||||||||||
Adjusted EBITDA (2) | 167.0 | 116.2 | 68.6 | 211.1 | 226.1 | 223.7 | ||||||||||||||||||
Adjusted EBITDA margin (2) | 7.8 | % | 8.8 | % | 7.3 | % | 7.9 | % | 8.0 | % | 7.8 | % | ||||||||||||
Adjusted Net Income (3) | 81.7 | 58.6 | 13.4 | 81.2 | 100.4 | 123.0 | ||||||||||||||||||
Adjusted Net Income per share: | ||||||||||||||||||||||||
Basic | $ | 0.19 | $ | 1.14 | $ | 1.30 | $ | 1.34 | ||||||||||||||||
Diluted | $ | 0.19 | $ | 1.11 | $ | 1.23 | $ | 1.28 | ||||||||||||||||
Weighted average shares used to compute Adjusted Net Income per share: | ||||||||||||||||||||||||
Basic | 70,010,538 | 71,117,962 | 77,517,700 | 91,891,295 | ||||||||||||||||||||
Diluted | 71,311,414 | 72,830,202 | 81,861,839 | 96,227,578 |
Predecessor | Successor | |||||||||||||||||||
As of June 30, 2014 | As of June 30, 2015 | As of June 30, 2016 | As of June 30, 2017 | As of June 30, 2018 | ||||||||||||||||
Consolidated Balance Sheet (at the end of the period): | ||||||||||||||||||||
Cash and cash equivalents | $ | 8.5 | $ | 88.3 | $ | 33.0 | $ | 27.5 | $ | 37.0 | ||||||||||
Total assets | 1,545.0 | 2,444.4 | 2,623.1 | 2,650.7 | 2,694.3 | |||||||||||||||
Long-term debt, including current maturities | 618.7 | 933.7 | 1,038.0 | 730.7 | 671.2 | |||||||||||||||
Total liabilities | 1,448.5 | 2,108.6 | 2,276.2 | 2,047.8 | 1,938.2 | |||||||||||||||
Total stockholders’ equity | 96.5 | 335.8 | 346.9 | 602.9 | 756.1 | |||||||||||||||
Cash dividends declared per common share | $ | 0.46 | $ | — | $ | — | $ | — | $ | — |
(1) | Adjusted Revenue is a non-GAAP financial measure. We believe Adjusted Revenue provides supplemental information with respect to our revenue activity associated with our ongoing operations. We define Adjusted Revenue as revenue adjusted to exclude (i) revenue generated by disposed businesses and (ii) noncash purchase accounting adjustments to revenue as a result of our acquisitions. The following table presents a reconciliation of Adjusted Revenue from Revenue: |
Predecessor | Successor | |||||||||||||||||||||||
Fiscal Year Ended June 30, 2014 | July 1, 2014 to February 1, 2015 | November 20, 2014 to June 30, 2015 | Fiscal Year Ended June 30, | |||||||||||||||||||||
2016 | 2017 | 2018 | ||||||||||||||||||||||
Revenue | $ | 2,266.0 | $ | 1,392.8 | $ | 985.5 | $ | 2,714.9 | $ | 2,817.6 | $ | 2,858.0 | ||||||||||||
Adjustments: | ||||||||||||||||||||||||
Revenue from disposed business (a) | (116.1 | ) | (69.4 | ) | (46.0 | ) | (32.8 | ) | — | — | ||||||||||||||
Purchase accounting adjustments (b) | — | — | 1.3 | 1.6 | 0.6 | 0.1 | ||||||||||||||||||
Total adjustments | (116.1 | ) | (69.4 | ) | (44.7 | ) | (31.2 | ) | 0.6 | 0.1 | ||||||||||||||
Adjusted Revenue | $ | 2,149.9 | $ | 1,323.4 | $ | 940.8 | $ | 2,683.7 | $ | 2,818.2 | $ | 2,858.1 |
(a) | “Revenue from disposed business” represents the removal of the historical revenue of Atlantix prior to the sale of the business. |
(b) | “Purchase accounting adjustments” include the noncash reduction to revenue associated with deferred revenue step down fair value adjustments in connection with purchase accounting. |
(2) | Adjusted EBITDA is a non-GAAP financial measure. We believe Adjusted EBITDA provides helpful information with respect to our operating performance as viewed by management, including a view of our business that is not dependent on (a) the impact of our capitalization structure and (b) items that are not part of our day-to-day operations. We define Adjusted EBITDA as net income (loss) plus (i) total depreciation and amortization, (ii) interest and other (income) expense and (iii) income tax expense (benefit), and further adjusted to eliminate noncash share-based compensation expense, purchase accounting adjustments, transaction costs, other costs and earnings from disposed business. We define Adjusted EBITDA margin as the ratio of Adjusted EBITDA to Adjusted Revenue. The following table presents a reconciliation of net income (loss) to Adjusted EBITDA: |
Predecessor | Successor | |||||||||||||||||||||||
Fiscal Year Ended June 30, 2014 | July 1, 2014 to February 1, 2015 | November 20, 2014 to June 30, 2015 | Fiscal Year Ended June 30, | |||||||||||||||||||||
2016 | 2017 | 2018 | ||||||||||||||||||||||
Adjusted EBITDA Reconciliation: | ||||||||||||||||||||||||
Net income (loss) | $ | 32.5 | $ | (5.1 | ) | $ | (24.3 | ) | $ | (3.4 | ) | $ | 4.4 | $ | 134.2 | |||||||||
Total depreciation and amortization (a) | 50.6 | 24.9 | 32.1 | 81.7 | 87.2 | 89.5 | ||||||||||||||||||
Interest and other (income) expense | 34.6 | 28.7 | 47.5 | 98.5 | 101.1 | 60.5 | ||||||||||||||||||
Income tax expense (benefit) | 24.4 | 3.2 | (12.6 | ) | 3.8 | 2.6 | (79.7 | ) | ||||||||||||||||
EBITDA | 142.1 | 51.7 | 42.7 | 180.6 | 195.3 | 204.5 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Share-based compensation expense | 5.5 | 20.1 | 1.0 | 2.2 | 10.2 | 7.0 | ||||||||||||||||||
Purchase accounting adjustments (b) | — | — | 4.9 | 3.9 | 1.0 | 0.3 | ||||||||||||||||||
Transaction costs (c) | 14.8 | 42.6 | 21.3 | 20.6 | 14.8 | 10.8 | ||||||||||||||||||
Other costs (d) | 13.0 | 4.5 | 1.9 | 5.6 | 4.8 | 1.1 | ||||||||||||||||||
Earnings from disposed business (e) | (8.4 | ) | (2.7 | ) | (3.2 | ) | (1.8 | ) | — | — | ||||||||||||||
Total adjustments | 24.9 | 64.5 | 25.9 | 30.5 | 30.8 | 19.2 | ||||||||||||||||||
Adjusted EBITDA | $ | 167.0 | $ | 116.2 | $ | 68.6 | $ | 211.1 | $ | 226.1 | $ | 223.7 |
(a) | “Total depreciation and amortization” equals the sum of (i) depreciation and amortization within total operating expenses and (ii) depreciation and amortization recorded as part of cost of revenue within our consolidated financial statements. |
(b) | “Purchase accounting adjustments” include charges associated with noncash adjustments to acquired assets and liabilities in connection with purchase accounting, such as recognition of increased cost of revenue in connection with an inventory step up fair value adjustment, recognition of reduced revenue in connection with a deferred revenue step down fair value adjustment and recognition of increased office rent expense associated with a fair value adjustment to the liabilities associated with deferred rent. |
(c) | “Transaction costs” (1) of $14.8 million for the fiscal year ended June 30, 2014 includes acquisition-related expenses of $0.8 million related to stay and retention bonuses, $0.3 million related to severance charges, $0.7 million related to transaction-related legal, accounting and tax fees and $13.0 million related to professional fees and expenses associated with debt refinancings; (2) of $42.6 million for the Predecessor period from July 1, 2014 to February 1, 2015 includes acquisition-related expenses of $0.3 million related to stay and retention bonuses, $0.2 million related to acquisition-related severance charges, $31.2 million related to transaction-related legal, accounting and tax fees in connection with the Presidio Acquisition and $10.9 million related to professional fees and expenses associated with debt refinancings; (3) of $21.3 million for the Successor period from November 20, 2014 to June 30, 2015 includes acquisition-related expenses of $0.6 million related to stay and retention bonuses, $0.6 million related to severance charges, $18.5 million related to transaction-related legal, accounting and tax fees in connection with the Presidio Acquisition and $1.6 million related to professional fees and expenses associated with debt refinancings; (4) of $20.6 million for the fiscal year ended June 30, 2016 includes acquisition-related expenses of $3.0 million related to stay and retention bonuses, $1.1 million related to severance charges, $8.7 million related to transaction-related advisory and diligence fees, $6.0 million related to transaction-related legal, accounting and tax fees and $1.8 million related to professional fees and expenses associated with debt refinancings; (5) of $14.8 million for the fiscal year ended June 30, 2017 includes acquisition-related expenses of $7.4 million related to stay and retention bonuses, $5.2 million related to transaction-related advisory and diligence fees, $0.5 million related to transaction-related legal, accounting and tax fees and $1.7 million related to professional fees and expenses associated with debt refinancings; and (6) of $10.8 million for the fiscal year ended June 30, 2018 includes acquisition-related expenses of $5.9 million related to stay, retention and earnout bonuses, $1.4 million related to transaction-related advisory and diligence fees primarily associated with the November 2017 secondary offering of our common stock, $0.6 million related to transaction-related legal, accounting and tax fees and $2.9 million related to professional fees and expenses associated with debt refinancings. |
(d) | “Other costs” (1) of $13.0 million for the fiscal year ended June 30, 2014 includes expenses of $3.7 million associated with the integration of previously acquired managed services platforms into one system, certain expenses of $1.1 million related to unusual office start-up development costs, an unusual and non-recurring loss of $1.7 million related to an Atlantix customer receivable, certain unusual legal expenses of $2.2 million, $2.1 million related to payments to our former sponsor for advisory and consulting services and $2.2 million related to certain acquisition-related integration and related costs; (2) of $4.5 million for the Predecessor period from July 1, 2014 to February 1, 2015 includes expenses of $2.2 million associated with the integration of previously acquired managed services platforms into one system, certain expenses of $0.4 million related to unusual office start-up development costs, $1.6 million related to payments to our former sponsor for advisory and consulting services and $0.3 million related to other non-recurring items; (3) of $1.9 million for the Successor period from November 20, 2014 to June 30, 2015 includes expenses of $1.0 million associated with the integration of previously acquired managed services platforms into one system, $0.7 million related to certain non-recurring costs incurred in the development of our new cloud service offerings and certain unusual legal expenses of $0.2 million; (4) of $5.6 million for the fiscal year ended June 30, 2016 includes expenses of $0.5 million associated with the integration of previously acquired managed services platforms into one system, $3.4 million related to certain non-recurring costs incurred in the development of our new cloud service offerings, certain expenses of $0.5 million related to unusual office start-up development costs and certain unusual legal expenses of $1.2 million; (5) of $4.8 million for the fiscal year ended June 30, 2017 includes $3.6 million related to certain non-recurring costs incurred in the development of our new cloud service offerings, certain unusual legal expenses of $0.9 million and $0.3 million related to other non-recurring items; and (6) of $1.1 million for the fiscal year ended June 30, 2018 primarily related to severance charges associated with the retirement of our former Chief Financial Officer. |
(e) | “Earnings from disposed business” represents the removal of the historical earnings contribution of Atlantix prior to the sale of the business. |
Predecessor | Successor | |||||||||||||||||||||||
Fiscal Year Ended June 30, 2014 | July 1, 2014 to February 1, 2015 | November 20, 2014 to June 30, 2015 | Fiscal Year Ended June 30, | |||||||||||||||||||||
2016 | 2017 | 2018 | ||||||||||||||||||||||
Adjusted Net Income reconciliation: | ||||||||||||||||||||||||
Net income (loss) | $ | 32.5 | $ | (5.1 | ) | $ | (24.3 | ) | $ | (3.4 | ) | $ | 4.4 | $ | 134.2 | |||||||||
Adjustments: | ||||||||||||||||||||||||
Amortization of intangible assets | 38.3 | 18.3 | 26.4 | 67.2 | 73.6 | 74.4 | ||||||||||||||||||
Amortization of debt issuance costs | 4.4 | 2.4 | 2.7 | 7.6 | 6.5 | 4.5 | ||||||||||||||||||
Loss on disposal of business | — | — | — | 6.8 | — | — | ||||||||||||||||||
Loss on extinguishment of debt | 2.7 | 7.5 | 0.7 | 9.7 | 28.5 | 14.8 | ||||||||||||||||||
Share-based compensation expense | 5.5 | 20.1 | 1.0 | 2.2 | 10.2 | 7.0 | ||||||||||||||||||
Purchase accounting adjustments (a) | — | — | 4.9 | 3.9 | 1.0 | 0.3 | ||||||||||||||||||
Transaction costs (b) | 14.8 | 42.6 | 21.3 | 20.6 | 14.8 | 10.8 | ||||||||||||||||||
Other costs (c) | 13.0 | 4.5 | 1.9 | 5.6 | 4.8 | 1.1 | ||||||||||||||||||
Earnings from disposed business (d) | (8.4 | ) | (2.7 | ) | (3.2 | ) | (1.8 | ) | — | — | ||||||||||||||
Revaluation of federal deferred taxes | — | — | — | — | — | (94.1 | ) | |||||||||||||||||
Income tax impact of adjustments (e) | (21.1 | ) | (29.0 | ) | (18.0 | ) | (37.2 | ) | (43.4 | ) | (30.0 | ) | ||||||||||||
Total adjustments | 49.2 | 63.7 | 37.7 | 84.6 | 96.0 | (11.2 | ) | |||||||||||||||||
Adjusted Net Income | $ | 81.7 | $ | 58.6 | $ | 13.4 | $ | 81.2 | $ | 100.4 | $ | 123.0 |
(a) | “Purchase accounting adjustments” include charges associated with noncash adjustments to acquired assets and liabilities in connection with purchase accounting, such as recognition of increased cost of revenue in connection with an inventory step up fair value adjustment, recognition of reduced revenue in connection with a deferred revenue step down fair value adjustment and recognition of increased office rent expense associated with a fair value adjustment to the liabilities associated with deferred rent. |
(b) | “Transaction costs” (1) of $14.8 million for the fiscal year ended June 30, 2014 includes acquisition-related expenses of $0.8 million related to stay and retention bonuses, $0.3 million related to severance charges, $0.7 million related to transaction-related legal, accounting and tax fees and $13.0 million related to professional fees and expenses associated with debt refinancings; (2) of $42.6 million for the Predecessor period from July 1, 2014 to February 1, 2015 includes acquisition-related expenses of $0.3 million related to stay and retention bonuses, $0.2 million related to acquisition-related severance charges, $31.2 million related to transaction-related legal, accounting and tax fees in connection with the Presidio Acquisition and $10.9 million related to professional fees and expenses associated with debt refinancings; (3) of $21.3 million for the Successor period from November 20, 2014 to June 30, 2015 includes acquisition-related expenses of $0.6 million related to stay and retention bonuses, $0.6 million related to severance charges, $18.5 million related to transaction-related legal, accounting and tax fees in connection with the Presidio Acquisition and $1.6 million related to professional fees and expenses associated with debt refinancings; (4) of $20.6 million for the fiscal year ended June 30, 2016 includes acquisition-related expenses of $3.0 million related to stay and retention bonuses, $1.1 million related to severance charges, $8.7 million related to transaction-related advisory and diligence fees, $6.0 million related to transaction-related legal, accounting and tax fees and $1.8 million related to professional fees and expenses associated with debt refinancings; (5) of $14.8 million for the fiscal year ended June 30, 2017 includes acquisition-related expenses of $7.4 million related to stay and retention bonuses, $5.2 million related to transaction-related advisory and |
(c) | “Other costs” (1) of $13.0 million for the fiscal year ended June 30, 2014 includes expenses of $3.7 million associated with the integration of previously acquired managed services platforms into one system, certain expenses of $1.1 million related to unusual office start-up development costs, an unusual and non-recurring loss of $1.7 million related to an Atlantix customer receivable, certain unusual legal expenses of $2.2 million, $2.1 million related to payments to our former sponsor for advisory and consulting services and $2.2 million related to certain acquisition-related integration and related costs; (2) of $4.5 million for the Predecessor period from July 1, 2014 to February 1, 2015 includes expenses of $2.2 million associated with the integration of previously acquired managed services platforms into one system, certain expenses of $0.4 million related to unusual office start-up development costs, $1.6 million related to payments to our former sponsor for advisory and consulting services and $0.3 million related to other non-recurring items; (3) of $1.9 million for the Successor period from November 20, 2014 to June 30, 2015 includes expenses of $1.0 million associated with the integration of previously acquired managed services platforms into one system, $0.7 million related to certain non-recurring costs incurred in the development of our new cloud service offerings and certain unusual legal expenses of $0.2 million; (4) of $5.6 million for the fiscal year ended June 30, 2016 includes expenses of $0.5 million associated with the integration of previously acquired managed services platforms into one system, $3.4 million related to certain non-recurring costs incurred in the development of our new cloud service offerings, certain expenses of $0.5 million related to unusual office start-up development costs and certain unusual legal expenses of $1.2 million; (5) of $4.8 million for the fiscal year ended June 30, 2017 includes $3.6 million related to certain non-recurring costs incurred in the development of our new cloud service offerings, certain unusual legal expenses of $0.9 million and $0.3 million related to other non-recurring items; and (6) of $1.1 million for the fiscal year ended June 30, 2018 primarily related to severance charges associated with the retirement of our former Chief Financial Officer. |
(d) | “Earnings from disposed business” represents the removal of the historical earnings contribution of Atlantix prior to the sale of the business. |
(e) | “Income tax impact of adjustments” includes an estimated tax impact of the adjustments to net income at the Company’s average statutory rate to arrive at an appropriate effective tax rate on Adjusted Net Income, except for (i) the adjustment of certain transaction costs that are permanently nondeductible for tax purposes, (ii) the impact of tax-deductible goodwill and intangible assets resulting from certain historical acquisitions and further adjusted for discrete tax items, such as the remeasurement of deferred tax liabilities due to state effective tax rate changes or the excess tax benefit related to share-based compensation activity. |
Page | |
Fiscal Year Ended June 30, | |||||||||||
(in millions) | 2016 | 2017 | 2018 | ||||||||
Total Revenue | $ | 2,714.9 | $ | 2,817.6 | $ | 2,858.0 | |||||
Gross margin | $ | 540.6 | $ | 585.9 | $ | 585.0 | |||||
Adjusted EBITDA | $ | 211.1 | $ | 226.1 | $ | 223.7 | |||||
Adjusted EBITDA margin | 7.9 | % | 8.0 | % | 7.8 | % | |||||
Net income (loss) | $ | (3.4 | ) | $ | 4.4 | $ | 134.2 | ||||
Adjusted Net Income | $ | 81.2 | $ | 100.4 | $ | 123.0 |
Fiscal Year Ended June 30, | |||||||||||
(in millions) | 2016 | 2017 | 2018 | ||||||||
Adjusted EBITDA Reconciliation: | |||||||||||
Net income (loss) | $ | (3.4 | ) | $ | 4.4 | $ | 134.2 | ||||
Total depreciation and amortization (a) | 81.7 | 87.2 | 89.5 | ||||||||
Interest and other (income) expense | 98.5 | 101.1 | 60.5 | ||||||||
Income tax expense (benefit) | 3.8 | 2.6 | (79.7 | ) | |||||||
EBITDA | 180.6 | 195.3 | 204.5 | ||||||||
Adjustments: | |||||||||||
Share-based compensation expense | 2.2 | 10.2 | 7.0 | ||||||||
Purchase accounting adjustments (b) | 3.9 | 1.0 | 0.3 | ||||||||
Transaction costs (c) | 20.6 | 14.8 | 10.8 | ||||||||
Other costs (d) | 5.6 | 4.8 | 1.1 | ||||||||
Earnings from disposed business (e) | (1.8 | ) | — | — | |||||||
Total adjustments | 30.5 | 30.8 | 19.2 | ||||||||
Adjusted EBITDA | $ | 211.1 | $ | 226.1 | $ | 223.7 |
(a) | “Total depreciation and amortization” equals the sum of (i) depreciation and amortization included within total operating expenses and (ii) depreciation and amortization recorded as part of cost of revenue within our consolidated financial statements. |
(b) | “Purchase accounting adjustments” include charges associated with noncash adjustments to acquired assets and liabilities in connection with purchase accounting, such as recognition of increased cost of revenue in connection with an inventory step up fair value adjustment, recognition of reduced revenue in connection with a deferred revenue step down fair value adjustment and recognition of increased office rent expense associated with a fair value adjustment to the liability associated with deferred rent. |
(c) | “Transaction costs” (i) of $20.6 million for the fiscal year ended June 30, 2016 includes acquisition-related expenses of $3.0 million related to stay and retention bonuses, $1.1 million related to severance charges, $8.7 million related to transaction-related advisory and diligence fees, $6.0 million related to transaction-related legal, accounting and tax fees in connection with the Presidio Acquisition and $1.8 million related to professional fees and expenses associated with debt refinancings; (ii) of $14.8 million for the fiscal year ended June 30, 2017 includes acquisition-related expenses of $7.4 million related to stay and retention bonuses, $5.2 million related to transaction-related advisory and diligence fees, $0.5 million related to transaction-related legal, accounting and tax fees and $1.7 million related to professional fees and expenses associated with debt refinancings; and (iii) of $10.8 million for the fiscal year ended June 30, 2018 includes acquisition-related expenses of $5.9 million related to stay and retention bonuses, $1.4 million related to transaction-related advisory and diligence fees primarily associated with the November 2017 secondary offering of our common stock, $0.6 million related to transaction-related legal, accounting and tax fees and $2.9 million related to professional fees and expenses associated with debt refinancings. |
(d) | “Other costs” (i) of $5.6 million for the fiscal year ended June 30, 2016 includes expenses of $3.4 million related to certain non-recurring costs incurred in the development of our new cloud service offerings, certain expenses of $0.5 million related to unusual office start-up development costs and certain unusual legal expenses of $1.2 million; (ii) of $4.8 million for the fiscal year ended June 30, 2017 includes $3.6 million related to certain non-recurring costs incurred in the development of our new cloud service offerings, certain unusual legal expenses of $0.9 million and $0.3 million related to severance, (iii) of $1.1 million for the fiscal year ended June 30, 2018 primarily related to severance charges associated with the retirement of our former Chief Financial Officer. |
(e) | “Earnings from disposed business” represents the removal of the historical earnings contribution of Atlantix prior to the sale of the business. |
Fiscal Year Ended June 30, | |||||||||||
(in millions) | June 30, 2016 | June 30, 2017 | June 30, 2018 | ||||||||
Adjusted Net Income reconciliation: | |||||||||||
Net income (loss) | $ | (3.4 | ) | $ | 4.4 | $ | 134.2 | ||||
Adjustments: | |||||||||||
Amortization of intangible assets | 67.2 | 73.6 | 74.4 | ||||||||
Amortization of debt issuance costs | 7.6 | 6.5 | 4.5 | ||||||||
Loss on disposal of business | 6.8 | — | — | ||||||||
Loss on extinguishment of debt | 9.7 | 28.5 | 14.8 | ||||||||
Share-based compensation expense | 2.2 | 10.2 | 7.0 | ||||||||
Purchase accounting adjustments (a) | 3.9 | 1.0 | 0.3 | ||||||||
Transaction costs (b) | 20.6 | 14.8 | 10.8 | ||||||||
Other costs (c) | 5.6 | 4.8 | 1.1 | ||||||||
Earnings from disposed business (d) | (1.8 | ) | — | — | |||||||
Revaluation of federal deferred taxes | — | — | (94.1 | ) | |||||||
Income tax impact of adjustments (e) | (37.2 | ) | (43.4 | ) | (30.0 | ) | |||||
Total adjustments | 84.6 | 96.0 | (11.2 | ) | |||||||
Adjusted Net Income | $ | 81.2 | $ | 100.4 | $ | 123.0 |
(a) | “Purchase accounting adjustments” include charges associated with noncash adjustments to acquired assets and liabilities in connection with purchase accounting, such as recognition of increased cost of revenue in connection with an inventory step up fair value adjustment, recognition of reduced revenue in connection with a deferred revenue step down fair value adjustment and recognition of increased office rent expense associated with a fair value adjustment to the liability associated with deferred rent. |
(b) | “Transaction costs” (i) of $20.6 million for the fiscal year ended June 30, 2016 includes acquisition-related expenses of $3.0 million related to stay and retention bonuses, $1.1 million related to severance charges, $8.7 million related to transaction-related advisory and diligence fees, $6.0 million related to transaction-related legal, accounting and tax fees in connection with the Presidio Acquisition and $1.8 million related to professional fees and expenses associated with debt refinancings; (ii) of $14.8 million for the fiscal year ended June 30, 2017 includes acquisition-related expenses of $7.4 million related to stay and retention bonuses, $5.2 million related to transaction-related advisory and diligence fees, $0.5 million related to transaction-related legal, accounting and tax fees and $1.7 million related to professional fees and expenses associated with debt refinancings; and (iii) of $10.8 million for the fiscal year ended June 30, 2018 includes acquisition-related expenses of $5.9 million related to stay and retention bonuses, $1.4 million related to transaction-related advisory and diligence fees primarily associated with the November 2017 secondary offering of our common stock, $0.6 million related to transaction-related legal, accounting and tax fees and $2.9 million related to professional fees and expenses associated with debt refinancings. |
(c) | “Other costs” (i) of $5.6 million for the fiscal year ended June 30, 2016 includes expenses of $3.4 million related to certain non-recurring costs incurred in the development of our new cloud service offerings, certain expenses of $0.5 million related to unusual office start-up development costs and certain unusual legal expenses of $1.2 million; (ii) of $4.8 million for the fiscal year ended June 30, 2017 includes $3.6 million related to certain non-recurring costs incurred in the development of our new cloud service offerings, certain unusual legal expenses of $0.9 million and $0.3 million related to severance, (iii) of $1.1 million for the fiscal year ended June 30, 2018 primarily related to severance charges associated with the retirement of our former Chief Financial Officer. |
(d) | “Earnings from disposed business” represents the removal of the historical earnings contribution of Atlantix prior to the sale of the business. |
(e) | “Income tax impact of adjustments” includes an estimated tax impact of the adjustments to net income at the Company’s average statutory rate to arrive at an appropriate effective tax rate on Adjusted Net Income, except for (i) the adjustment of certain transaction costs that are permanently nondeductible for tax purposes, (ii) the impact of tax-deductible goodwill and intangible assets resulting from certain historical acquisitions and further adjusted for discrete tax items such as the remeasurement of deferred tax liabilities due to state effective tax rate changes or the excess tax benefit related to share-based compensation activity. |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2017 | 2018 | $ | % | ||||||||||
Revenue | ||||||||||||||
Product | $ | 2,373.2 | $ | 2,336.5 | $ | (36.7 | ) | (1.5 | )% | |||||
Service | 444.4 | 521.5 | 77.1 | 17.3 | % | |||||||||
Total revenue | 2,817.6 | 2,858.0 | 40.4 | 1.4 | % | |||||||||
Cost of revenue | ||||||||||||||
Product | 1,884.2 | 1,856.3 | (27.9 | ) | (1.5 | )% | ||||||||
Service | 347.5 | 416.7 | 69.2 | 19.9 | % | |||||||||
Total cost of revenue | 2,231.7 | 2,273.0 | 41.3 | 1.9 | % | |||||||||
Gross margin | 585.9 | 585.0 | (0.9 | ) | (0.2 | )% | ||||||||
Product gross margin | 489.0 | 480.2 | (8.8 | ) | (1.8 | )% | ||||||||
Service gross margin | 96.9 | 104.8 | 7.9 | 8.2 | % | |||||||||
Product gross margin % | 20.6 | % | 20.6 | % | — | % | ||||||||
Service gross margin % | 21.8 | % | 20.1 | % | (1.7 | )% | ||||||||
Total gross margin % | 20.8 | % | 20.5 | % | (0.3 | )% | ||||||||
Operating expenses | ||||||||||||||
Selling expenses | 276.2 | 273.7 | (2.5 | ) | (0.9 | )% | ||||||||
General and administrative | 105.0 | 101.8 | (3.2 | ) | (3.0 | )% | ||||||||
Transaction costs | 14.8 | 10.8 | (4.0 | ) | (27.0 | )% | ||||||||
Depreciation and amortization | 81.8 | 83.7 | 1.9 | 2.3 | % | |||||||||
Total operating expenses | 477.8 | 470.0 | (7.8 | ) | (1.6 | )% | ||||||||
Selling, general and administrative expenses % of total revenue | 13.5 | % | 13.1 | % | (0.4 | )% | ||||||||
Operating income | 108.1 | 115.0 | 6.9 | 6.4 | % | |||||||||
Interest and other (income) expense | ||||||||||||||
Interest expense | 72.5 | 46.0 | (26.5 | ) | (36.6 | )% | ||||||||
Loss on extinguishment of debt | 28.5 | 14.8 | (13.7 | ) | (48.1 | )% | ||||||||
Other (income) expense, net | 0.1 | (0.3 | ) | (0.4 | ) | n.m. | ||||||||
Total interest and other (income) expense | 101.1 | 60.5 | (40.6 | ) | (40.2 | )% | ||||||||
Income before income taxes | 7.0 | 54.5 | 47.5 | n.m. | ||||||||||
Income tax expense (benefit) | 2.6 | (79.7 | ) | (82.3 | ) | n.m. | ||||||||
Net income | $ | 4.4 | $ | 134.2 | $ | 129.8 | n.m. | |||||||
Adjusted EBITDA | $ | 226.1 | $ | 223.7 | $ | (2.4 | ) | (1.1 | )% | |||||
Adjusted Net Income | $ | 100.4 | $ | 123.0 | $ | 22.6 | 22.5 | % |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2017 | 2018 | $ | % | ||||||||||
Revenue | ||||||||||||||
Product | $ | 2,373.2 | $ | 2,336.5 | $ | (36.7 | ) | (1.5 | )% | |||||
Service | 444.4 | 521.5 | 77.1 | 17.3 | % | |||||||||
Total revenue | $ | 2,817.6 | $ | 2,858.0 | $ | 40.4 | 1.4 | % |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2017 | 2018 | $ | % | ||||||||||
Revenue by solution area | ||||||||||||||
Cloud | $ | 501.1 | $ | 450.3 | $ | (50.8 | ) | (10.1 | )% | |||||
Security | 324.1 | 376.9 | 52.8 | 16.3 | % | |||||||||
Digital Infrastructure | 1,992.4 | 2,030.8 | 38.4 | 1.9 | % | |||||||||
Total revenue | $ | 2,817.6 | $ | 2,858.0 | $ | 40.4 | 1.4 | % |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2017 | 2018 | $ | % | ||||||||||
Gross margin | ||||||||||||||
Product gross margin | $ | 489.0 | $ | 480.2 | $ | (8.8 | ) | (1.8 | )% | |||||
Service gross margin | 96.9 | 104.8 | 7.9 | 8.2 | % | |||||||||
Gross margin | $ | 585.9 | $ | 585.0 | $ | (0.9 | ) | (0.2 | )% | |||||
Product gross margin % | 20.6 | % | 20.6 | % | — | % | ||||||||
Service gross margin % | 21.8 | % | 20.1 | % | (1.7 | )% | ||||||||
Total gross margin % | 20.8 | % | 20.5 | % | (0.3 | )% |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2017 | 2018 | $ | % | ||||||||||
Operating expenses | ||||||||||||||
Selling expenses | $ | 276.2 | $ | 273.7 | $ | (2.5 | ) | (0.9 | )% | |||||
General and administrative | 105.0 | 101.8 | (3.2 | ) | (3.0 | )% | ||||||||
Selling, general and administrative costs | 381.2 | 375.5 | (5.7 | ) | (1.5 | )% | ||||||||
Transaction costs | 14.8 | 10.8 | (4.0 | ) | (27.0 | )% | ||||||||
Depreciation and amortization | 81.8 | 83.7 | 1.9 | 2.3 | % | |||||||||
Total operating expenses | $ | 477.8 | $ | 470.0 | $ | (7.8 | ) | (1.6 | )% | |||||
Selling, general and administrative expenses % of total revenue | 13.5 | % | 13.1 | % | (0.4 | )% |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2017 | 2018 | $ | % | ||||||||||
Interest and other (income) expense | ||||||||||||||
Interest expense | $ | 72.5 | $ | 46.0 | $ | (26.5 | ) | (36.6 | )% | |||||
Loss on extinguishment of debt | 28.5 | 14.8 | (13.7 | ) | (48.1 | )% | ||||||||
Other (income) expense, net | 0.1 | (0.3 | ) | (0.4 | ) | n.m. | ||||||||
Total interest and other (income) expense | $ | 101.1 | $ | 60.5 | $ | (40.6 | ) | (40.2 | )% |
Fiscal Year Ended June 30, | Change | ||||||||||||
(in millions) | 2017 | 2018 | $ | % | |||||||||
Income before income taxes | $ | 7.0 | $ | 54.5 | $ | 47.5 | n.m. | ||||||
Income tax expense (benefit) | 2.6 | (79.7 | ) | (82.3 | ) | n.m. | |||||||
Net income | $ | 4.4 | $ | 134.2 | $ | 129.8 | n.m. |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2016 | 2017 | $ | % | ||||||||||
Revenue | ||||||||||||||
Product | $ | 2,319.8 | $ | 2,373.2 | $ | 53.4 | 2.3 | % | ||||||
Service | 395.1 | 444.4 | 49.3 | 12.5 | % | |||||||||
Total revenue | 2,714.9 | 2,817.6 | 102.7 | 3.8 | % | |||||||||
Cost of revenue | ||||||||||||||
Product | 1,866.5 | 1,884.2 | 17.7 | 0.9 | % | |||||||||
Service | 307.8 | 347.5 | 39.7 | 12.9 | % | |||||||||
Total cost of revenue | 2,174.3 | 2,231.7 | 57.4 | 2.6 | % | |||||||||
Gross margin | 540.6 | 585.9 | 45.3 | 8.4 | % | |||||||||
Product gross margin | 453.3 | 489.0 | 35.7 | 7.9 | % | |||||||||
Service gross margin | 87.3 | 96.9 | 9.6 | 11.0 | % | |||||||||
Product gross margin % | 19.5 | % | 20.6 | % | 1.1 | % | ||||||||
Service gross margin % | 22.1 | % | 21.8 | % | (0.3 | )% | ||||||||
Total gross margin % | 19.9 | % | 20.8 | % | 0.9 | % | ||||||||
Operating expenses | ||||||||||||||
Selling expenses | 248.2 | 276.2 | 28.0 | 11.3 | % | |||||||||
General and administrative | 96.9 | 105.0 | 8.1 | 8.4 | % | |||||||||
Transaction costs | 20.6 | 14.8 | (5.8 | ) | (28.2 | )% | ||||||||
Depreciation and amortization | 76.0 | 81.8 | 5.8 | 7.6 | % | |||||||||
Total operating expenses | 441.7 | 477.8 | 36.1 | 8.2 | % | |||||||||
Selling, general and administrative expenses % of total revenue | 12.7 | % | 13.5 | % | 0.8 | % | ||||||||
Operating income | 98.9 | 108.1 | 9.2 | 9.3 | % | |||||||||
Interest and other (income) expense | ||||||||||||||
Interest expense | 81.9 | 72.5 | (9.4 | ) | (11.5 | )% | ||||||||
Loss on disposal of business | 6.8 | — | (6.8 | ) | (100.0 | )% | ||||||||
Loss on extinguishment of debt | 9.7 | 28.5 | 18.8 | 193.8 | % | |||||||||
Other (income) expense, net | 0.1 | 0.1 | — | — | % | |||||||||
Total interest and other (income) expense | 98.5 | 101.1 | 2.6 | 2.6 | % | |||||||||
Income before income taxes | 0.4 | 7.0 | 6.6 | n.m. | ||||||||||
Income tax expense | 3.8 | 2.6 | (1.2 | ) | (31.6 | )% | ||||||||
Net income (loss) | $ | (3.4 | ) | $ | 4.4 | $ | 7.8 | (229.4 | )% | |||||
Adjusted EBITDA | $ | 211.1 | $ | 226.1 | $ | 15.0 | 7.1 | % | ||||||
Adjusted Net Income | $ | 81.2 | $ | 100.4 | $ | 19.2 | 23.6 | % |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2016 | 2017 | $ | % | ||||||||||
Revenue | ||||||||||||||
Product | $ | 2,319.8 | $ | 2,373.2 | $ | 53.4 | 2.3 | % | ||||||
Service | 395.1 | 444.4 | 49.3 | 12.5 | % | |||||||||
Total revenue | $ | 2,714.9 | $ | 2,817.6 | $ | 102.7 | 3.8 | % |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2016 | 2017 | $ | % | ||||||||||
Revenue by solution area | ||||||||||||||
Cloud | $ | 391.7 | $ | 501.1 | $ | 109.4 | 27.9 | % | ||||||
Security | 249.4 | 324.1 | 74.7 | 30.0 | % | |||||||||
Digital Infrastructure | 2,073.8 | 1,992.4 | (81.4 | ) | (3.9 | )% | ||||||||
Total revenue | $ | 2,714.9 | $ | 2,817.6 | $ | 102.7 | 3.8 | % |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2016 | 2017 | $ | % | ||||||||||
Gross margin | ||||||||||||||
Product gross margin | $ | 453.3 | $ | 489.0 | $ | 35.7 | 7.9 | % | ||||||
Service gross margin | 87.3 | 96.9 | 9.6 | 11.0 | % | |||||||||
Gross margin | $ | 540.6 | $ | 585.9 | $ | 45.3 | 8.4 | % | ||||||
Product gross margin % | 19.5 | % | 20.6 | % | 1.1 | % | ||||||||
Service gross margin % | 22.1 | % | 21.8 | % | (0.3 | )% | ||||||||
Total gross margin % | 19.9 | % | 20.8 | % | 0.9 | % |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2016 | 2017 | $ | % | ||||||||||
Operating expenses | ||||||||||||||
Selling expenses | $ | 248.2 | $ | 276.2 | $ | 28.0 | 11.3 | % | ||||||
General and administrative | 96.9 | 105.0 | 8.1 | 8.4 | % | |||||||||
Selling, general and administrative costs | 345.1 | 381.2 | 36.1 | 10.5 | % | |||||||||
Transaction costs | 20.6 | 14.8 | (5.8 | ) | (28.2 | )% | ||||||||
Depreciation and amortization | 76.0 | 81.8 | 5.8 | 7.6 | % | |||||||||
Total operating expenses | $ | 441.7 | $ | 477.8 | $ | 36.1 | 8.2 | % | ||||||
Selling, general and administrative expenses % of total revenue | 12.7 | % | 13.5 | % | 0.8 | % |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2016 | 2017 | $ | % | ||||||||||
Interest and other (income) expense | ||||||||||||||
Interest expense | $ | 81.9 | $ | 72.5 | $ | (9.4 | ) | (11.5 | )% | |||||
Loss on disposal of business | 6.8 | — | (6.8 | ) | (100.0 | )% | ||||||||
Loss on extinguishment of debt | 9.7 | 28.5 | 18.8 | 193.8 | % | |||||||||
Other (income) expense, net | 0.1 | 0.1 | — | — | % | |||||||||
Total interest and other (income) expense | $ | 98.5 | $ | 101.1 | $ | 2.6 | 2.6 | % |
Fiscal Year Ended June 30, | Change | |||||||||||||
(in millions) | 2016 | 2017 | $ | % | ||||||||||
Income before income taxes | $ | 0.4 | $ | 7.0 | $ | 6.6 | n.m. | |||||||
Income tax expense | 3.8 | 2.6 | (1.2 | ) | (31.6 | )% | ||||||||
Net income (loss) | $ | (3.4 | ) | $ | 4.4 | $ | 7.8 | (229.4 | )% |
Fiscal Year Ended June 30, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Net cash provided by (used in) | |||||||||||
Operating activities | $ | 86.1 | $ | 51.0 | $ | 192.0 | |||||
Investing activities | (322.0 | ) | (101.6 | ) | (162.1 | ) | |||||
Net borrowings (repayments) on floor plan | 20.9 | 41.6 | (54.3 | ) | |||||||
Other financing activities | 159.7 | 3.5 | 33.9 | ||||||||
Financing activities | 180.6 | 45.1 | (20.4 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | $ | (55.3 | ) | $ | (5.5 | ) | $ | 9.5 |
Fiscal Year Ended June 30, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Impact of tax deductible goodwill and intangible assets | $ | 8.6 | $ | 12.0 | $ | 10.5 |
(in millions) | June 30, 2017 | June 30, 2018 | |||||
Available liquidity | $ | 251.5 | $ | 333.2 | |||
Net debt | $ | 724.1 | $ | 649.6 | |||
Net working capital ratio | 1.00x | 1.02x | |||||
Free cash flow | $ | 94.0 | $ | 122.8 |
June 30, 2017 | June 30, 2018 | ||||||
Cash and cash equivalents | $ | 27.5 | $ | 37.0 | |||
Availability under the February 2015 Revolver | 48.5 | 48.2 | |||||
Availability under the Receivables Securitization Facility | 175.5 | 248.0 | |||||
Available liquidity | $ | 251.5 | $ | 333.2 |
June 30, 2017 | June 30, 2018 | ||||||
Cash and cash equivalents | $ | 27.5 | $ | 37.0 | |||
Accounts payable - floor plan facility | $ | 264.9 | $ | 210.6 | |||
Revolving credit facility | $ | — | $ | — | |||
Receivables Securitization Facility | — | — | |||||
Term loan facility, due February 2022 | 626.6 | — | |||||
Term loan facility, due February 2024 | — | 686.6 | |||||
Senior Notes, 10.25% due February 2023 | 125.0 | — | |||||
Total long-term debt | $ | 751.6 | $ | 686.6 |
June 30, 2017 | June 30, 2018 | ||||||
Total long-term debt | $ | 751.6 | $ | 686.6 | |||
Cash and cash equivalents | (27.5 | ) | (37.0 | ) | |||
Net debt | $ | 724.1 | $ | 649.6 |
Fiscal Year Ended June 30, | |||||||
2017 | 2018 | ||||||
Additions of equipment under sales-type and direct financing leases | $ | (100.1 | ) | $ | (108.3 | ) | |
Proceeds from collection of financing receivables | 9.8 | 4.1 | |||||
Additions to equipment under operating leases | (2.0 | ) | (1.6 | ) | |||
Proceeds from disposition of equipment under operating leases | 1.5 | 0.7 | |||||
Proceeds from the discounting of financing receivables | 108.6 | 114.6 | |||||
Retirements of discounted financing receivables | (5.0 | ) | (10.0 | ) | |||
Aggregate net cash impact of leasing business | $ | 12.8 | $ | (0.5 | ) |
Fiscal Year Ended June 30, | ||||||||
2017 | 2018 | |||||||
Net cash provided by operating activities | $ | 51.0 | $ | 192.0 | ||||
Adjustments to reconcile to free cash flow: | ||||||||
Net change in accounts payable — floor plan | 41.6 | (54.3 | ) | |||||
Aggregate net cash impact of leasing business | 12.8 | (0.5 | ) | |||||
Purchases of property and equipment | (11.4 | ) | (14.4 | ) | ||||
Total adjustments | 43.0 | (69.2 | ) | |||||
Free cash flow | $ | 94.0 | $ | 122.8 |
• | incur additional debt or issue certain preferred shares; |
• | create liens on certain assets; |
• | make certain loans or investments (including acquisitions); |
• | pay dividends on or make distributions in respect of capital stock or make other restricted payments; |
• | consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; |
• | sell assets; |
• | enter into certain transactions with affiliates; |
• | enter into sale-leaseback transactions; |
• | change lines of business; |
• | restrict dividends from our subsidiaries or restrict liens; |
• | change our fiscal year; and |
• | modify the terms of certain debt or organizational agreements. |
(a) | the LIBOR rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 1.00% floor in the case of term loans, plus an applicable margin; or |
(b) | the base rate determined by reference to the highest of: |
(i) | the federal funds rate plus 0.50%, |
(ii) | the prime rate, or |
(iii) | the one-month adjusted LIBOR plus 1.00%; in each case, plus an applicable margin. |
• | 75% (which percentage will be reduced to 50% if the consolidated net first lien secured leverage ratio is less than or equal to 3.00 to 1.00, reduced to 25% if the consolidated net first lien secured leverage ratio is less than or equal to 2.50 to 1.00 and reduced to 0% if the consolidated net first lien secured leverage ratio is less than or equal to 2.00 to 1.00) of the Borrowers’ annual excess cash flow, as defined under the February 2015 Credit Agreement; |
• | 100% of the net cash proceeds of all non-ordinary course asset sales, other dispositions of property or certain casualty events, in each case subject to certain exceptions and provided that we may (a) reinvest within twelve months or (b) commit to reinvest those proceeds within 12 months and so reinvest such proceeds within 18 months in assets to be used in the business, or certain other permitted investments; and |
• | 100% of the net cash proceeds of any issuance or incurrence of debt, other than proceeds from debt permitted under the February 2015 Credit Agreement. |
(a) | the LIBOR rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 1.00% floor in the case of term loans; or |
(b) | the base rate determined by reference to the highest of: |
(i) | the federal funds rate plus 0.50%, |
(ii) | the prime rate, or |
(iii) | the one-month adjusted LIBOR plus 1.00%, in each case, plus an applicable margin. |
Payments Due by Period | |||||||||||||||||||
Total | <1 Year | 1-3 Years | 4-5 Years | >5 Years | |||||||||||||||
Term loan facility(1) | $ | 686.6 | $ | — | $ | — | $ | 7.6 | $ | 679.0 | |||||||||
Interest on term loan facility(2) | 197.5 | 35.4 | 70.9 | 70.6 | 20.6 | ||||||||||||||
Operating leases(3) | 55.5 | 12.0 | 20.7 | 12.4 | 10.4 | ||||||||||||||
Total | $ | 939.6 | $ | 47.4 | $ | 91.6 | $ | 90.6 | $ | 710.0 |
(1) | Includes future principal on long-term borrowings through scheduled maturity dates. |
(2) | Interest payments for the variable rate term loan were calculated using interest rates as of June 30, 2018. Excluded from these amounts are the amortization of debt issuance and other costs related to indebtedness. |
(3) | Includes the minimum lease payments for non-cancelable operating leases used in our operations. Excluded from these amounts are applicable taxes, insurance and common area maintenance charges which we are obligated to pay per the terms of our lease agreements. |
• | Persuasive evidence of an arrangement exists. Contracts, customer purchase orders, and statements of work are generally used to determine the existence of an arrangement. |
• | Delivery has occurred. Shipping documents and customer acceptance, when applicable, are used to verify product delivery and hours incurred are used to verify services are performed. |
• | The fee is fixed or determinable. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. |
• | Collectability is reasonably assured. We assess collectability based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history. |
• | the lease transfers ownership of the property to the lessee by the end of the lease term; |
• | the lease contains a bargain purchase option; |
• | the lease is equal to 75% or more of the estimated economic life of the leased property; or |
• | the present value at the beginning of the lease term of the minimum lease payments equals or exceeds 90% of the fair value of the leased property at the inception of the lease. |
Page | |
CONSOLIDATED FINANCIAL STATEMENTS | |
FINANCIAL STATEMENT SCHEDULES | |
As of June 30, 2017 | As of June 30, 2018 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 27.5 | $ | 37.0 | |||
Accounts receivable, net | 576.3 | 613.3 | |||||
Unbilled accounts receivable, net | 159.8 | 156.7 | |||||
Financing receivables, current portion | 84.2 | 88.3 | |||||
Inventory | 27.7 | 27.7 | |||||
Prepaid expenses and other current assets | 63.4 | 80.7 | |||||
Total current assets | 938.9 | 1,003.7 | |||||
Property and equipment, net | 32.1 | 35.9 | |||||
Financing receivables, less current portion | 113.6 | 116.8 | |||||
Goodwill | 781.5 | 803.7 | |||||
Identifiable intangible assets, net | 751.9 | 700.3 | |||||
Other assets | 32.7 | 33.9 | |||||
Total assets | $ | 2,650.7 | $ | 2,694.3 | |||
Liabilities and Stockholders’ Equity | |||||||
Current Liabilities | |||||||
Current maturities of long-term debt | $ | — | $ | — | |||
Accounts payable – trade | 350.5 | 457.7 | |||||
Accounts payable – floor plan | 264.9 | 210.6 | |||||
Accrued expenses and other current liabilities | 216.3 | 193.2 | |||||
Discounted financing receivables, current portion | 79.9 | 85.2 | |||||
Total current liabilities | 911.6 | 946.7 | |||||
Long-term debt, net of debt issuance costs | 730.7 | 671.2 | |||||
Discounted financing receivables, less current portion | 104.7 | 108.6 | |||||
Deferred income tax liabilities | 270.4 | 177.7 | |||||
Other liabilities | 30.4 | 34.0 | |||||
Total liabilities | 2,047.8 | 1,938.2 | |||||
Commitments and contingencies (Note 13) | |||||||
Stockholders’ Equity | |||||||
Preferred stock: | |||||||
$0.01 par value; 100 shares authorized and zero shares issued and outstanding at June 30, 2018 and June 30, 2017 | — | — | |||||
Common stock: | |||||||
$0.01 par value; 250,000,000 shares authorized and 92,853,983 shares issued and outstanding at June 30, 2018, 250,000,000 shares authorized and 90,969,919 shares issued and outstanding at June 30, 2017 | 0.9 | 0.9 | |||||
Additional paid-in capital | 625.3 | 644.3 | |||||
Accumulated earnings (deficit) | (23.3 | ) | 110.9 | ||||
Total stockholders’ equity | 602.9 | 756.1 | |||||
Total liabilities and stockholders’ equity | $ | 2,650.7 | $ | 2,694.3 |
Fiscal Year Ended June 30, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Revenue | |||||||||||
Product | $ | 2,319.8 | $ | 2,373.2 | $ | 2,336.5 | |||||
Service | 395.1 | 444.4 | 521.5 | ||||||||
Total revenue | 2,714.9 | 2,817.6 | 2,858.0 | ||||||||
Cost of revenue | |||||||||||
Product | 1,866.5 | 1,884.2 | 1,856.3 | ||||||||
Service | 307.8 | 347.5 | 416.7 | ||||||||
Total cost of revenue | 2,174.3 | 2,231.7 | 2,273.0 | ||||||||
Gross margin | 540.6 | 585.9 | 585.0 | ||||||||
Operating expenses | |||||||||||
Selling expenses | 248.2 | 276.2 | 273.7 | ||||||||
General and administrative expenses | 96.9 | 105.0 | 101.8 | ||||||||
Transaction costs | 20.6 | 14.8 | 10.8 | ||||||||
Depreciation and amortization | 76.0 | 81.8 | 83.7 | ||||||||
Total operating expenses | 441.7 | 477.8 | 470.0 | ||||||||
Operating income | 98.9 | 108.1 | 115.0 | ||||||||
Interest and other (income) expense | |||||||||||
Interest expense | 81.9 | 72.5 | 46.0 | ||||||||
Loss on disposal of business | 6.8 | — | — | ||||||||
Loss on extinguishment of debt | 9.7 | 28.5 | 14.8 | ||||||||
Other (income) expense, net | 0.1 | 0.1 | (0.3 | ) | |||||||
Total interest and other (income) expense | 98.5 | 101.1 | 60.5 | ||||||||
Income before income taxes | 0.4 | 7.0 | 54.5 | ||||||||
Income tax expense (benefit) | 3.8 | 2.6 | (79.7 | ) | |||||||
Net income (loss) | $ | (3.4 | ) | $ | 4.4 | $ | 134.2 | ||||
Earnings (loss) per share: | |||||||||||
Basic | $ | (0.05 | ) | $ | 0.06 | $ | 1.46 | ||||
Diluted | $ | (0.05 | ) | $ | 0.05 | $ | 1.39 | ||||
Weighted-average common shares outstanding: | |||||||||||
Basic | 71,117,962 | 77,517,700 | 91,891,295 | ||||||||
Diluted | 71,117,962 | 81,861,839 | 96,227,578 |
Fiscal Year Ended June 30, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income (loss) | $ | (3.4 | ) | $ | 4.4 | $ | 134.2 | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
Amortization of intangible assets | 67.2 | 73.6 | 74.4 | ||||||||
Depreciation of property and equipment in operating expenses | 8.8 | 8.2 | 9.3 | ||||||||
Depreciation of property and equipment in cost of revenue | 5.7 | 5.4 | 5.8 | ||||||||
Provision for sales returns and credit losses | 1.5 | 2.0 | 1.0 | ||||||||
Amortization of debt issuance costs | 7.6 | 6.5 | 4.5 | ||||||||
Loss on extinguishment of debt | 9.7 | 28.5 | 14.8 | ||||||||
Loss on disposal of business | 6.8 | — | — | ||||||||
Noncash lease income | (5.0 | ) | (3.7 | ) | (1.4 | ) | |||||
Share-based compensation expense | 2.2 | 10.2 | 7.0 | ||||||||
Deferred income tax benefit | (19.6 | ) | (17.6 | ) | (93.0 | ) | |||||
Other | — | 0.4 | 0.1 | ||||||||
Change in assets and liabilities, net of acquisitions and dispositions: | |||||||||||
Unbilled and accounts receivable | (37.6 | ) | (98.4 | ) | (23.9 | ) | |||||
Inventory | (4.5 | ) | 20.6 | 0.3 | |||||||
Prepaid expenses and other assets | 13.5 | (20.6 | ) | (17.3 | ) | ||||||
Accounts payable – trade | 21.7 | (31.9 | ) | 96.4 | |||||||
Accrued expenses and other liabilities | 11.5 | 63.4 | (20.2 | ) | |||||||
Net cash provided by operating activities | 86.1 | 51.0 | 192.0 | ||||||||
Cash flows from investing activities: | |||||||||||
Acquisition of businesses, net of cash and cash equivalents acquired | (251.3 | ) | — | (42.8 | ) | ||||||
Proceeds from collection of escrow related to acquisition of business | — | 0.6 | 0.2 | ||||||||
Proceeds from disposition of business | 36.3 | — | — | ||||||||
Additions of equipment under sales-type and direct financing leases | (95.4 | ) | (100.1 | ) | (108.3 | ) | |||||
Proceeds from collection of financing receivables | 6.5 | 9.8 | 4.1 | ||||||||
Additions to equipment under operating leases | (2.7 | ) | (2.0 | ) | (1.6 | ) | |||||
Proceeds from disposition of equipment under operating leases | 1.0 | 1.5 | 0.7 | ||||||||
Purchases of property and equipment | (16.4 | ) | (11.4 | ) | (14.4 | ) | |||||
Net cash used in investing activities | (322.0 | ) | (101.6 | ) | (162.1 | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from initial public offering, net of underwriter discounts and commissions | — | 247.5 | — | ||||||||
Payments of initial public offering costs | — | (7.2 | ) | — | |||||||
Proceeds from issuance of common stock under share-based compensation plans | — | 1.1 | 8.0 | ||||||||
Repurchases of common stock | (0.1 | ) | — | — | |||||||
Payments of future consideration on acquisitions | (10.3 | ) | — | — | |||||||
Deferred financing costs | (1.2 | ) | — | (1.2 | ) | ||||||
Proceeds from the discounting of financing receivables | 86.4 | 108.6 | 114.6 | ||||||||
Retirements of discounted financing receivables | (4.2 | ) | (5.0 | ) | (10.0 | ) | |||||
Net borrowings (repayments) on the receivables securitization facility | 5.0 | (5.0 | ) | — | |||||||
Repayments of senior and subordinated notes | (66.3 | ) | (230.8 | ) | (135.7 | ) | |||||
Borrowings of term loans, net of original issue discount | 306.6 | — | 138.2 | ||||||||
Repayments of term loans | (156.2 | ) | (105.7 | ) | (80.0 | ) | |||||
Net borrowings (repayments) on the floor plan facility | 20.9 | 41.6 | (54.3 | ) | |||||||
Net cash provided by (used in) financing activities | 180.6 | 45.1 | (20.4 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | (55.3 | ) | (5.5 | ) | 9.5 | ||||||
Cash and cash equivalents: | |||||||||||
Beginning of the period | 88.3 | 33.0 | 27.5 | ||||||||
End of the period | $ | 33.0 | $ | 27.5 | $ | 37.0 | |||||
Supplemental disclosures of cash flow information | |||||||||||
Cash paid (received) during the period for: | |||||||||||
Interest | $ | 74.0 | $ | 75.7 | $ | 44.8 | |||||
Income taxes, net of refunds | $ | 23.7 | $ | 3.3 | $ | 20.3 | |||||
Reduction of discounted lease assets and liabilities | $ | 82.8 | $ | 89.6 | $ | 102.7 |
Preferred stock | Common stock | Additional paid-in capital | Accumulated earnings (deficit) | Total | |||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Balance, June 30, 2015 | — | $ | — | 70,491,948 | $ | 0.7 | $ | 359.4 | $ | (24.3 | ) | $ | 335.8 | ||||||||||||
Common stock issued for awards under share-based compensation plans | — | — | 23,856 | — | — | — | — | ||||||||||||||||||
Common stock issued for acquisitions | — | — | 1,417,032 | — | 12.4 | — | 12.4 | ||||||||||||||||||
Repurchase of common stock | — | — | (10,000 | ) | — | (0.1 | ) | — | (0.1 | ) | |||||||||||||||
Net Loss | — | — | — | — | — | (3.4 | ) | (3.4 | ) | ||||||||||||||||
Share-based compensation expense | — | — | — | — | 2.2 | — | 2.2 | ||||||||||||||||||
Balance, June 30, 2016 | — | — | 71,922,836 | 0.7 | 373.9 | (27.7 | ) | 346.9 | |||||||||||||||||
Common stock issued for initial public offering, net of underwriting discounts and commissions | — | — | 18,766,465 | 0.2 | 247.3 | — | 247.5 | ||||||||||||||||||
Costs related to initial public offering | — | — | — | — | (7.2 | ) | — | (7.2 | ) | ||||||||||||||||
Common stock issued for awards under share-based compensation plans | — | — | 280,618 | — | 1.1 | — | 1.1 | ||||||||||||||||||
Net income | — | — | — | — | — | 4.4 | 4.4 | ||||||||||||||||||
Share-based compensation expense | — | — | — | — | 10.2 | — | 10.2 | ||||||||||||||||||
Balance, June 30, 2017 | — | — | 90,969,919 | 0.9 | 625.3 | (23.3 | ) | 602.9 | |||||||||||||||||
Common stock issued for awards under share-based compensation plans | — | — | 1,614,777 | — | 7.9 | — | 7.9 | ||||||||||||||||||
Common stock issued for acquisitions | — | — | 269,287 | — | 4.1 | — | 4.1 | ||||||||||||||||||
Net income | — | — | — | — | — | 134.2 | 134.2 | ||||||||||||||||||
Share-based compensation expense | — | — | — | — | 7.0 | — | 7.0 | ||||||||||||||||||
Balance, June 30, 2018 | — | $ | — | 92,853,983 | $ | 0.9 | $ | 644.3 | $ | 110.9 | $ | 756.1 |
• | Persuasive evidence of an arrangement exists. Contracts, customer purchase orders, and statements of work are generally used to determine the existence of an arrangement. |
• | Delivery has occurred. Shipping documents and customer acceptance, when applicable, are used to verify product delivery and hours incurred are used to verify services are performed. |
• | The fee is fixed or determinable. The Company assesses whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. |
• | Collectability is reasonably assured. The Company assesses collectability based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history. |
• | the lease transfers ownership of the property to the lessee by the end of the lease term; |
• | the lease contains a bargain purchase option; |
• | the lease is equal to 75% or more of the estimated economic life of the leased property; or |
• | the present value at the beginning of the lease term of the minimum lease payments equals or exceeds 90% of the fair value of the leased property at the inception of the lease. |
Level 1: | Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; |
Level 2: | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and |
Level 3: | Unobservable inputs for the asset or liability. |
• | In certain transactions, the Company sells security software that is accompanied by third-party delivered software assurance that is deemed to be critical or essential to the core functionality of the security software license. In these cases, the Company has determined that the software license and the accompanying third-party delivered software assurance are a single performance obligation. The value of the product is primarily the accompanying support delivered by a third-party, and therefore, the Company is acting as an agent in these transactions and will recognize them on a net basis. The Company currently recognizes revenue from the sale of security software on a gross basis (i.e., acting as a principal). The adoption of the new standard results in a reduction to both Product revenue and Product cost of revenue with no impact on Product gross margin. |
• | The Company sells software enterprise license agreements (“ELAs”) that provide customers with access to manage their software license needs. The Company has determined that the ELA software sales are, individually, single performance obligations regardless of whether they are sold on a standalone basis or in connection with other hardware, software or services. The software licenses sold as part of an ELA are not operated or hosted by the Company and typically the manufacturer provides support services as part of the ELA transaction. Accordingly, the Company is acting as an agent in these transactions and will recognize them on a net basis. The Company currently recognizes revenue for ELAs sold as stand-alone solutions on a net basis (i.e., acting as an agent), while ELAs sold with other hardware, software or services are recognized on a gross basis. The adoption of the new standard results in a reduction to both Product revenue and Product cost of revenue with no impact on Product gross margin. |
• | The Company performs professional service engagements that may include subcontractors performing the services. In certain transactions, the Company currently recognizes revenue based on the milestones billed by the subcontractor when additional data is unavailable. The adoption of the new standard impacts the timing of revenue recognition for these transactions based on an appropriate input method aligned with when control transfers to the customer and the impact results in adjustments to Service revenue, Service cost of revenue and Service gross margin. |
• | The Company pays commissions to its sales personnel and the amount is generally derived from the profitability of the transaction. In certain cases, commissions are calculated and paid for contracts with performance periods that exceed one year and have been identified as costs to obtain the contracts. The adoption of the new standard results in the capitalization of these commissions and recognition of expense over a longer period of time resulting in a reduction in Selling expenses. |
Fiscal Year Ended | ||||||||||||||||||||||||
June 30, 2017 | June 30, 2018 | |||||||||||||||||||||||
As Reported | ASU 2014-09 Adjustment | As Adjusted | As Reported | ASU 2014-09 Adjustment | As Adjusted | |||||||||||||||||||
Revenue | ||||||||||||||||||||||||
Product | $ | 2,373.2 | $ | (86.0 | ) | $ | 2,287.2 | $ | 2,336.5 | $ | (73.7 | ) | $ | 2,262.8 | ||||||||||
Service | 444.4 | 4.4 | 448.8 | 521.5 | (19.1 | ) | 502.4 | |||||||||||||||||
Total revenue | 2,817.6 | (81.6 | ) | 2,736.0 | 2,858.0 | (92.8 | ) | 2,765.2 | ||||||||||||||||
Cost of revenue | ||||||||||||||||||||||||
Product | 1,884.2 | (86.0 | ) | 1,798.2 | 1,856.3 | (73.7 | ) | 1,782.6 | ||||||||||||||||
Service | 347.5 | 4.0 | 351.5 | 416.7 | (18.1 | ) | 398.6 | |||||||||||||||||
Total cost of revenue | 2,231.7 | (82.0 | ) | 2,149.7 | 2,273.0 | (91.8 | ) | 2,181.2 | ||||||||||||||||
Gross margin | $ | 585.9 | $ | 0.4 | $ | 586.3 | $ | 585.0 | $ | (1.0 | ) | $ | 584.0 | |||||||||||
Selling expenses | $ | 276.2 | $ | (0.8 | ) | $ | 275.4 | $ | 273.7 | $ | (0.5 | ) | $ | 273.2 | ||||||||||
Operating income | $ | 108.1 | $ | 1.2 | $ | 109.3 | $ | 115.0 | $ | (0.5 | ) | $ | 114.5 | |||||||||||
Income tax expense (benefit) | $ | 2.6 | $ | 0.5 | $ | 3.1 | $ | (79.7 | ) | $ | (0.2 | ) | $ | (79.9 | ) | |||||||||
Net income (loss) | $ | 4.4 | $ | 0.7 | $ | 5.1 | $ | 134.2 | $ | (0.3 | ) | $ | 133.9 | |||||||||||
Earnings (loss) per share: | ||||||||||||||||||||||||
Basic | $ | 0.06 | $ | 0.01 | $ | 0.07 | $ | 1.46 | $ | — | $ | 1.46 | ||||||||||||
Diluted | $ | 0.05 | $ | 0.01 | $ | 0.06 | $ | 1.39 | $ | — | $ | 1.39 |
As of June 30, 2017 | As of June 30, 2018 | |||||||||||||||||||||||
As Reported | ASU 2014-09 Adjustment | As Adjusted | As Reported | ASU 2014-09 Adjustment | As Adjusted | |||||||||||||||||||
Accounts receivable, net | $ | 576.3 | $ | (5.4 | ) | $ | 570.9 | $ | 613.3 | $ | (4.6 | ) | $ | 608.7 | ||||||||||
Unbilled accounts receivable, net | $ | 159.8 | $ | 18.6 | $ | 178.4 | $ | 156.7 | $ | 14.8 | $ | 171.5 | ||||||||||||
Prepaid expenses and other current assets | $ | 63.4 | $ | 16.4 | $ | 79.8 | $ | 80.7 | $ | 31.8 | $ | 112.5 | ||||||||||||
Total assets | $ | 2,650.7 | $ | 29.6 | $ | 2,680.3 | $ | 2,694.3 | $ | 42.0 | $ | 2,736.3 | ||||||||||||
Accrued expenses and other current liabilities | $ | 216.3 | $ | 22.1 | $ | 238.4 | $ | 193.2 | $ | 35.0 | $ | 228.2 | ||||||||||||
Deferred income tax liabilities | $ | 270.4 | $ | 3.0 | $ | 273.4 | $ | 177.7 | $ | 2.8 | $ | 180.5 | ||||||||||||
Total liabilities | $ | 2,047.8 | $ | 25.1 | $ | 2,072.9 | $ | 1,938.2 | $ | 37.8 | $ | 1,976.0 | ||||||||||||
Accumulated earnings (deficit) | $ | (23.3 | ) | $ | 4.5 | $ | (18.8 | ) | $ | 110.9 | $ | 4.2 | $ | 115.1 | ||||||||||
Total stockholders’ equity | $ | 602.9 | $ | 4.5 | $ | 607.4 | $ | 756.1 | $ | 4.2 | $ | 760.3 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 2,650.7 | $ | 29.6 | $ | 2,680.3 | $ | 2,694.3 | $ | 42.0 | $ | 2,736.3 |
Computation of purchase price: | ||||
Cash paid to sellers | $ | 36.6 | ||
Receivable due from escrow | (0.2 | ) | ||
Fair value of equity consideration | 4.1 | |||
Total consideration | $ | 40.5 | ||
Allocation of purchase price: | ||||
Fair value of assets acquired | ||||
Cash | $ | 3.0 | ||
Accounts receivable | 7.2 | |||
Unbilled accounts receivable | 0.3 | |||
Inventory | 0.2 | |||
Prepaid expenses and other current assets | 1.3 | |||
Property and equipment | 1.7 | |||
Goodwill | 19.6 | |||
Identifiable intangible assets | 18.5 | |||
Fair value of liabilities assumed | ||||
Accounts payable - trade | (8.5 | ) | ||
Accrued expenses and other current liabilities | (2.8 | ) | ||
Total net assets acquired | $ | 40.5 |
Computation of purchase price: | ||||
Cash paid to sellers | $ | 240.1 | ||
Receivable due from escrow | (0.6 | ) | ||
Fair value of equity consideration | 11.0 | |||
Total consideration | $ | 250.5 | ||
Allocation of purchase price: | ||||
Fair value of assets acquired: | ||||
Accounts receivable | $ | 70.2 | ||
Unbilled accounts receivable | 7.5 | |||
Inventory | 9.0 | |||
Prepaid expenses and other current assets | 5.0 | |||
Property and equipment | 2.3 | |||
Goodwill | 108.2 | |||
Identifiable intangible assets | 107.0 | |||
Other assets | 2.4 | |||
Fair value of liabilities assumed: | ||||
Accounts payable - trade | (2.3 | ) | ||
Accounts payable - floor plan | (40.5 | ) | ||
Accrued expenses and other current liabilities | (18.3 | ) | ||
Total net assets acquired | $ | 250.5 |
Computation of purchase price: | ||||
Cash paid to sellers | $ | 11.2 | ||
Fair value of equity consideration | 1.4 | |||
Total consideration | $ | 12.6 | ||
Allocation of purchase price: | ||||
Assets assumed | $ | 0.1 | ||
Purchased identifiable intangible assets | 1.0 | |||
Goodwill | 11.5 | |||
Total net assets acquired | $ | 12.6 |
Carrying amount of assets disposed | |||
Accounts receivable | $ | 13.4 | |
Inventory | 7.4 | ||
Prepaid expenses and other current assets | 1.1 | ||
Property and equipment | 7.0 | ||
Equipment under operating leases, net | 0.3 | ||
Identifiable intangible assets, net | 26.4 | ||
Carrying amount of liabilities disposed | |||
Accounts payable - trade | (3.2 | ) | |
Accrued expenses and other current liabilities | (9.3 | ) | |
Net assets disposed | $ | 43.1 |
June 30, 2017 | June 30, 2018 | ||||||
Gross accounts receivable | $ | 580.0 | $ | 616.4 | |||
Provision for sales returns and credit losses | (3.7 | ) | (3.1 | ) | |||
Total accounts receivable, net | $ | 576.3 | $ | 613.3 |
June 30, 2017 | June 30, 2018 | ||||||
Gross unbilled accounts receivable | $ | 160.6 | $ | 157.0 | |||
Provision for sales returns and credit losses | (0.8 | ) | (0.3 | ) | |||
Total unbilled accounts receivable, net | $ | 159.8 | $ | 156.7 |
June 30, 2017 | June 30, 2018 | ||||||
Partner incentive program receivable | $ | 26.2 | $ | 32.7 | |||
Prepaid income taxes | — | 4.9 | |||||
Deferred product costs and other current assets | 37.2 | 43.1 | |||||
Total prepaid expenses and other current assets | $ | 63.4 | $ | 80.7 |
June 30, 2017 | Discounted to financial institutions | Not discounted to financial institutions | Total | ||||||||
Minimum lease payments | $ | 197.2 | $ | 4.2 | $ | 201.4 | |||||
Estimated net residual values | — | 7.2 | 7.2 | ||||||||
Unearned income | (9.4 | ) | (0.8 | ) | (10.2 | ) | |||||
Provision for credit losses | — | (0.6 | ) | (0.6 | ) | ||||||
Total, net | $ | 187.8 | $ | 10.0 | $ | 197.8 | |||||
Reported as: | |||||||||||
Current | $ | 80.8 | $ | 3.4 | $ | 84.2 | |||||
Long-term | 107.0 | 6.6 | 113.6 | ||||||||
Total, net | $ | 187.8 | $ | 10.0 | $ | 197.8 | |||||
Discounted financing receivables: | |||||||||||
Nonrecourse | $ | 183.7 | $ | — | $ | 183.7 | |||||
Recourse | — | — | — | ||||||||
Total | $ | 183.7 | $ | — | $ | 183.7 | |||||
Reported as: | |||||||||||
Current | $ | 79.3 | $ | — | $ | 79.3 | |||||
Long-term | 104.4 | — | 104.4 | ||||||||
Total, net | $ | 183.7 | $ | — | $ | 183.7 |
June 30, 2018 | Discounted to financial institutions | Not discounted to financial institutions | Total | ||||||||
Minimum lease payments | $ | 207.5 | $ | 2.7 | $ | 210.2 | |||||
Estimated net residual values | — | 7.6 | 7.6 | ||||||||
Unearned income | (11.4 | ) | (0.9 | ) | (12.3 | ) | |||||
Provision for credit losses | — | (0.4 | ) | (0.4 | ) | ||||||
Total, net | $ | 196.1 | $ | 9.0 | $ | 205.1 | |||||
Reported as: | |||||||||||
Current | $ | 85.4 | $ | 2.9 | $ | 88.3 | |||||
Long-term | 110.7 | 6.1 | 116.8 | ||||||||
Total, net | $ | 196.1 | $ | 9.0 | $ | 205.1 | |||||
Discounted financing receivables: | |||||||||||
Nonrecourse | $ | 192.6 | $ | — | $ | 192.6 | |||||
Recourse | — | — | — | ||||||||
Total | $ | 192.6 | $ | — | $ | 192.6 | |||||
Reported as: | |||||||||||
Current | $ | 84.5 | $ | — | $ | 84.5 | |||||
Long-term | 108.1 | — | 108.1 | ||||||||
Total, net | $ | 192.6 | $ | — | $ | 192.6 |
Years ending June 30, | Discounted to financial institutions | Not discounted to financial institutions | Total | ||||||||
2019 | $ | 91.4 | $ | 1.1 | $ | 92.5 | |||||
2020 | 60.8 | 0.4 | 61.2 | ||||||||
2021 | 33.7 | 0.5 | 34.2 | ||||||||
2022 | 15.7 | 0.4 | 16.1 | ||||||||
2023 | 5.9 | 0.3 | 6.2 | ||||||||
2024 and thereafter | — | — | — | ||||||||
Total | $ | 207.5 | $ | 2.7 | $ | 210.2 |
June 30, 2017 | June 30, 2018 | ||||||
Equipment under operating leases | $ | 4.6 | $ | 3.4 | |||
Accumulated depreciation | (2.9 | ) | (1.9 | ) | |||
Total equipment under operating leases, net | $ | 1.7 | $ | 1.5 |
Years ending June 30, | Discounted to financial institutions | Not discounted to financial institutions | Total | ||||||||
2019 | $ | 0.7 | $ | — | $ | 0.7 | |||||
2020 | 0.4 | — | 0.4 | ||||||||
2021 | 0.1 | — | 0.1 | ||||||||
2022 | — | — | — | ||||||||
2023 | — | — | — | ||||||||
2024 and thereafter | — | — | — | ||||||||
Total | $ | 1.2 | $ | — | $ | 1.2 |
June 30, 2017 | June 30, 2018 | ||||||
Discounted operating leases: | |||||||
Current | $ | 0.7 | $ | 0.7 | |||
Noncurrent | 0.2 | 0.5 | |||||
Total | $ | 0.9 | $ | 1.2 |
Estimated useful lives | June 30, 2017 | June 30, 2018 | |||||||
Furniture and fixtures | 3 to 7 years | $ | 5.3 | $ | 8.4 | ||||
Equipment | 3 to 7 years | 22.2 | 28.5 | ||||||
Software | 3 years | 19.9 | 24.4 | ||||||
Leasehold improvements | Life of lease | 13.3 | 16.4 | ||||||
Total property and equipment | 60.7 | 77.7 | |||||||
Accumulated depreciation and amortization | (28.6 | ) | (41.8 | ) | |||||
Total property and equipment, net | $ | 32.1 | $ | 35.9 |
Gross carrying value | Accumulated impairment charges | Total, net | |||||||||
Balance, June 30, 2016 | 781.5 | — | 781.5 | ||||||||
Acquisitions | — | — | — | ||||||||
Impairment charges | — | — | — | ||||||||
Balance, June 30, 2017 | 781.5 | — | 781.5 | ||||||||
Acquisitions | 22.2 | — | 22.2 | ||||||||
Impairment charges | — | — | — | ||||||||
Balance, June 30, 2018 | $ | 803.7 | $ | — | $ | 803.7 |
June 30, 2017 | Range of life (years) | Gross amount | Accumulated amortization | Total, net | |||||||||
Finite-lived intangible assets: | |||||||||||||
Customer relationships | 5 – 10 | $ | 703.2 | $ | (159.8 | ) | $ | 543.4 | |||||
Developed technology | 5 | 3.6 | (1.6 | ) | 2.0 | ||||||||
Trade names | 1 – 2 | 5.1 | (3.6 | ) | 1.5 | ||||||||
Indefinite-lived intangible assets: | |||||||||||||
Trade names | Indefinite | 205.0 | — | 205.0 | |||||||||
Total intangible assets | $ | 916.9 | $ | (165.0 | ) | $ | 751.9 |
June 30, 2018 | Range of life (years) | Gross amount | Accumulated amortization | Total, net | |||||||||
Finite-lived intangible assets: | |||||||||||||
Customer relationships | 5 – 10 | $ | 724.2 | $ | (231.4 | ) | $ | 492.8 | |||||
Developed technology | 5 | 3.6 | (2.3 | ) | 1.3 | ||||||||
Trade names | 2 | 1.8 | (0.6 | ) | 1.2 | ||||||||
Indefinite-lived intangible assets: | |||||||||||||
Trade names | Indefinite | 205.0 | — | 205.0 | |||||||||
Total intangible assets | $ | 934.6 | $ | (234.3 | ) | $ | 700.3 |
Years ending June 30, | |||
2019 | $ | 75.2 | |
2020 | 74.3 | ||
2021 | 73.6 | ||
2022 | 73.5 | ||
2023 | 72.8 | ||
2024 and thereafter | 125.9 | ||
Total | $ | 495.3 |
June 30, 2017 | June 30, 2018 | ||||||
Accrued compensation | $ | 64.5 | $ | 61.1 | |||
Accrued interest | 11.7 | 8.3 | |||||
Accrued equipment purchases/vendor expenses | 78.3 | 56.9 | |||||
Accrued income taxes | 7.3 | 5.7 | |||||
Accrued non-income taxes | 7.4 | 8.2 | |||||
Customer deposits, current portion | 5.1 | 3.5 | |||||
Unearned revenue | 40.0 | 47.6 | |||||
Other accrued expenses and current liabilities | 2.0 | 1.9 | |||||
Total accrued expenses and other current liabilities | $ | 216.3 | $ | 193.2 |
June 30, 2017 | June 30, 2018 | ||||||
Revolving credit facility | $ | — | $ | — | |||
Receivable securitization facility | — | — | |||||
Term loan facility, due February 2022 | 626.6 | — | |||||
Term loan facility, due February 2024 | — | 686.6 | |||||
Senior notes, 10.25% due February 2023 | 125.0 | — | |||||
Total long-term debt | 751.6 | 686.6 | |||||
Unamortized debt issuance costs | (20.9 | ) | (15.4 | ) | |||
Total long-term debt, net of debt issuance costs | $ | 730.7 | $ | 671.2 | |||
Reported as: | |||||||
Current | $ | — | $ | — | |||
Long-term | 730.7 | 671.2 | |||||
Total long-term debt, net of debt issuance costs | $ | 730.7 | $ | 671.2 |
• | incur additional debt or issue certain preferred shares; |
• | create liens on certain assets; |
• | make certain loans or investments (including acquisitions); |
• | pay dividends on or make distributions in respect of capital stock or make other restricted payments; |
• | consolidate, merge, sell or otherwise dispose of all or substantially all of their assets; |
• | sell assets; |
• | enter into certain transactions with affiliates; |
• | enter into sale-leaseback transactions; |
• | change lines of business; |
• | restrict dividends from their subsidiaries or restrict liens; |
• | change their fiscal year; and |
• | modify the terms of certain debt or organizational agreements. |
(a) | the LIBOR rate determined by reference to the cost of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 1.00% floor in the case of term loans, plus an applicable margin; or |
(b) | the base rate determined by reference to the highest of: |
(i) | the federal funds rate plus 0.50%, |
(ii) | the prime rate, or |
(iii) | one-month adjusted LIBOR plus 1.00%; plus an applicable margin. |
• | 75% (which percentage will be reduced to 50% if the consolidated net first lien secured leverage ratio is less than or equal to 3.00 to 1.00, reduced to 25% if the consolidated net first lien secured leverage ratio is less than or equal to 2.50 to 1.00, and reduced to 0% if the consolidated net first lien secured leverage ratio is less than or equal to 2.00 to 1.00) of the Borrowers’ annual excess cash flow, as defined under the February 2015 Credit Agreement; |
• | 100% of the net cash proceeds of all non-ordinary course asset sales, other dispositions of property or certain casualty events, in each case subject to certain exceptions and provided that the Company may (a) reinvest within 12 months or (b) commit to reinvest those proceeds within 12 months and so reinvest such proceeds within 18 months in assets to be used in the business, or certain other permitted investments; and |
• | 100% of the net cash proceeds of any issuance or incurrence of debt, other than proceeds from debt permitted under the February 2015 Credit Agreement. |
(a) | the LIBOR rate determined by reference to the cost of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs, subject to a 1.00% floor in the case of term loans; or |
(b) | the base rate determined by reference to the highest of: |
(i) | the federal funds rate plus 0.50%, |
(ii) | the prime rate, or |
(iii) | one-month adjusted LIBOR plus 1.00%, plus an applicable margin. |
Other Assets | Long-Term Debt | ||||||||||||||||||||||||||
Revolving credit facilities | Term loan, due February 2019 | Term loan facility, due February 2022 | Term loan facility, due February 2024 | Senior Notes | Senior subordinated notes | Total | |||||||||||||||||||||
Balance, June 30, 2015 | $ | 2.9 | $ | — | $ | 30.4 | $ | — | $ | 6.0 | $ | 3.5 | $ | 42.8 | |||||||||||||
Additions | 0.1 | 8.4 | 1.0 | — | — | — | 9.5 | ||||||||||||||||||||
Extinguishments | — | (7.7 | ) | — | — | (0.6 | ) | (0.9 | ) | (9.2 | ) | ||||||||||||||||
Amortization | (1.1 | ) | (0.7 | ) | (4.7 | ) | — | (0.8 | ) | (0.3 | ) | (7.6 | ) | ||||||||||||||
Balance, June 30, 2016 | 1.9 | — | 26.7 | — | 4.6 | 2.3 | 35.5 | ||||||||||||||||||||
Additions | — | — | — | — | — | — | — | ||||||||||||||||||||
Extinguishments | — | — | (3.2 | ) | — | (1.8 | ) | (2.0 | ) | (7.0 | ) | ||||||||||||||||
Amortization | (0.8 | ) | — | (4.8 | ) | — | (0.6 | ) | (0.3 | ) | (6.5 | ) | |||||||||||||||
Balance, June 30, 2017 | 1.1 | — | 18.7 | — | 2.2 | — | 22.0 | ||||||||||||||||||||
Modifications | — | — | (15.3 | ) | 15.3 | — | — | — | |||||||||||||||||||
Additions | 0.8 | — | — | 2.4 | — | — | 3.2 | ||||||||||||||||||||
Extinguishments | — | — | (1.4 | ) | (0.7 | ) | (1.9 | ) | — | (4.0 | ) | ||||||||||||||||
Amortization | (0.7 | ) | — | (2.0 | ) | (1.5 | ) | (0.3 | ) | — | (4.5 | ) | |||||||||||||||
Balance, June 30, 2018 | $ | 1.2 | $ | — | $ | — | $ | 15.5 | $ | — | $ | — | $ | 16.7 |
Years ending June 30, | |||
2019 | $ | — | |
2020 | — | ||
2021 | — | ||
2022 | 0.4 | ||
2023 | 7.2 | ||
2024 and thereafter | 679.0 | ||
Total | $ | 686.6 |
Fair Value Measurements | |||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Liabilities: | |||||||||||||||
Term loan | 626.6 | — | 627.4 | — | |||||||||||
Senior notes | 125.0 | — | 138.8 | — | |||||||||||
Total | $ | 751.6 | $ | — | $ | 766.2 | $ | — |
Fair Value Measurements | |||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Liabilities: | |||||||||||||||
Term loan | $ | 686.6 | $ | — | $ | 684.1 | $ | — | |||||||
Total | $ | 686.6 | $ | — | $ | 684.1 | $ | — |
Years ending June 30, | |||
2019 | $ | 11.3 | |
2020 | 10.9 | ||
2021 | 9.4 | ||
2022 | 7.0 | ||
2023 | 5.3 | ||
2024 and thereafter | 10.4 | ||
Total | $ | 54.3 |
Service and Rolled options outstanding | ||||||||||||||||||||||||||||||||
Total outstanding options | Vested (exercisable) options | Nonvested options | ||||||||||||||||||||||||||||||
Weighted-average | Weighted-average | Weighted-average | ||||||||||||||||||||||||||||||
Number of options | Exercise price | Fair value | Number of options | Exercise price | Fair value | Number of options | Exercise price | Fair value | ||||||||||||||||||||||||
Balance, June 30, 2017 | 6,801,591 | 6.88 | 3.20 | 2,756,683 | 2.98 | 3.03 | 4,044,908 | 9.53 | 3.32 | |||||||||||||||||||||||
Granted | 451,992 | 15.13 | 5.53 | — | — | — | 451,992 | 15.13 | 5.53 | |||||||||||||||||||||||
Vested | — | — | — | 1,095,473 | 8.76 | 2.82 | (1,095,473 | ) | 8.76 | 2.82 | ||||||||||||||||||||||
Exercised | (1,389,341 | ) | 3.43 | 2.90 | (1,389,341 | ) | 3.43 | 2.90 | — | — | — | |||||||||||||||||||||
Forfeited | (457,233 | ) | 9.14 | 2.86 | — | — | — | (457,233 | ) | 9.14 | 2.86 | |||||||||||||||||||||
Expired | (31,745 | ) | 3.19 | 3.52 | (31,745 | ) | 3.19 | 3.52 | — | — | — | |||||||||||||||||||||
Balance, June 30, 2018 | 5,375,264 | $ | 8.29 | $ | 3.50 | 2,431,070 | $ | 5.32 | $ | 3.00 | 2,944,194 | $ | 10.74 | $ | 3.91 |
Performance and Market options outstanding | ||||||||||||||||||||||||||||||
Total outstanding options | Vested (exercisable) options | Nonvested options | ||||||||||||||||||||||||||||
Weighted-average | Weighted-average | Weighted-average | ||||||||||||||||||||||||||||
Number of options | Exercise price | Fair value | Number of options | Exercise price | Fair value | Number of options | Exercise price | Fair value | ||||||||||||||||||||||
Balance, June 30, 2017 | 3,453,036 | 5.56 | 2.09 | — | — | — | 3,453,036 | 5.56 | 2.09 | |||||||||||||||||||||
Granted | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Vested | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Exercised | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Forfeited | (427,068 | ) | 5.29 | 1.96 | — | — | — | (427,068 | ) | 5.29 | 1.96 | |||||||||||||||||||
Expired | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Balance, June 30, 2018 | 3,025,968 | $ | 5.60 | $ | 2.11 | — | 3,025,968 | $ | 5.60 | $ | 2.11 |
Number of options | Weighted-average exercise price | Intrinsic value (in millions) | Weighted-average remaining contract term (in years) | |||||||||
Balance, June 30, 2018 | 7,634,664 | $ | 7.52 | $ | 42.6 | 6.3 |
Service & Rolled options outstanding | Performance and market options outstanding | ||||||||||||||||||
Exercised during the period end | Total outstanding options | Vested (exercisable) options | Nonvested options | Nonvested options | |||||||||||||||
June 30, 2016 | $ | 0.2 | $ | 24.6 | $ | 15.4 | $ | 9.2 | $ | 11.7 | |||||||||
June 30, 2017 | $ | 3.1 | $ | 50.6 | $ | 31.2 | $ | 19.4 | $ | 30.2 | |||||||||
June 30, 2018 | $ | 16.2 | $ | 28.3 | $ | 19.3 | $ | 9.0 | $ | 22.7 |
Fiscal Year Ended June 30, | ||||||||
June 30, 2016 | June 30, 2017 | June 30, 2018 | ||||||
Nonqualified stock options: | ||||||||
Expected life (in years)(1) | 6.5 | 6.4 | 6.3 | |||||
Expected volatility | 32.2 | % | 32.3 | % | 32.5 | % | ||
Average risk-free interest rate | 1.8 | % | 2.2 | % | 2.4 | % | ||
Dividend yield | — | % | — | % | — | % |
(1) | The expected life assumption for the performance and market stock options used in the Monte Carlo simulation varied based on the outcomes of each scenario performed. |
Fiscal Year Ended June 30, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Nonqualified stock options | $ | 2.2 | $ | 10.2 | $ | 5.7 | |||||
Restricted stock units | $ | — | $ | — | $ | 1.3 | |||||
Total | $ | 2.2 | $ | 10.2 | $ | 7.0 | |||||
Reported as: | |||||||||||
Selling expenses | $ | 0.9 | $ | 4.2 | $ | 1.4 | |||||
General and administrative expenses | 1.3 | 6.0 | 5.6 | ||||||||
Total | $ | 2.2 | $ | 10.2 | $ | 7.0 | |||||
Income tax benefit for share-based compensation | $ | 0.9 | $ | 4.0 | $ | 2.3 |
Fiscal Year Ended June 30, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Numerator | |||||||||||
Earnings (loss) | $ | (3.4 | ) | $ | 4.4 | $ | 134.2 | ||||
Denominator | |||||||||||
Weighted-average shares - basic | 71,117,962 | 77,517,700 | 91,891,295 | ||||||||
Effect of dilutive securities | |||||||||||
Stock options(1) | — | 4,344,139 | 4,336,283 | ||||||||
Weighted-average shares - diluted | 71,117,962 | 81,861,839 | 96,227,578 | ||||||||
Earnings (loss) per share: | |||||||||||
Basic | $ | (0.05 | ) | $ | 0.06 | $ | 1.46 | ||||
Diluted | $ | (0.05 | ) | $ | 0.05 | $ | 1.39 |
Fiscal Year Ended June 30, | ||||||||
2016 | 2017 | 2018 | ||||||
Stock options excluded from EPS because of anti- dilution | 5,301,576 | 2,069,551 | 2,112,224 | |||||
Stock options excluded from EPS because performance or market condition had not been met(1) | 3,534,712 | 317,675 | 766,568 | |||||
Total stock options excluded from EPS | 8,836,288 | 2,387,226 | 2,878,792 |
Fiscal Year Ended June 30, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Current: | |||||||||||
Federal | $ | 18.4 | $ | 16.8 | $ | 9.0 | |||||
State | 5.0 | 3.6 | 4.5 | ||||||||
Deferred: | |||||||||||
Federal | (17.4 | ) | (16.0 | ) | (92.1 | ) | |||||
State | (2.2 | ) | (1.8 | ) | (1.1 | ) | |||||
Total income tax expense (benefit) | $ | 3.8 | $ | 2.6 | $ | (79.7 | ) |
Fiscal Year Ended June 30, | ||||||||
2016 | 2017 | 2018 | ||||||
Statutory federal income tax rate | 35.0 | % | 35.0 | % | 28.1 | % | ||
Increase (decrease) in rate resulting from: | ||||||||
State taxes, net of federal benefits | 175.0 | 7.1 | 5.0 | |||||
Permanent adjustments | 250.0 | 11.4 | 2.0 | |||||
Stock compensation adjustments | — | (11.4 | ) | (6.7 | ) | |||
Deferred tax impacts of TCJA | — | — | (172.6 | ) | ||||
State tax rate change on deferred items | 340.0 | 1.5 | — | |||||
Provision to return adjustments | 125.0 | (4.7 | ) | (0.7 | ) | |||
Uncertain tax positions | 25.0 | (3.2 | ) | (0.4 | ) | |||
Other | — | 1.4 | (0.9 | ) | ||||
Effective tax rate | 950.0 | % | 37.1 | % | (146.2 | )% |
Fiscal Year Ended June 30, | |||||||
2017 | 2018 | ||||||
Non-current | |||||||
Deferred tax assets: | |||||||
Accrued expenses | $ | 16.5 | $ | 5.4 | |||
Bad debt | 1.5 | 0.9 | |||||
Share-based compensation | 7.5 | 5.5 | |||||
Acquisition related | 3.8 | 2.3 | |||||
Net operating losses | — | — | |||||
Total deferred tax assets | 29.3 | 14.1 | |||||
Deferred tax liabilities: | |||||||
Intangibles | (252.3 | ) | (156.9 | ) | |||
Leases | (34.2 | ) | (29.4 | ) | |||
Debt issuance costs | (8.6 | ) | (2.8 | ) | |||
Depreciation | (3.4 | ) | (0.5 | ) | |||
Other | (1.2 | ) | (2.2 | ) | |||
Total deferred tax liabilities | (299.7 | ) | (191.8 | ) | |||
Total deferred tax assets (liabilities) | $ | (270.4 | ) | $ | (177.7 | ) |
Fiscal Year Ended June 30, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Balance, beginning of the period | $ | 1.5 | $ | 1.3 | $ | 0.9 | |||||
Increases for tax positions taken on acquired entities | — | — | — | ||||||||
Increases for tax positions taken in current period | — | — | — | ||||||||
Increases for tax positions taken in a previous period | 0.3 | — | 0.9 | ||||||||
Expiration of statute of limitations | (0.5 | ) | (0.4 | ) | (0.7 | ) | |||||
Balance, end of period | $ | 1.3 | $ | 0.9 | $ | 1.1 |
Fiscal Year Ended June 30, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Revenue by solution area: | |||||||||||
Cloud | $ | 391.7 | $ | 501.1 | $ | 450.3 | |||||
Security | 249.4 | 324.1 | 376.9 | ||||||||
Digital infrastructure | 2,073.8 | 1,992.4 | 2,030.8 | ||||||||
Total revenue | $ | 2,714.9 | $ | 2,817.6 | $ | 2,858.0 |
Condensed Consolidating Balance Sheet | |||||||||||||||
As of June 30, 2017 | |||||||||||||||
Presidio, Inc. | Presidio Holdings Inc. & Subsidiaries | Intercompany Adjustments | Consolidated | ||||||||||||
Assets | |||||||||||||||
Current Assets | |||||||||||||||
Cash and cash equivalents | $ | 0.7 | $ | 26.8 | $ | — | $ | 27.5 | |||||||
Accounts receivable, net | — | 576.3 | — | 576.3 | |||||||||||
Unbilled accounts receivable, net | — | 159.8 | — | 159.8 | |||||||||||
Financing receivables, current portion | — | 84.2 | — | 84.2 | |||||||||||
Inventory | — | 27.7 | — | 27.7 | |||||||||||
Prepaid expenses and other current assets | 1.3 | 69.1 | (7.0 | ) | 63.4 | ||||||||||
Total current assets | 2.0 | 943.9 | (7.0 | ) | 938.9 | ||||||||||
Property and equipment, net | — | 32.1 | — | 32.1 | |||||||||||
Deferred tax asset | 2.7 | — | (2.7 | ) | — | ||||||||||
Financing receivables, less current portion | — | 113.6 | — | 113.6 | |||||||||||
Goodwill | — | 781.5 | — | 781.5 | |||||||||||
Identifiable intangible assets, net | — | 751.9 | — | 751.9 | |||||||||||
Other assets | 605.2 | 32.7 | (605.2 | ) | 32.7 | ||||||||||
Total assets | $ | 609.9 | $ | 2,655.7 | $ | (614.9 | ) | $ | 2,650.7 | ||||||
Liabilities and Stockholders’ Equity | |||||||||||||||
Current Liabilities | |||||||||||||||
Accounts payable – trade | — | 350.5 | — | 350.5 | |||||||||||
Accounts payable – floor plan | — | 264.9 | — | 264.9 | |||||||||||
Accrued expenses and other current liabilities | 7.0 | 216.3 | (7.0 | ) | 216.3 | ||||||||||
Discounted financing receivables, current portion | — | 79.9 | — | 79.9 | |||||||||||
Total current liabilities | 7.0 | 911.6 | (7.0 | ) | 911.6 | ||||||||||
Long-term debt, net of debt issuance costs | — | 730.7 | — | 730.7 | |||||||||||
Discounted financing receivables, less current portion | — | 104.7 | — | 104.7 | |||||||||||
Deferred income tax liabilities | — | 273.1 | (2.7 | ) | 270.4 | ||||||||||
Other liabilities | — | 30.4 | — | 30.4 | |||||||||||
Total liabilities | 7.0 | 2,050.5 | (9.7 | ) | 2,047.8 | ||||||||||
Total stockholders’ equity | 602.9 | 605.2 | (605.2 | ) | 602.9 | ||||||||||
Total liabilities and stockholders’ equity | $ | 609.9 | $ | 2,655.7 | $ | (614.9 | ) | $ | 2,650.7 |
Condensed Consolidating Balance Sheet | |||||||||||||||
As of June 30, 2018 | |||||||||||||||
Presidio, Inc. | Presidio Holdings Inc. & Subsidiaries | Intercompany Adjustments | Consolidated | ||||||||||||
Assets | |||||||||||||||
Current Assets | |||||||||||||||
Cash and cash equivalents | $ | 0.1 | $ | 36.9 | $ | — | $ | 37.0 | |||||||
Accounts receivable, net | — | 613.3 | — | 613.3 | |||||||||||
Unbilled accounts receivable, net | — | 156.7 | — | 156.7 | |||||||||||
Financing receivables, current portion | — | 88.3 | — | 88.3 | |||||||||||
Inventory | — | 27.7 | — | 27.7 | |||||||||||
Prepaid expenses and other current assets | 2.9 | 79.6 | (1.8 | ) | 80.7 | ||||||||||
Total current assets | 3.0 | 1,002.5 | (1.8 | ) | 1,003.7 | ||||||||||
Property and equipment, net | — | 35.9 | — | 35.9 | |||||||||||
Deferred tax asset | 1.5 | — | (1.5 | ) | — | ||||||||||
Financing receivables, less current portion | — | 116.8 | — | 116.8 | |||||||||||
Goodwill | — | 803.7 | — | 803.7 | |||||||||||
Identifiable intangible assets, net | — | 700.3 | — | 700.3 | |||||||||||
Other assets | 751.6 | 33.9 | (751.6 | ) | 33.9 | ||||||||||
Total assets | $ | 756.1 | $ | 2,693.1 | $ | (754.9 | ) | $ | 2,694.3 | ||||||
Liabilities and Stockholders’ Equity | |||||||||||||||
Current Liabilities | |||||||||||||||
Accounts payable – trade | — | 457.7 | — | 457.7 | |||||||||||
Accounts payable – floor plan | — | 210.6 | — | 210.6 | |||||||||||
Accrued expenses and other current liabilities | — | 195.0 | (1.8 | ) | 193.2 | ||||||||||
Discounted financing receivables, current portion | — | 85.2 | — | 85.2 | |||||||||||
Total current liabilities | — | 948.5 | (1.8 | ) | 946.7 | ||||||||||
Long-term debt, net of debt issuance costs | — | 671.2 | — | 671.2 | |||||||||||
Discounted financing receivables, less current portion | — | 108.6 | — | 108.6 | |||||||||||
Deferred income tax liabilities | — | 179.2 | (1.5 | ) | 177.7 | ||||||||||
Other liabilities | — | 34.0 | — | 34.0 | |||||||||||
Total liabilities | — | 1,941.5 | (3.3 | ) | 1,938.2 | ||||||||||
Total stockholders’ equity | 756.1 | 751.6 | (751.6 | ) | 756.1 | ||||||||||
Total liabilities and stockholders’ equity | $ | 756.1 | $ | 2,693.1 | $ | (754.9 | ) | $ | 2,694.3 |
Condensed Consolidating Statement of Operations | |||||||||||||||
Fiscal Year Ended June 30, 2017 | |||||||||||||||
Presidio, Inc. | Presidio Holdings Inc. & Subsidiaries | Intercompany Adjustments | Consolidated | ||||||||||||
Total revenue | $ | — | $ | 2,817.6 | $ | — | $ | 2,817.6 | |||||||
Total cost of revenue | — | 2,231.7 | — | 2,231.7 | |||||||||||
Gross margin | — | 585.9 | — | 585.9 | |||||||||||
Operating expenses | |||||||||||||||
Selling, general and administrative, and transaction costs | 0.5 | 395.5 | — | 396.0 | |||||||||||
Depreciation and amortization | — | 81.8 | — | 81.8 | |||||||||||
Total operating expenses | 0.5 | 477.3 | — | 477.8 | |||||||||||
Operating income (loss) | (0.5 | ) | 108.6 | — | 108.1 | ||||||||||
Interest and other (income) expense | |||||||||||||||
Interest expense | — | 72.5 | — | 72.5 | |||||||||||
Loss on extinguishment of debt | — | 28.5 | — | 28.5 | |||||||||||
Other (income) expense, net | (4.7 | ) | 0.1 | 4.7 | 0.1 | ||||||||||
Total interest and other (income) expense | (4.7 | ) | 101.1 | 4.7 | 101.1 | ||||||||||
Income before income taxes | 4.2 | 7.5 | (4.7 | ) | 7.0 | ||||||||||
Income tax expense (benefit) | (0.2 | ) | 2.8 | — | 2.6 | ||||||||||
Net income | $ | 4.4 | $ | 4.7 | $ | (4.7 | ) | $ | 4.4 |
Condensed Consolidating Statement of Operations | |||||||||||||||
Fiscal Year Ended June 30, 2018 | |||||||||||||||
Presidio, Inc. | Presidio Holdings Inc. & Subsidiaries | Intercompany Adjustments | Consolidated | ||||||||||||
Total revenue | $ | — | $ | 2,858.0 | $ | — | $ | 2,858.0 | |||||||
Total cost of revenue | — | 2,273.0 | — | 2,273.0 | |||||||||||
Gross margin | — | 585.0 | — | 585.0 | |||||||||||
Operating expenses | |||||||||||||||
Selling, general and administrative, and transaction costs | 1.7 | 384.6 | — | 386.3 | |||||||||||
Depreciation and amortization | — | 83.7 | — | 83.7 | |||||||||||
Total operating expenses | 1.7 | 468.3 | — | 470.0 | |||||||||||
Operating income (loss) | (1.7 | ) | 116.7 | — | 115.0 | ||||||||||
Interest and other (income) expense | |||||||||||||||
Interest expense | — | 46.0 | — | 46.0 | |||||||||||
Loss on extinguishment of debt | — | 14.8 | — | 14.8 | |||||||||||
Other (income) expense, net | (136.2 | ) | (0.3 | ) | 136.2 | (0.3 | ) | ||||||||
Total interest and other (income) expense | (136.2 | ) | 60.5 | 136.2 | 60.5 | ||||||||||
Income before income taxes | 134.5 | 56.2 | (136.2 | ) | 54.5 | ||||||||||
Income tax expense (benefit) | 0.3 | (80.0 | ) | — | (79.7 | ) | |||||||||
Net income | $ | 134.2 | $ | 136.2 | $ | (136.2 | ) | $ | 134.2 |
Condensed Consolidating Statement of Cash Flows | |||||||||||||||
Fiscal Year Ended June 30, 2017 | |||||||||||||||
Presidio, Inc. | Presidio Holdings Inc. & Subsidiaries | Intercompany Eliminations | Consolidated | ||||||||||||
Net cash provided by (used in) operating activities | $ | (0.1 | ) | $ | 51.1 | $ | — | $ | 51.0 | ||||||
Cash flows from investing activities: | . | ||||||||||||||
Proceeds from collection of escrow related to acquisition of business | — | 0.6 | — | 0.6 | |||||||||||
Capital contribution to subsidiary | (162.7 | ) | — | 162.7 | — | ||||||||||
Investment in debt of subsidiary | (123.3 | ) | — | 123.3 | — | ||||||||||
Return of intercompany loan | 12.1 | — | (12.1 | ) | — | ||||||||||
Additions of equipment under sales-type and direct financing leases | — | (100.1 | ) | — | (100.1 | ) | |||||||||
Proceeds from collection of financing receivables | — | 9.8 | — | 9.8 | |||||||||||
Additions to equipment under operating leases | — | (2.0 | ) | — | (2.0 | ) | |||||||||
Proceeds from disposition of equipment under operating leases | — | 1.5 | — | 1.5 | |||||||||||
Purchases of property and equipment | — | (11.4 | ) | — | (11.4 | ) | |||||||||
Net cash used in investing activities | (273.9 | ) | (101.6 | ) | 273.9 | (101.6 | ) | ||||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from initial public offering, net of underwriter discounts and commissions | 247.5 | — | — | 247.5 | |||||||||||
Payment of initial public offering costs | — | (7.2 | ) | — | (7.2 | ) | |||||||||
Proceeds from issuance of comment stock under share-based compensation plans | 1.1 | — | — | 1.1 | |||||||||||
Capital contribution from parent | — | 162.7 | (162.7 | ) | — | ||||||||||
Proceeds from the discounting of financing receivables | — | 108.6 | — | 108.6 | |||||||||||
Retirements of discounted financing receivables | — | (5.0 | ) | — | (5.0 | ) | |||||||||
Net repayments on the receivables securitization facility | — | (5.0 | ) | — | (5.0 | ) | |||||||||
Repayments of senior and subordinated notes | — | (107.5 | ) | (123.3 | ) | (230.8 | ) | ||||||||
Repayment of intercompany loan | — | (12.1 | ) | 12.1 | — | ||||||||||
Repayments of term loans | — | (105.7 | ) | — | (105.7 | ) | |||||||||
Net repayments on the floor plan facility | — | 41.6 | — | 41.6 | |||||||||||
Net cash provided by financing activities | 248.6 | 70.4 | (273.9 | ) | 45.1 | ||||||||||
Net increase (decrease) in cash and cash equivalents | (25.4 | ) | 19.9 | — | (5.5 | ) | |||||||||
Cash and cash equivalents: | |||||||||||||||
Beginning of the period | 26.1 | 6.9 | — | 33.0 | |||||||||||
End of the period | $ | 0.7 | $ | 26.8 | $ | — | $ | 27.5 |
Condensed Consolidating Statement of Cash Flows | |||||||||||||||
Fiscal Year Ended June 30, 2018 | |||||||||||||||
Presidio, Inc. | Presidio Holdings Inc. & Subsidiaries | Intercompany Eliminations | Consolidated | ||||||||||||
Net cash provided by (used in) operating activities | $ | (5.3 | ) | $ | 197.3 | $ | — | $ | 192.0 | ||||||
Cash flows from investing activities: | |||||||||||||||
Acquisition of businesses, net of cash and cash equivalents acquired | — | (42.8 | ) | — | (42.8 | ) | |||||||||
Proceeds from collection of escrow related to acquisition of business | — | 0.2 | — | 0.2 | |||||||||||
Additions of equipment under sales-type and direct financing leases | — | (108.3 | ) | — | (108.3 | ) | |||||||||
Proceeds from collection of financing receivables | — | 4.1 | — | 4.1 | |||||||||||
Additions to equipment under operating leases | — | (1.6 | ) | — | (1.6 | ) | |||||||||
Proceeds from disposition of equipment under operating leases | — | 0.7 | — | 0.7 | |||||||||||
Purchases of property and equipment | — | (14.4 | ) | — | (14.4 | ) | |||||||||
Net cash used in investing activities | — | (162.1 | ) | — | (162.1 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from issuance of comment stock under share-based compensation plans | 4.7 | 3.3 | — | 8.0 | |||||||||||
Proceeds from the discounting of financing receivables | — | 114.6 | — | 114.6 | |||||||||||
Retirements of discounted financing receivables | — | (10.0 | ) | — | (10.0 | ) | |||||||||
Deferred financing cost on receivables securitization facility | — | (1.2 | ) | — | (1.2 | ) | |||||||||
Repayments of senior and subordinated notes | — | (135.7 | ) | — | (135.7 | ) | |||||||||
Borrowings on term loans, net of original issue discount | — | 138.2 | — | 138.2 | |||||||||||
Repayments of term loans | — | (80.0 | ) | — | (80.0 | ) | |||||||||
Net repayments on the floor plan facility | — | (54.3 | ) | — | (54.3 | ) | |||||||||
Net cash provided by (used in) financing activities | 4.7 | (25.1 | ) | — | (20.4 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | (0.6 | ) | 10.1 | — | 9.5 | ||||||||||
Cash and cash equivalents: | |||||||||||||||
Beginning of the period | 0.7 | 26.8 | — | 27.5 | |||||||||||
End of the period | $ | 0.1 | $ | 36.9 | $ | — | $ | 37.0 |
Three Months Ended | |||||||||||||||
September 30, 2016 | December 31, 2016 | March 31, 2017 | June 30, 2017 | ||||||||||||
(in millions, except per-share amounts) | |||||||||||||||
Total revenue | $ | 737.7 | $ | 721.8 | $ | 628.8 | $ | 729.3 | |||||||
Gross margin | 148.6 | 142.9 | 142.1 | 152.3 | |||||||||||
Operating income | 30.3 | 27.5 | 14.4 | 35.9 | |||||||||||
Net income (loss) | 5.6 | 3.4 | (15.0 | ) | 10.4 | ||||||||||
Net income (loss), per common share, basic | $ | 0.08 | $ | 0.05 | $ | (0.20 | ) | $ | 0.11 | ||||||
Net income (loss), per common share, diluted | $ | 0.08 | $ | 0.05 | $ | (0.20 | ) | $ | 0.11 |
Three Months Ended | |||||||||||||||
September 30, 2017 | December 31, 2017 | March 31, 2018 | June 30, 2018 | ||||||||||||
(in millions, except per-share amounts) | |||||||||||||||
Total revenue | $ | 765.0 | $ | 661.6 | $ | 665.1 | $ | 766.3 | |||||||
Gross margin | 156.4 | 137.4 | 139.4 | 151.8 | |||||||||||
Operating income | 44.1 | 23.3 | 18.3 | 29.3 | |||||||||||
Net income | 19.8 | 99.2 | 0.6 | 14.6 | |||||||||||
Net income, per common share, basic | $ | 0.22 | $ | 1.08 | $ | 0.01 | $ | 0.16 | |||||||
Net income, per common share, diluted | $ | 0.21 | $ | 1.03 | $ | 0.01 | $ | 0.15 |
As of June 30, 2017 | As of June 30, 2018 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 0.7 | $ | 0.1 | |||
Prepaid expenses and other current assets | 1.3 | 2.9 | |||||
Total current assets | 2.0 | 3.0 | |||||
Deferred income tax assets | 2.7 | 1.5 | |||||
Investment in subsidiaries | 605.2 | 751.6 | |||||
Total assets | $ | 609.9 | $ | 756.1 | |||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities | |||||||
Accrued expenses and other current liabilities | $ | 7.0 | $ | — | |||
Total current liabilities | 7.0 | — | |||||
Total liabilities | 7.0 | — | |||||
Stockholders' Equity | |||||||
Preferred stock: | |||||||
$0.01 par value; 100 shares authorized, zero shares issued and outstanding at June 30, 2018 and June 30, 2017 | — | — | |||||
Common stock: | |||||||
$0.01 par value; 250,000,000 shares authorized and 92,853,983 shares issued and outstanding at June 30, 2018, 250,000,000 shares authorized and 90,969,919 shares issued and outstanding at June 30, 2017 | 0.9 | 0.9 | |||||
Additional paid-in capital | 625.3 | 644.3 | |||||
Accumulated earnings (deficit) | (23.3 | ) | 110.9 | ||||
Total stockholders' equity | 602.9 | 756.1 | |||||
Total liabilities and stockholders' equity | $ | 609.9 | $ | 756.1 |
Fiscal Year Ended June 30, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Operating expenses | |||||||||||
Selling, general and administrative, and transaction costs | $ | 0.3 | $ | 0.5 | $ | 1.7 | |||||
Total operating expenses | 0.3 | 0.5 | 1.7 | ||||||||
Operating income (loss) | (0.3 | ) | (0.5 | ) | (1.7 | ) | |||||
Interest and other (income) expense | |||||||||||
Unrealized loss (income) on equity investment in subsidiaries | 3.2 | (4.7 | ) | (136.2 | ) | ||||||
Other (income) expense, net | (0.3 | ) | — | — | |||||||
Total interest and other (income) expense | 2.9 | (4.7 | ) | (136.2 | ) | ||||||
Income (loss) before income taxes | (3.2 | ) | 4.2 | 134.5 | |||||||
Income tax (benefit) expense | 0.2 | (0.2 | ) | 0.3 | |||||||
Net income (loss) | $ | (3.4 | ) | $ | 4.4 | $ | 134.2 |
Fiscal Year Ended June 30, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Net cash provided by operating activities | $ | 0.3 | $ | (0.1 | ) | $ | (5.3 | ) | |||
Cash flows from investing activities: | |||||||||||
Capital contribution to subsidiary | — | (162.7 | ) | — | |||||||
Investment in debt of subsidiary | (25.0 | ) | (123.3 | ) | — | ||||||
Return of intercompany loan | — | 12.1 | — | ||||||||
Proceeds from sale of debt investment | 24.9 | — | — | ||||||||
Net cash used in investing activities | (0.1 | ) | (273.9 | ) | — | ||||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of common stock | — | 248.6 | 4.7 | ||||||||
Repurchases of common stock | (0.1 | ) | — | — | |||||||
Net cash (used in) provided by investing activities | (0.1 | ) | 248.6 | 4.7 | |||||||
Net increase (decrease) in cash and cash equivalents | 0.1 | (25.4 | ) | (0.6 | ) | ||||||
Cash and cash equivalents, beginning of the period | 26.0 | 26.1 | 0.7 | ||||||||
Cash and cash equivalents, end of the period | $ | 26.1 | $ | 0.7 | $ | 0.1 |
Balance at beginning of period | Charged to costs and expenses | Charged to other accounts | Deductions and other adjustments | Balance at end of period | |||||||||||||||
Fiscal Year Ended June 30, 2016 | |||||||||||||||||||
Provision for sales returns and credit losses | $ | 3.8 | $ | 1.9 | $ | — | $ | (1.9 | ) | $ | 3.8 | ||||||||
Provision for inventory obsolescence | — | 0.1 | — | — | 0.1 | ||||||||||||||
Provision for residual value and credit losses on financing receivables | 2.0 | — | — | (0.3 | ) | 1.7 | |||||||||||||
Fiscal Year Ended June 30, 2017 | |||||||||||||||||||
Provision for sales returns and credit losses | $ | 3.8 | $ | 2.4 | $ | — | $ | (1.7 | ) | $ | 4.5 | ||||||||
Provision for inventory obsolescence | 0.1 | 0.5 | — | — | 0.6 | ||||||||||||||
Provision for residual value and credit losses on financing receivables | 1.7 | — | — | (0.5 | ) | 1.2 | |||||||||||||
Fiscal Year Ended June 30, 2018 | |||||||||||||||||||
Provision for sales returns and credit losses | $ | 4.5 | $ | 1.0 | $ | — | $ | (2.1 | ) | $ | 3.4 | ||||||||
Provision for inventory obsolescence | 0.6 | 0.1 | — | (0.4 | ) | 0.3 | |||||||||||||
Provision for residual value and credit losses on financing receivables | 1.2 | — | — | (0.5 | ) | 0.7 |
Page | |
Incorporated by Reference | ||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date | ||||
3.1 | S-8 | 3.1 | 3/13/2017 | |||||
3.2 | S-8 | 3.2 | 3/13/2017 | |||||
4.1 | S-1 | 4.1 | 11/22/2016 | |||||
4.2 | S-1 | 4.2 | 11/22/2016 | |||||
4.3 | S-1 | 4.3 | 11/22/2016 | |||||
4.4 | S-1 | 4.4 | 11/22/2016 | |||||
4.5 | S-1 | 4.5 | 1/24/2017 | |||||
4.6 | 8-K | 4.2 | 3/15/2017 | |||||
4.7 | 8-K | 4.1 | 3/15/2017 | |||||
10.1 | S-1 | 10.1 | 12/27/2016 | |||||
10.2 | S-1 | 10.2 | 11/22/2016 | |||||
10.3 | S-1 | 10.3 | 11/22/2016 | |||||
10.4 | S-1 | 10.4 | 11/22/2016 | |||||
10.5 | S-1 | 10.13 | 1/24/2017 | |||||
10.6 | S-1 | 10.5 | 11/22/2016 | |||||
10.7 | S-1 | 10.6 | 11/22/2016 | |||||
10.8 | S-1 | 10.7 | 11/22/2016 |
Incorporated by Reference | ||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date | ||||
10.9 | S-1 | 10.8 | 12/27/2016 | |||||
10.10 | S-1 | 10.9 | 11/22/2016 | |||||
10.11 | S-1 | 10.10 | 11/22/2016 | |||||
+10.12 | S-1 | 10.11 | 2/15/2017 | |||||
10.12.1 | 10-K | 10.12.1 | 9/21/2017 | |||||
10.13 | S-1 | 10.12 | 11/22/2016 | |||||
*10.14 | S-1 | 10.14 | 1/24/2017 | |||||
*10.15 | S-8 | 99.1 | 3/13/2017 | |||||
*10.16 | S-1 | 10.16 | 2/15/2017 | |||||
*10.17 | S-1 | 10.17 | 2/15/2017 | |||||
*10.18 | 8-K | 10.5 | 3/15/2017 | |||||
*10.19 | S-8 | 99.2 | 3/13/2017 | |||||
*10.20 | 8-K | 10.11 | 3/15/2017 | |||||
*10.21 | 8-K | 10.12 | 3/15/2017 | |||||
*10.22 | 8-K | 10.6 | 3/15/2017 | |||||
*10.23 | S-1 | 10.22 | 2/15/2017 | |||||
*10.24 | 8-K | 10.7 | 3/9/2017 | |||||
*10.25 | 8-K | 10.8 | 3/9/2017 | |||||
*10.26 | 8-K | 10.9 | 3/9/2017 | |||||
*10.27 | S-8 | 99.3 | 3/13/2017 | |||||
*10.28 | S-1 | 10.27 | 2/15/2017 | |||||
*10.29 | S-1 | 10.28 | 2/15/2017 | |||||
10.30 | S-1 | 10.29 | 2/15/2017 | |||||
*10.31 | S-1 | 10.30 | 2/15/2017 | |||||
10.32 | 10-K | 10.32 | 9/21/2017 | |||||
10.33 | 10-Q | 10.1 | 2/8/2018 |
Incorporated by Reference | ||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date | ||||
10.34 | 10-Q | 10.2 | 2/8/2018 | |||||
*10.35 | 8-K | 10.1 | 1/16/2018 | |||||
*10.36 | 8-K | 10.2 | 1/16/2018 | |||||
**21.1 | ||||||||
**23.1 | ||||||||
***31.1 | ||||||||
***31.2 | ||||||||
***32.1 | ||||||||
***32.2 | ||||||||
**101.INS | XBRL Instance Document. | |||||||
**101.SCH | XBRL Taxonomy Extension Schema Linkbase Document. | |||||||
**101.CAL | XBRL Taxonomy Calculation Linkbase Document. | |||||||
**101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
**101.LAB | XBRL Taxonomy Label Linkbase Document. | |||||||
**101.PRE | XBRL Taxonomy Presentation Linkbase Document. |
+ | Portions of this exhibit have been omitted pursuant to a confidential treatment request. This information has been filed separately with the SEC. |
PRESIDIO, INC. | ||
Dated: September 6, 2018 | By: | /s/ Robert Cagnazzi |
Robert Cagnazzi | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
Signature | Title | |
/s/ Robert Cagnazzi | Chief Executive Officer and Chairman of the Board of Directors | |
Robert Cagnazzi | ||
/s/ Neil. O Johnston | Executive Vice President and Chief Financial Officer | |
Neil O. Johnston | (Principal Financial Officer) | |
/s/ Benjamin Pawson | Controller and Chief Accounting Officer | |
Benjamin Pawson | (Principal Accounting Officer) | |
/s/ Heather Berger | Director | |
Heather Berger | ||
/s/ Christopher L. Edson | Director | |
Christopher L. Edson | ||
/s/ Salim Hirji | Director | |
Salim Hirji | ||
/s/ Steven Lerner | Director | |
Steven Lerner | ||
/s/ Matthew H. Nord | Director | |
Matthew H. Nord | ||
/s/ Pankaj Patel | Director | |
Pankaj Patel | ||
/s/ Michael A. Reiss | Director | |
Michael A. Reiss | ||
/s/ Todd H. Siegel | Director | |
Todd H. Siegel |
Subsidiaries of Presidio, Inc. | ||
Name | Jurisdiction of Incorporation | |
Presidio Holdings Inc. | Delaware | |
Presidio IS LLC | Delaware | |
Presidio LLC | Georgia | |
Presidio Capital Funding LLC | Delaware | |
Presidio Networked Solutions LLC | Florida | |
Presidio Technology Capital, LLC | Georgia | |
Presidio Networked Solutions Group, LLC | Delaware | |
3rd Ave. Creative Marketing & Branding LLC | Delaware | |
Red Sky Solutions LLC | Utah | |
Red Sky Security Ltd | United Kingdom |
1. | I have reviewed this annual report on Form 10-K for the period ended June 30, 2018 of Presidio, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | I have reviewed this annual report on Form 10-K for the period ended June 30, 2018 of Presidio, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Aug. 31, 2018 |
Dec. 29, 2017 |
|
Document and Entity Information | |||
Entity Registrant Name | Presidio, Inc. | ||
Entity Central Index Key | 0001631825 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --06-30 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 92,953,627 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 637.2 |
Consolidated Balance Sheets (Parentheticals) - $ / shares |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100 | 100 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 92,853,983 | 90,969,919 |
Common stock, shares outstanding | 92,853,983 | 90,969,919 |
Nature of Business and Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nature of Business and Significant Accounting Policies | Nature of Business and Significant Accounting Policies Description of the Company Presidio, Inc., formerly named Aegis Holdings, Inc. (“Aegis”), is a Delaware corporation which was incorporated on November 20, 2014 by certain investment funds affiliated with or managed by Apollo Global Management, LLC and its subsidiaries, including Apollo Investment Fund VIII, L.P., along with their parallel investment funds (the “Apollo Funds”) to complete the acquisition of Presidio Holdings Inc. (“Presidio Holdings”). Presidio Holdings is a holding company for its wholly-owned subsidiary, Presidio LLC, and its operating subsidiaries, which are described below. Prior to its acquisition of Presidio Holdings on February 2, 2015 (the “Presidio Acquisition”), Presidio, Inc. had no operations or activity other than acquisition related costs. Subsequent to the Presidio Acquisition, Presidio, Inc. became the holding company and derives all of its operating income and cash flows from Presidio Holdings and its subsidiaries. For the periods presented, the Company operated primarily through Presidio Networked Solutions LLC (“PNS”), a single indirect, wholly-owned subsidiary. PNS is a leading provider of life-cycle based IT solutions and services. The PNS business also includes the operations of Presidio Networked Solutions Group, LLC (“PNSG”). In addition, the Company operated an IT infrastructure leasing company, Presidio Technology Capital, LLC (“PTC”). On April 3, 2018, the Company completed the acquisition of all of the issued and outstanding units of Red Sky Solutions, LLC, which expands our geographic footprint in the southwestern United States. The Company also has an indirect, wholly-owned, non-operating subsidiary, Presidio Capital Funding LLC (“PCF”), which is utilized for the Receivables Securitization Facility described in Note 11. Presidio Holdings is a guarantor of certain indebtedness and a borrower of other indebtedness as described in Note 11. Refer to Note 22 for the condensed consolidating financial information of Presidio Holdings Inc. and subsidiaries. The Company is headquartered in New York, New York and all of its direct and indirect subsidiaries are located in the United States. Nature of Business Presidio, Inc. is a leading provider of IT solutions to the middle market in North America. The Company enables business transformation through its expertise in IT solutions, with a specific focus on Digital Infrastructure, Cloud and Security solutions. The Company's solutions are delivered through a broad suite of professional services, including strategy, consulting, design and implementation. The Company complements its professional services with project management, technology acquisition, managed services, maintenance and support to offer a full lifecycle model. The Company's services-led, lifecycle model leads to ongoing client engagement. The Company has three solution areas: (i) Digital Infrastructure, (ii) Cloud, and (iii) Security. Through its increasing focus on Cloud and Security solution areas, the Company believes it is well positioned to benefit from the rapid growth in demand for these technologies. Within its three solutions areas, the Company offers customers enterprise-class solutions that are critical to driving digital transformation and expanding business capabilities. Examples of such solutions include advanced networking, IoT, data analytics, data center modernization, hybrid and multi-cloud, cyber risk management and enterprise mobility. These solutions are enabled by the Company's expertise in foundational technologies, built upon its investments in network, data center, security, collaboration, and mobility. The Company’s revenue from solutions consists of the resale of hardware, software, and third-party support service contracts, which is reported as product revenue, and the sale of professional, cloud and managed services, which is reported as service revenue. The Company implements IT solutions for its customers on a national and international basis, although the Company’s principal markets are located in the continental United States. Stock Split On February 24, 2017, the Board of Directors of the Company declared a 2-for-1 stock split of the Company’s common stock in the form of a stock dividend payable on each share of common stock issued and outstanding as of February 24, 2017. The number of shares subject to and the exercise price of the Company’s outstanding options were adjusted to equitably reflect the split. All common stock share and per-share data included in these financial statements give effect to the stock split. Public Offerings On March 15, 2017, the Company completed an initial public offering (“IPO”) in which the Company issued and sold 18,766,465 shares of common stock, inclusive of 2,099,799 shares issued and sold on March 21, 2017, pursuant to the underwriters’ option to purchase additional shares, at the public offering price of $14.00 per share. The Company received net proceeds of $247.5 million, after deducting underwriting discounts and commissions from the sale of its shares in the IPO. In addition, the Company incurred $7.2 million of offering expenses in connection with the IPO. On November 21, 2017, the Company completed a secondary public offering of 8,000,000 shares of the Company’s common stock by certain funds affiliated with Apollo Global Management, LLC (the “Selling Stockholder”) at a price to the public of $14.25 per share. In addition, the underwriters to such secondary public offering purchased an additional 1,200,000 shares of common stock from the Selling Stockholder. The Company did not sell any shares and did not receive any proceeds from the offering. In conjunction with this secondary offering, the Company incurred $1.0 million of expenses, which is presented within transaction costs on the consolidated statement of operations for the fiscal year ended June 30, 2018. Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All financial information presented in the financial statements and notes herein is presented in millions except for share and per share information and percentages. In management’s opinion, all adjustments necessary for a fair presentation of the results of operations, financial position, and cash flows for the periods shown have been made. With the exception of acquisition related accounting, all other adjustments are of a normal recurring nature. The Company has evaluated subsequent events through the issue date of these consolidated financial statements. Principles of Consolidation The Company’s consolidated financial statements include the accounts of Presidio, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Reclassifications We have reclassified some prior period amounts in our consolidated financial statements to conform to our current presentation. Use of Estimates The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, asset residual values, vendor rebates and consideration, goodwill, identifiable intangibles, measurement of income tax assets and liabilities and provisions for doubtful accounts, credit losses, inventory obsolescence, and other contingencies. Actual results could differ from management’s estimates. Significant Accounting Policies A summary of the Company’s significant accounting policies is as follows: Revenue Recognition The Company's revenue is generally derived from the sale of IT-solutions to customers. Incorporated in those solutions are third-party products including hardware, software and support service contracts and the sale of Company services and third-party services. Revenue is generally recognized when all of the following criteria have been met:
As a provider of third-party products and services, the Company considers the principal versus agent accounting guidance to determine if the Company is the primary obligor in the arrangement and if revenue should be recognized gross or net of the associated costs. Applying the principal versus agent accounting guidance is a matter of judgment based on the consideration of several factors and indicators. The Company's solutions may consist of a combination of deliverables including third-party products along with services delivered by the Company and/or third-parties. These types of arrangements generally contain multiple revenue generating activities or elements where delivery or performance may occur at different times or over different periods of time as discussed in the policies below. For arrangements that contain multiple elements, the total consideration of the arrangement is allocated to the deliverables which qualify as separate units of accounting. Generally, each of the above items qualifies as separate units of accounting since they provide stand-alone value to the customer and the delivery or performance of any undelivered items is considered probable and substantially in our control. The allocation of the arrangement consideration to the separate units of accounting is based on the relative selling price of each deliverable. The relative selling price is determined based on an assessment of the cost plus a reasonable margin. The identification of the deliverables, the separate units of accounting, the estimated selling prices and the allocation of the arrangement require management estimates and judgment. Product Revenue Revenue for hardware and software – Revenue from the sale of third-party hardware and third-party software products is generally recognized on a gross basis with the sales price to the customer recorded as revenue and the acquisition cost of the product recorded as cost of revenue, net of vendor rebates. Revenue is recognized when the title and risk of loss are passed to the customer. Hardware and software items can be delivered to customers in a variety of ways including drop-shipped by our vendor or supplier, shipped from our warehouse or via electronic delivery for software licenses. In certain cases, our solutions include the sale of software subscriptions where we are the agent in the arrangement with the customer and recognize the related revenue at the date of sale, net of the related cost of revenue. As the Company is under no obligation to perform additional services, such as post-customer support or upgrades, revenue is recognized at the time of sale as opposed to over the life of the software license. The Company maintains an estimate for sales returns and credit losses based on historical experience. The Company’s vendor partners provide warranties to our customers on equipment sold and as such we have not estimated a warranty reserve or deferred revenue for potential warranty work. Revenue for third-party support service contracts – Revenue from the sale of third-party support service contracts is recognized net of the related cost of revenue. In a third-party support service contract, all services are performed by third-party providers and as a result, the Company concluded that it is acting as an agent and recognizes revenue on a net basis at the date of sale with revenue being equal to the gross margin on the transaction. As the Company is under no obligation to perform additional services, revenue is recognized at the time of sale as opposed to over the life of the third-party support agreement. Revenue from leasing arrangements – Revenue from information technology products leased to customers is based on the type of lease entered into with each customer. Each lease is classified as either a direct financing lease, sales-type lease or operating lease. If a lease meets one or more of the four criteria listed below and both the collectability of the minimum lease payments is reasonably predictable and there are no material uncertainties surrounding the amount of unreimbursable costs yet to be incurred, the lease is classified as either a sales-type or direct financing lease; otherwise, it is classified as an operating lease:
Interest earned on direct financing leases is recognized over the term of the lease using the effective interest method. Revenue on sales-type leases is recognized at the inception of the lease at the present value of the minimum lease payments using the discount rate implicit in the lease, with the earned interest being recognized over the term of the lease using the effective interest method. Minimum lease payments comprise the rental payments that the lessee is obligated to make, excluding contingent rentals and any guarantee by the lessee to pay executory costs. Revenue from operating leases is recognized ratably on a straight-line basis over the term of the lease agreement. Revenue from the sale of the residual asset at the end of a lease term is recognized at the date of sale. The interest income from direct financing and sales-type leases and the revenue recognized from sales-type leases, operating leases and residual asset sales are presented as product revenue in the consolidated statements of operations. For additional information on the accounting treatment of leases, see the Financing Receivables and Operating Leases policies described in this footnote below as well as Note 6. Sales taxes – The Company records sales and use taxes collected from customers for remittance to governmental authorities on a net basis within the Company’s consolidated statements of operations. Shipping and freight – Shipping and freight costs billed to customers are recognized within revenue with the related shipping and freight costs incurred by the Company recorded as a cost of revenue. Service Revenue Revenue for Services – Revenue from professional services and cloud services is recognized as the services are performed. For time and material service contracts revenue is recognized at the contractual hourly rates for the labor hours performed during the period. For fixed price service contracts revenue is recognized on a proportional performance basis. Milestone payments are recognized against the labor hours completed compared to the total estimated hours for the scope of work with contract and revenue accrued or deferred as appropriate. Revenue for managed services is recognized on a straight-line basis over the term of the arrangement. The Company may incur upfront costs associated with professional and managed services, including, but not limited to, purchasing support service contracts and software licenses. These costs are initially deferred as prepaid expenses or other assets and expensed over the period that services are being provided. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of less than three months at the date of purchase to be cash equivalents. The Company’s cash management program utilizes zero balance accounts and overnight money market investments. The Company does not have any compensating balance requirements. Accounts Receivable Accounts receivable are carried at the original invoice amount less a provision for credit losses. Management determines the provision for credit losses by reviewing all outstanding amounts to identify troubled accounts, using historical experience applied to the aging of accounts, and considering current economic conditions that may affect a customer’s ability to pay. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. Accounts receivable are generally due within 30 days of the date of the invoice and typically do not bear interest. Any interest income received on accounts receivable is recorded as received or when collectability is reasonably assured. Unbilled Accounts Receivable Unbilled accounts receivable represent the revenue that has been earned but not yet billed to the customer as of the balance sheet date, less a provision for credit losses. Unbilled accounts receivable typically are comprised of receivables for hardware and software products delivered but not yet invoiced as a result of bill in full provisions, support service contract sales that are being billed over the contract term to customers, and revenue on professional service contracts in which revenue has been recognized in accordance with a proportional performance method but invoicing milestones have not yet been achieved. Management determines the provision for credit losses by reviewing unbilled amounts to identify troubled accounts, using historical experience and considering economic conditions that may affect a customer’s ability to pay. Unbilled receivables are written off when deemed uncollectible. Inventory During the fiscal year, the Company adopted ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which restricts the valuation of inventory to the lower of cost or net realizable value, which is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. The Company's inventory primarily consists of finished goods valued at the lower of cost or market, with cost determined on the first-in, first-out method (“FIFO”). The Company decreases the value of inventory when evidence exists that the net realizable value of inventory is lower than its cost, based upon an aging analysis of the inventory on hand, specifically known inventory-related risks, and assumptions about future demand and market conditions. Property and Equipment Property and equipment are stated at cost less accumulated depreciation, with the exception that property and equipment acquired in an acquisition are recorded at estimated fair value on the date of the acquisition. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Estimated useful lives of three to seven years are used for equipment, software and furniture and fixtures. Depreciation and amortization of leasehold improvements are computed using the shorter of the estimated useful life or the remaining lease term. Depreciation of certain equipment, software, and other property utilized directly in product revenue generation is recorded in cost of product revenue in the Company’s consolidated statements of operations. Similarly, depreciation expense associated with equipment and software directly utilized in support of cloud and managed services contracts is included in cost of service revenue within the Company’s consolidated statements of operations. All other depreciation and amortization are recorded in depreciation and amortization within operating expenses in the Company’s consolidated statements of operations. Debt Issuance Costs Debt issuance costs arising from the Company’s borrowings and credit agreements are amortized using the effective interest rate method over the term of the related debt financing. Debt issuance costs associated with non-revolving credit facilities are presented on a net basis along with the associated debt obligation in the consolidated balance sheets. Debt issuance costs associated with revolving credit facilities are presented net of accumulated amortization within other assets in the consolidated balance sheets. Impairment of Long-lived Assets The Company reviews its long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of long-lived assets is measured by a comparison of the carrying amount of the asset or asset group to the future undiscounted net cash flows expected to be generated by that asset or asset group. If such asset(s) are considered to be impaired, the impairment loss is measured as the amount by which the carrying amount of the asset(s) exceeds their estimated fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less cost to sell. Identifiable Intangible Assets Finite-lived intangible assets such as customer relationships assets, developed technology, trade names, and non-compete agreements are amortized over their estimated useful lives, generally on a straight-line basis. Finite-lived intangible assets are reviewed for impairment or obsolescence whenever events or circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of intangible assets is measured by a comparison of the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by that asset. If the asset is considered to be impaired, the impairment loss is measured as the amount by which the carrying amount of the asset exceeds the estimated fair value. Goodwill and Other Indefinite-lived Intangibles The Company records goodwill when the purchase price of a business acquisition exceeds the estimated fair value of net identified tangible and intangible assets acquired. Goodwill is assigned to a reporting unit on the acquisition date and assessed for impairment at least annually, or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value. In accordance with ASC Topic 805, Business Combinations, if, at the time of issuance of any consolidated financial statements, the Company has not yet finalized the acquisition method of accounting and calculation of goodwill, the corresponding consolidated financial statements are prepared using provisional amounts. Upon finalizing the acquisition method of accounting, the Company applies any adjustments to the provisional amounts in the period in which the adjustments are determined. The Company assesses goodwill for impairment at least annually on March 31 of each year for each reporting unit. During the year, the Company adopted ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), which simplified the test for goodwill impairment. To perform its impairment assessment, the Company compared the fair value of our reporting unit with its carrying amount. If our carrying amount exceeds our fair value, an impairment charge would be recognized for the difference. When the fair value of our reporting unit exceeds the carrying amount, no impairment is recognized. As of March 31, 2018, our estimated fair value exceeded our carrying value by approximately 96.6%. Our fair value was calculated based on our total market capitalization on March 31, 2018. On a qualitative basis, no economic, industry or our company-specific indicators were noted which would have led us to believe that it is more likely than not that goodwill was impaired since March 31, 2018. Similar to goodwill, indefinite-lived intangible assets other than goodwill are assessed annually on March 31, or more frequently if indicated, for impairment. The impairment assessment first considers qualitative and quantitative factors to determine whether events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired, including, but not limited to, the following: (i) the performance of the underlying business related to the intangible asset; (ii) the use of the intangible asset to market to customers and transact with vendors; and (iii) the expectation that the intangible asset will continue to be used going forward. If after assessing the qualitative and quantitative factors the Company determines that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value, then the Company will write down the value of the intangible asset to its fair value. The fair value of the Company's indefinite-lived intangible asset is determined using the relief from royalty method. The significant estimates and assumptions utilized in the fair value estimates include revenue projections, the royalty rate and the weighted average cost of capital. See Note 8 for additional information about the accounting for goodwill and indefinite-lived intangible assets, including the results of the Company’s impairment assessments. Financing Receivables and Operating Leases The Company’s lessor lease transactions are classified at the inception of the lease as either direct financing leases, sales-type leases or operating leases. At the inception of direct financing and sales-type leases, the net investment in leases is recorded, which consists of the minimum lease payments, the initial direct costs applicable for direct financing leases, the unguaranteed residual value of the leased asset and the unearned interest income. Upon entering into a lease transaction, the Company generally assigns the customer lease payments to a financial institution along with a first priority security interest in the leased equipment (“discounting”). These assignments do not qualify for sale accounting in accordance with ASC 860, Transfers and Servicing, and as such are not derecognized from the consolidated balance sheet and instead reported as collateralized borrowings. Accordingly, the related assets remain on the Company’s balance sheets and continue to be reported and accounted for as if the sale or assignment had not occurred. The majority of our assigned lease payments are on a nonrecourse basis with the financial institutions. At the time the lease is discounted, the Company receives a cash payment from the financial institution equal to the present value of the lease payments discounted at a fixed interest rate, and a related liability is established equal to this cash payment received. The asset and liability are both decreased over the term of the lease as payments are received by the financial institution from the lessee. The typical term of our leases and the discounting arrangements is between two and five years. Sales-type leases – At the inception of the lease, the present value of the non-cancelable rentals is recorded as product revenue. Equipment costs, less the present value of the estimated residual values, are recorded in cost of product revenue. The difference between the present value of the non-cancelable rentals and the minimum lease payments receivable and the difference between the present value of the estimated residual values and the future value of residuals are recorded as unearned income, which is amortized to product revenue over the lease term using the effective interest rate method. Direct financing leases – At the inception of a lease, the difference between the cost of the equipment and the present value of the non-cancelable rentals is recorded as unearned income, which is amortized to product revenue over the lease term using an effective interest rate method. Residual values – Residual values represent management’s estimates of the fair market or realizable values of equipment under leases at the maturity of the leases. Management reviews the residual values and they are reduced as necessary to reflect any decrease in the estimated fair market or realizable values. Residual values are evaluated on a quarterly basis and any impairment, other than temporary, is recorded in the period in which the impairment is determined. The resulting reduction in the net investment in leases is recognized as a loss in the period in which the estimate is changed. No upward revision of residual value is made subsequent to the inception of the lease. Operating leases – At the inception of a lease, the equipment assigned to the lease is recorded at cost as equipment under operating leases presented within other assets in the Company’s consolidated balance sheets and is depreciated on a straight-line basis over its useful life. Monthly payments from customers are recorded as part of product revenue, with the depreciation expense associated with the equipment recorded in cost of product revenue within the Company’s consolidated statements of operations. Provision for Sales Returns and Credit Losses A provision for sales returns is maintained for potential future product returns. A corresponding provision is maintained for those product returns that the Company is able to return to our vendors or original equipment manufacturers. These provisions are based on an evaluation of historical trends in product return rates and are presented net as a reduction in accounts receivable and product revenue. Provisions for credit losses are maintained for potentially uncollectible accounts receivable, unbilled receivables and financing receivables. The provisions are increased for potential credit losses, which increases expenses, and decreased by subsequent recoveries. The provisions for credit losses are decreased by write-offs and reductions to the provision for potential credit losses. Accounts are either written off or written down when the loss is both probable and determinable. Management’s determination of the adequacy of the provisions for credit losses for accounts receivable, unbilled receivables and financing receivables are based on the age of the receivable balance, the customer’s credit quality rating, an evaluation of historical credit losses, current economic conditions, and other relevant factors. Income Taxes Deferred taxes are calculated using the liability method, whereby deferred tax assets are recognized for deductible temporary differences, operating losses and tax credit carry-forwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities in the Company’s consolidated balance sheets and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are presented based on the tax rates currently in effect and adjusted for changes in tax laws and rates on the date of enactment. Deferred tax assets and liabilities are classified as noncurrent and presented net in the consolidated balance sheets. The Company evaluates its tax positions under a more-likely-than-not recognition threshold and measurement analysis before they can be recognized for financial statement reporting. Uncertain tax positions have been classified as current or non-current income tax liabilities based on the expectation of whether they will be paid in the next fiscal year. The Company recognizes interest and penalties related to income tax exposures as a component of income tax expense (benefit) in the Company’s consolidated statements of operations. Share-based Compensation The Company measures and recognizes share-based compensation expense for all share-based awards made to employees and directors using fair value based methods over the requisite service period. Prior to the fiscal year ended June 30, 2017 adoption of ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, the Company included an estimated forfeiture rate in its calculation of compensation expense. Subsequently, the Company recognizes forfeitures as they occur. The cost of equity-classified awards is based on the grant-date fair value calculated using a Black-Scholes or Monte Carlo valuation model, depending on the nature and classification of the award. Share-based compensation expense for awards with a service-only condition is recognized over the employee’s requisite service period using a graded vesting method. For awards with a performance condition that affects vesting, the performance condition is not considered in determining the award’s grant-date fair value; however, the conditions are considered when estimating the quantity of awards that are expected to vest. No compensation expense is recorded for awards with performance conditions until the performance condition is determined to be probable of achievement. For awards with a market condition that affects vesting, the market condition is considered in determining the award’s grant-date fair value. Compensation expense for awards with a market condition is recognized straight-line over the derived or implied service period. For awards with both performance and market conditions, the market condition is incorporated into the fair value of the award, while the performance condition impacts the timing of expense recognition. Prior to the fiscal year ended June 30, 2017 adoption of ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, the Company recorded excess tax benefits to additional paid in capital on the consolidated balance sheet. Subsequently, excess tax benefits are recorded as a component of income tax expense in the consolidated statement of operations. Additionally, subsequent to the adoption of ASU 2016-09, excess tax benefits are presented as an operating activity on the consolidated statement of cash flows, instead of as a financing activity. In the case of modifications of awards, additional share-based compensation expense is based on the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified. Share-based compensation expense is classified as selling expenses or general and administrative expenses consistent with other compensation expense associated with the award recipient. The Company uses the simplified method in estimating the expected life of its service-only condition awards because the Company does not have sufficient historical exercise data to provide a reasonable basis to estimate future exercise patterns. Other Comprehensive Income The Company did not have any components of other comprehensive income for any of the periods presented. Earnings Per Share Basic earnings per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed using the weighted-average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Dilutive potential shares of common stock outstanding includes the dilutive effect of vested and unvested in-the-money service-only condition stock options and stock options with performance conditions once the performance condition is considered probable of achievement. Stock options with market conditions are included in the calculation of potential dilutive shares to the extent the market conditions are deemed to have been met based on information as of the end of the period as if it were the end of the contingency period. The dilutive effect of such equity-classified awards is calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that the Company has not yet recognized are collectively assumed to be used to repurchase shares. Prior to the fiscal year ended June 30, 2017 adoption of ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, the amount of excess tax benefits that would be recorded in additional paid-in capital when the award became deductible was considered an assumed proceed. Shares issued under the Company's Employee Stock Purchase Plan are included as dilutive potential shares of common stock outstanding as of the beginning of the applicable offering period, to the extent they are not anti-dilutive. Partner Incentive Program Consideration The Company receives payments and credits from vendors for various programs, including rebates, volume incentive programs, and shared marketing expense programs. Each program varies in length and has varying conditions or achievement targets that determine the amount of consideration the Company is eligible for. The Company estimates and recognizes the amount of partner incentive program consideration earned when it is probable and reasonably estimable using the information available or historical data. Such partner incentive program consideration is recognized as a reduction of cost of revenue with respect to rebates, volume incentive programs and similar programs or as a reduction to operating expenses with respect to shared marketing expense programs. Business Combinations The Company accounts for business combinations and acquisitions using the acquisition method. The acquisition method requires that the total purchase price of the acquired entity be allocated to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The assets acquired include the analysis and recognition of intangible assets such as customer relationships, trade names, developed technology and contractual rights and the liabilities assumed include contractual commitments and contingencies. Any premium paid over the fair value of the net assets and liabilities acquired is recorded as goodwill in connection with the business combination. The results of operations for an acquired entity are included in the consolidated financial statements from the date of acquisition. Fair Value Measurements Fair value is defined under U.S. GAAP as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also provides a fair value hierarchy for valuation inputs to prioritize the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
For those financial instruments with no quoted market prices available, fair value is estimated using present value calculations or other valuation methods. Determining the fair value incorporates management’s best judgment with respect to current economic conditions, discount rates and estimates of future cash flows. The Company did not elect the fair value measurement option for any of its financial assets or liabilities. Derivative Instruments The Company may periodically use interest rate swap and cap agreements to reduce the impact of interest rate changes on its long-term debt. All derivative instruments that are not clearly and closely related to the economic characteristics and risks of the host contract are recognized in the Company’s consolidated balance sheets at their fair value and are appropriately classified as current or non-current assets and liabilities. The Company has not elected hedge accounting for its derivative instruments, and as a result, changes in the fair value are recorded within the Company’s consolidated statements of operations within general and administrative expenses along with the periodic settlements on the variable rate asset or liability. For the periods presented, the Company had no derivative agreements or activity. Reportable Segments Segment information is presented in accordance with a “management approach.” The “management approach” is based on the way that the Company’s chief operating decision-maker reviews operating segment information for use in making decisions, allocating resources and assessing performance. An operating segment is a component of the Company (i) that engages in business activities from which it may earn revenue and incur expense, (ii) whose operating results are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and (iii) for which discrete financial information is available. Recent Accounting Pronouncements Adopted During the Fiscal Year In July 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which restricts the valuation of inventory to the lower of cost or net realizable value, which is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. The standard has an effective date for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, with early adoption permitted. The Company adopted this standard in the three months ended September 30, 2017. The adoption of this standard had an immaterial impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this update eliminate Step 2 of the current two-step process, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 is effective for the Company beginning in the first quarter of 2020 and allows for early adoption. The Company elected to early adopt this standard during the three months ended March 31, 2018. The adoption of this ASU did not have an impact on the Company's Consolidated Financial Statements. Recent Accounting Pronouncements Not Yet Adopted as of June 30, 2018 In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), along with subsequent clarifying ASUs, which outline a single, comprehensive model for accounting for revenue from contracts with customers. Under the standard, revenue is to be recognized upon the transfer of promised goods or services to a customer, in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standard, as amended, is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The standard allows entities to apply the standard retrospectively to each prior reporting period presented ("full retrospective adoption") or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application ("modified retrospective adoption"). The Company formed an implementation committee to evaluate the differences compared to existing GAAP and to implement the processes associated with the adoption of this standard. The Company is currently in the process of implementing appropriate changes to its business processes, systems and controls to support recognition and disclosure under the standard. The Company adopted the guidance on July 1, 2018, and utilized the full retrospective method. The Company has finalized its accounting policies under the new standard which impacted revenue recognition as follows:
The adoption of the ASU is expected to impact the Company's results as follows (in millions, except per-share data):
The adoption of the ASU did not impact cash flow provided by operating activities for the years ended June 30, 2018 and 2017. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which changes the accounting for leases in order 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. The standard has an effective date for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact that the standard will have on the consolidated financial statements. The adoption of the standard is not expected to have a material impact on the Company’s leasing business from a lessor perspective. |
Acquisitions |
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Acquisitions | Acquisitions Red Sky Solutions, LLC On April 3, 2018, the Company completed the acquisition (“Red Sky Acquisition”) of all of the issued and outstanding units of Red Sky Solutions, LLC in exchange for $36.6 million paid in cash and approximately $4.1 million paid in 269,287 restricted shares of the Company’s common stock. As part of the Red Sky Acquisition, employees of Red Sky are eligible to obtain an earnout bonus based on a target EBITDA, subject to continued employment. Expense for this earnout is recorded in transaction costs, presented in the consolidated statement of operations. The acquisition expands our geographic footprint in the southwestern United States. In accordance with the acquisition method, the acquired assets and assumed liabilities of the Red Sky business have been recognized at fair value as of April 3, 2018. The fair value of the acquired tangible assets and liabilities of Red Sky were determined to be consistent with their book value as of the date of the transaction. The fair values assigned to intangible assets were determined through use of a combination of the income, market and costs methods. The goodwill recognized from the transaction is primarily associated with Red Sky’s specialized and technical workforce. The acquisition of Red Sky was a taxable transaction and as a result, the goodwill and acquired intangible assets are deductible for income tax purposes. The Company incurred $0.4 million of acquisition related costs during the fiscal year ended June 30, 2018 associated with the Red Sky Acquisition, which are presented as part of transaction costs in the consolidated statements of operations. The following table summarizes the purchase price allocation for the Red Sky Acquisition (in millions):
Emergent Networks, LLC On August 31, 2017, the Company completed the acquisition of all of the issued and outstanding units of Emergent Networks, LLC (“Emergent”) for total consideration of approximately $9.3 million. The acquisition of Emergent expanded our geographic footprint in Minnesota. The Company incurred $0.1 million of acquisition related costs during the fiscal year ended June 30, 2018 associated with the acquisition of Emergent, which are presented as part of transaction costs in the consolidated statements of operations. In connection with this acquisition, the Company recognized $4.3 million of identifiable intangible assets and $2.6 million of goodwill. Netech Corporation On February 1, 2016, pursuant to an asset purchase agreement dated as of December 31, 2015, a wholly-owned subsidiary of the Company acquired certain assets and assumed certain liabilities of the Netech Corporation (“Netech Acquisition”) comprising the Netech business (“Netech”). Total consideration was $250.5 million, which included $240.1 million paid in cash and $11.0 million paid in 1,257,142 shares of the Company’s common stock. In the absence of a public trading market for our common stock at the time of the acquisition, the value of the common stock provided as consideration was determined contemporaneously using a combination of the market approach valuation method of comparable companies and an income approach valuation method based on discounted cash flows. The Netech Acquisition enables the Company to further broaden its portfolio of services and solutions and significantly expand its capabilities within the midwestern United States. The Netech Acquisition was funded through the combination of a new $150.0 million senior credit facility, an incremental $25.0 million term loan borrowing under the Company’s existing senior credit facility, a borrowing under the Company’s accounts receivable securitization facility and available cash on hand. In accordance with the acquisition method, the acquired assets and assumed liabilities of the Netech business have been recognized at fair value as of February 1, 2016. The fair values assigned to the assets and liabilities were derived using a combination of the income approach, the market approach and the cost approach. The significant estimates that were used in calculating the fair values include useful lives, estimated selling prices, disposal costs, costs to complete, and reasonable profit. The fair values assigned to intangible assets were determined through the use of the relief from royalty method and the excess earnings method. The goodwill recognized from the transaction is primarily associated with Netech’s specialized and technical workforce, its positioning in the marketplace, potential synergies and the Company’s belief in its potential for continued growth. The Netech Acquisition was a taxable transaction, and as a result, the goodwill and acquired intangible assets are deductible for income tax purposes. The following table summarizes the purchase price allocation for the Netech Acquisition (in millions):
Gross contractual receivables acquired were $70.4 million of accounts receivable and $7.5 million of unbilled receivables. The Company incurred $4.5 million of acquisition related costs during the fiscal year ended June 30, 2016 associated with the Netech Acquisition, which are presented as part of transaction costs in the consolidated statements of operations. In August 2016, the Company collected the $0.6 million that was due back to the Company from escrow accounts as a result of final post-closing purchase price adjustments related to the net working capital as of the closing date of February 1, 2016. Sequoia Worldwide LLC On November 23, 2015, the Company acquired certain assets and assumed certain liabilities of Sequoia Worldwide LLC (“Sequoia”) for total consideration of approximately $12.6 million, which included $11.2 million paid in cash and $1.4 million paid in 159,890 shares of the Company’s common stock. In the absence of a public trading market for our common stock at the time of acquisition, the value of the common stock provided as consideration was determined contemporaneously using a market approach valuation method of comparable companies. The acquisition of Sequoia, a firm with deep cloud consulting and integration domain expertise, allows the Company to provide hybrid cloud strategies and service delivery models for our clients. The fair values assigned to intangible assets were determined through the use of the relief from royalty method and the excess earnings method. The goodwill recognized from the transaction is primarily associated with Sequoia’s specialized and technical workforce. The acquisition of Sequoia was a taxable transaction and as a result, the goodwill and acquired intangible assets are deductible for income tax purposes. Transaction costs associated with the acquisition were immaterial. The following table summarizes the purchase price allocation for the Sequoia acquisition (in millions):
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Disposition of Business |
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Disposition of Business | Disposition of Business On October 22, 2015, the Company completed the sale of the Atlantix business to a third party for $36.3 million in net proceeds resulting in a $6.8 million loss on the disposal presented within interest and other (income) expense in the consolidated statement of operations. Based on qualitative and quantitative considerations, Atlantix was not considered to be a discontinued operation for financial reporting purposes. The carrying amounts of the assets and liabilities included as part of the disposal were as follows (in millions):
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Accounts and Unbilled Receivables |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts and Unbilled Receivables | Accounts and Unbilled Receivables Accounts receivable consisted of the following (in millions):
Unbilled receivables consisted of the following (in millions):
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Prepaid Expenses and Other Current Assets |
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Prepaid Expenses and Other Current Assets | Prepaid Expense and Other Current Assets Prepaid expenses and other current assets consisted of the following (in millions):
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Financing Receivables and Operating Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Receivables and Operating Leases | Financing Receivables and Operating Leases The Company records the lease receivables related to discounted sales-type or direct financing leases as financing receivables, and the related liability resulting from discounting customer payment streams as discounted financing receivables, in the Company’s consolidated balance sheets. Discounted customer payment streams are typically collateralized by a security interest in the underlying assets being leased. At June 30, 2018 and 2017, the interest rates on discounted leases ranged from 0.0% to 10.0% and 2.0% to 10.5%, respectively. Financing receivables – The assets and related liabilities for discounted and not discounted sales-type and direct financing leases to financial institutions were as follows (in millions):
The discounted financing receivables associated with sales-type and direct financing type leases are presented in the consolidated balance sheets together with the discounted financing receivables associated with operating leases, which is discussed below. Minimum lease payments for discounted and non-discounted sales-type and direct financing leases were as follows (in millions):
Operating leases – Equipment under operating leases and accumulated depreciation presented within other assets in the consolidated balance sheets was as follows (in millions):
Depreciation and amortization expense associated with equipment under operating leases that is included in cost of product revenue within the Company’s consolidated statements of operations was $1.4 million for the fiscal year ended June 30, 2018, $1.7 million for the fiscal year ended June 30, 2017 and $2.5 million for the fiscal year ended June 30, 2016. The minimum lease payments related to operating leases discounted or non-discounted were as follows (in millions):
Liabilities for discounted operating leases was follows (in millions):
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Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment and accumulated depreciation and amortization was as follows (in millions):
Depreciation and amortization associated with property and equipment that is included in depreciation and amortization within the Company’s consolidated statement of operations was $9.3 million for the fiscal year ended June 30 2018, $8.2 million for the fiscal year ended June 30, 2017 and $8.8 million for the fiscal year ended June 30, 2016. Depreciation and amortization expense associated with property and equipment directly utilized in support of managed services and managed cloud contracts that is included in cost of service revenue within the Company’s consolidated statement of operations was $4.4 million for the fiscal year ended June 30, 2018, $3.7 million for the fiscal year ended June 30, 2017 and $3.2 million for the fiscal year ended June 30, 2016. |
Goodwill and Identifiable Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Identifiable Intangible Assets | Goodwill and Identifiable Intangible Assets Goodwill Goodwill consisted of the following (in millions):
No acquisitions were made during the fiscal year ended June 30, 2017. For the fiscal year ended June 30, 2018, goodwill increased by $22.2 million in connection with new acquisitions, of which $19.6 million was associated with the Red Sky Acquisition and $2.6 million was associated with the acquisition of Emergent. The Company performed an impairment assessment as of March 31 of each year to determine whether it was more likely than not that the fair value of the Company’s reporting unit was less than its carrying amount. Based on the results of these assessments, the Company determined that it was not more likely than not that the fair value of the reporting unit was less than its carrying amount. As a result, the Company concluded that no impairment of its goodwill existed at those dates and, accordingly, no impairment losses have been recorded during any of the periods presented. Identifiable Intangible Assets Identifiable intangible assets consisted of the following (in millions):
Amortization associated with intangible assets was $74.4 million for the fiscal year ended June 30, 2018, $73.6 million for the fiscal year ended June 30, 2017 and $67.2 million for the fiscal year ended June 30, 2016. The weighted-average remaining useful life of the finite-lived intangible assets was 6.6 years as of June 30, 2018. The Company performed an impairment assessment as of March 31 of each year on the indefinite-lived trade names to determine whether it was more likely than not that the fair value of the trade names was less than their carrying amounts. Based on the results of these assessments, the Company determined that it was not more likely than not that the fair value of its trade names was less than their carrying amount. As a result, the Company concluded that no impairment of its trade names existed at those dates. The Company did not identify or record any impairment losses related to its trade names during any of the periods presented. Based on the finite-lived intangible assets recorded at June 30, 2018, the annual amortization expense is expected to be as follows (in millions):
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Accounts Payable - Floor Plan |
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Line of Credit Facility [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable - Floor Plan | Accounts Payable - Floor Plan The accounts payable – floor plan balances on the consolidated balance sheets relate to an agreement with a financial institution that provides an indirect wholly-owned subsidiary of the Company with funding for discretionary inventory purchases from approved vendors. Payables are due within 90 days and are non-interest bearing provided they are paid when due. In accordance with the agreement, the financial institution has been granted a senior security interest in the indirect wholly-owned subsidiary’s inventory purchased under the agreement and accounts receivable arising from the sale thereof. Payments on the facility are guaranteed by Presidio LLC and subsidiaries. As of June 30, 2018, the aggregate availability for purchases under the floor plan is the lesser of $325.0 million or the liquidation value of the pledged assets. The balances outstanding under the accounts payable – floor plan facility were $210.6 million and $264.9 million as of June 30, 2018 and 2017, respectively. Long-Term Debt and Credit Agreements Long-term debt consisted of the following (in millions):
February 2015 Credit Facilities On February 2, 2015, Presidio LLC and PNS (the “Borrowers”), two wholly-owned subsidiaries of the Company, entered into a senior secured credit facility (the “February 2015 Credit Agreement”) which provided a $600.0 million term loan (“February 2015 Term Loan”) with a seven year maturity and a $50.0 million revolving credit facility (“February 2015 Revolver”) with a five year maturity (collectively referred to as the “February 2015 Credit Facilities”). On February 1, 2016, as part of the Netech Acquisition discussed in Note 2, the Borrowers entered into Incremental Assumption Agreement and Amendment No. 2 to the February 2015 Credit Agreement for an incremental $25.0 million term loan borrowing. The $25.0 million incremental term loan under the credit facility is subject to the same terms and conditions as the then-existing term loans under the February 2015 Credit Agreement. On May 27, 2016, the Borrowers entered into Incremental Assumption Agreement and Amendment No. 3 (the “May 2016 Amendment”) to the February 2015 Credit Agreement for an incremental $140.0 million term loan borrowing. The proceeds of the incremental term loan were used to, among other things, repay in full the remaining $115.0 million outstanding on the credit facility incurred in connection with the Netech Acquisition. The $140.0 million incremental term loan under the credit facility is subject to the same terms and conditions as the then-existing term loans under the February 2015 Credit Agreement. On January 19, 2017, the Borrowers entered into Incremental Assumption Agreement and Amendment No. 4 (the “January 2017 Amendment”) to, among other things, lower the applicable margin for all term loans outstanding under the February 2015 Credit Agreement to 3.50% in the case of LIBOR rate borrowings and 2.50% in the case of base rate borrowings. In addition, the January 2017 Amendment provided that from and after the date that Presidio Holdings delivers a certificate to the administrative agent certifying that (i) a qualifying initial public offering has occurred and (ii) as of the date of such certificate, the net total leverage ratio, calculated on a pro forma basis, is less than 4.00 to 1.00, the applicable margin for term loans outstanding under the February 2015 Credit Agreement would be reduced by an additional 0.25%. In addition, the January 2017 Amendment reset the amortization payments at a rate of 1.00% per annum, payable quarterly on the principal amount of term loans outstanding as of the date of the January 2017 Amendment, which principal amount was $703.6 million. On January 5, 2018, the Borrowers entered into an Incremental Assumption Agreement and Amendment No. 6 (the “Sixth Amendment” or the “January 2018 Amendment”) amending the February 2015 Credit Agreement, by and among the Borrowers, the guarantors party thereto, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent. Pursuant to the Sixth Amendment, the Borrowers (i) refinanced all $576.6 million in aggregate principal amount of term loans outstanding under the Credit Agreement (the “Existing Term Loans”) and (ii) borrowed $140.0 million in aggregate principal amount of incremental term loans, in each case with new term loans (the “New Term Loans”) under the February 2015 Credit Agreement. The New Term Loans have an interest rate of LIBOR plus 2.75% (with a LIBOR floor of 1.0%) or base rate plus 1.75% (reduced from the interest rates of LIBOR plus 3.25% or base rate plus 2.25% applicable to the Existing Term Loans), and a maturity date of February 2, 2024 (two years longer than the maturity date of the Existing Term Loans). The New Term Loans were issued at a price equal to 99.75% of their face value. In accordance with the terms of the February 2015 Credit Agreement, the Borrowers may request one or more incremental term loan facilities and/or increase commitments under the February 2015 Revolver in an aggregate amount of up to the sum of $125.0 million plus additional amounts so long as, (i) in the case of loans under additional credit facilities secured by liens (other than to the extent such liens are expressly subordinated in writing to the liens on the collateral securing the February 2015 Credit Agreement), the consolidated net first lien secured leverage ratio would be no greater than 3.75 to 1.00 and (ii) in the case of loans under additional credit facilities that would not be included in the computation of the consolidated net first lien secured leverage ratio, the consolidated net secured leverage ratio would be no greater than 4.25 to 1.00, subject to certain conditions and receipt of commitments by existing or additional lenders. The Borrowers may voluntarily repay outstanding loans under the February 2015 Credit Agreement at any time without prepayment premium or penalty except in connection with a repricing event, subject to customary “breakage” costs with respect to LIBOR rate loans. All obligations under the February 2015 Credit Agreement are unconditionally guaranteed by Presidio Holdings and each of its existing and future direct and indirect, wholly-owned domestic subsidiaries, subject to certain exceptions. The obligations are secured by substantially all assets of the Borrowers and each guarantor, including capital stock of the Borrowers and subsidiary guarantors, in each case subject to certain exceptions. The February 2015 Credit Agreement is subject to an intercreditor agreement with the accounts payable – floor plan that provides that certain security interests in assets securing the February 2015 Credit Agreement shall be subordinate to the security interests on the collateral securing the obligations under the accounts payable – floor plan described in Note 9. The February 2015 Credit Agreement contains certain customary affirmative covenants, negative covenants and events of default. The negative covenants in the February 2015 Credit Agreement include, among other things, limitations (subject in each case to exceptions) on the ability of the Borrowers, the guarantors and their restricted subsidiaries to:
February 2015 Term Loan – Borrowings under the February 2015 Term Loan bear interest at a rate equal to, at the Borrowers’ option, either:
The applicable margin for term loans is 2.75% in the case of LIBOR rate borrowings and 1.75% in the case of base rate borrowings as of June 30, 2018, resulting from the January 2018 Amendment. As of June 30, 2018, due to voluntary prepayments made on the term loans subsequent to the January 2018 Amendment, $11.2 million of amortization payments are due prior to the maturity of the February 2015 Term Loan. The February 2015 Credit Agreement requires the Borrowers to prepay outstanding term loan borrowings, subject to certain exceptions, with:
For the fiscal year ended June 30, 2018, there are no additional prepayments required based on the Borrowers’ calculation of the annual excess cash flow. The February 2015 Term Loan was originally a $600.0 million term loan with a seven year maturity of February 2, 2022. The borrowing was issued at 97.0% of par, resulting in an original issue discount of $18.0 million. The Company incurred $15.0 million of deferred financing costs associated with the original term loan, resulting in total deferred issuance costs of $33.0 million. The $140.0 million borrowing entered into pursuant to the May 2016 Amendment was issued at 99.5% of par, resulting in $0.7 million of original issue discount. In accordance with debt modification accounting, the Company recorded an additional $0.1 million in deferred issuance costs associated with the amendment. In association with the January 2018 Amendment, the Company incurred $2.9 million in professional fees which are presented within transaction costs on the Company's consolidated statement of operations and capitalized $2.4 million of debt issuance costs, inclusive of original issuance discount, presented on a net basis along with the associated debt obligations on the Company's consolidated balance sheet. The Company has made $80.0 million in aggregate voluntary prepayments of term loans under the February 2015 Credit Agreement during the fiscal year ended June 30, 2018, resulting in $2.1 million loss on extinguishment of debt reflected in the Company’s consolidated statement of operations associated with the write-off of debt issuance costs. February 2015 Revolver– The February 2015 Revolver provides a $50.0 million revolving credit facility with a $25.0 million sublimit available for letters of credit and a swingline loan sub facility maturing February 2, 2020. Borrowings under the February 2015 Revolver bear interest at a rate equal to, at the Borrowers’ option, either:
The applicable margin for revolving loans is 4.25% in the case of LIBOR rate borrowings and 3.25% in the case of base rate borrowings (with margins for revolving loans subject to certain reductions based on a net first lien leverage ratio). In addition to paying interest on the outstanding principal under the February 2015 Revolver, the Borrowers are required to pay a commitment fee equal to 0.50% (subject to a step-down to 0.375% based on achievement of a specified net first lien leverage ratio) in respect of the unutilized commitments under the facility. The Borrowers are also required to pay customary agency fees as well as letter of credit participation fees computed at a rate per annum equal to the applicable margin for LIBOR rate borrowings on the dollar equivalent of the daily stated amount of outstanding letters of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges and customary fronting fees. All borrowings under the February 2015 Revolver are subject to the satisfaction of customary conditions, including the absence of a default and the accuracy of representations and warranties. The February 2015 Revolver requires that Presidio Holdings, after an initial grace period and subject to a testing threshold, comply on a quarterly basis with a maximum first lien net senior secured leverage ratio. The testing threshold is met if, at the end of any applicable fiscal quarter, the sum of outstanding exposure under the February 2015 Revolver exceeds 30% of the outstanding commitments under the revolving credit facility at such time. In conjunction with entering into the February 2015 Credit Agreement, the Company incurred $1.3 million in deferred financing costs associated with the February 2015 Revolver. As of June 30, 2018 and 2017, there were no outstanding borrowings on the February 2015 Revolver and there were $1.8 million and $1.5 million in letters of credit outstanding, respectively. The Company is in compliance with the covenants and had and $48.2 million and $48.5 million available for borrowings under the facility as of June 30, 2018 and 2017, respectively. Senior and Senior Subordinated Notes In conjunction with the Presidio Acquisition, on February 2, 2015, Presidio Holdings issued a series of senior notes (“Senior Notes”) in an aggregate principal amount of $250.0 million, and a series of senior subordinated notes (“Senior Subordinated Notes”) in an aggregate amount of $150.0 million (collectively referred to as the “Notes”), each of which were to mature on February 15, 2023. On February 15, 2017, the Company entered into a senior subordinated notes purchase agreement with Deutsche Bank AG, who was the holder of 100% of the remaining $111.8 million of outstanding Senior Subordinated Notes, pursuant to which the Company agreed to use the net proceeds of the IPO to repurchase, and Deutsche Bank AG agreed to sell, all of the outstanding Senior Subordinated Notes at the Senior Subordinated Notes Repurchase Price as defined in the indenture. On March 15, 2017 (the “Repurchase Date”), the Company used proceeds from the initial public offering, together with cash on hand, to repurchase and cancel the $111.8 million in aggregate principal amount of outstanding 10.25% Senior Subordinated Notes at a repurchase price equal to 110.25% of the principal amount, plus accrued and unpaid interest to, but excluding, the Repurchase Date. In connection with the cancellation, the Company satisfied and discharged its obligations under the indenture. As a result of the repurchase and cancellation of the Senior Subordinated Notes, the Company recorded a $13.5 million loss on extinguishment of debt which includes the repurchase premium of $11.5 million and the write-off of $2.0 million of related debt issuance costs. On February 17, 2017, the Company provided notice to the trustee of the Senior Notes that on March 20, 2017 (the “Redemption Date”), the Company intended to redeem up to $97.5 million in aggregate principal amount of its 10.25% Senior Notes, subject to the satisfaction or waiver of certain conditions. Pursuant to the IPO, such conditions were satisfied and so on March 20, 2017, $97.5 million in aggregate principal amount of the Senior Notes were redeemed at a redemption price equal to 110.25% of the principal amount of the Senior Notes being redeemed, plus accrued and unpaid interest to, but excluding, the Redemption Date. As a result of the redemption of the $97.5 million in aggregate principal amount of Senior Notes, the Company recorded a $11.8 million loss on extinguishment of debt which includes the redemption premium of $10.0 million and the write-off of $1.8 million of related debt issuance costs. Proceeds from the New Term Loans obtained pursuant to the January 2018 Amendment noted above were used to (i) refinance all of the Existing Term Loans, (ii) redeem all of the $125.0 million remaining outstanding Senior Notes in accordance with the optional redemption provisions contained in the indenture governing the Senior Notes and (iii) pay the redemption premium on the Senior Notes, accrued and unpaid interest, and other fees and expenses payable in connection with the foregoing. In connection with the redemption of the Senior Notes, the Company recorded a loss on extinguishment of debt of $12.6 million, of which $1.9 million related to write-offs of unamortized debt issuance costs. Receivables Securitization Facility The Company maintains an accounts receivable securitization facility (“Receivables Securitization Facility”) originally issued in April 2008 whereby each of PNS and Atlantix (prior to its disposal) sells its trade receivables on a continuous basis to a wholly-owned non-operating subsidiary of the Company, Presidio Capital Funding, LLC (“PCF”). PCF then grants, without recourse, a senior undivided security interest in the pooled receivables to the administrative agent of the facility, PNC Bank, while maintaining a subordinated undivided security interest in any over-collateralization of the pooled receivables. Presidio LLC services the receivables for PCF at market rates, and accordingly, no servicing asset or liability has been recorded. Upon and after the sale or contribution of the accounts receivable to PCF, such accounts receivable are assets of PCF and, as such, are not available to creditors of the Company or its other subsidiaries. The Receivables Securitization Facility provides for borrowing capacity subject to a borrowing limit that is based on eligible receivables, as defined in the securitization agreements. Interest is calculated daily but payable monthly based on a Eurodollar borrowing rate plus a utilized program fee of 1.40%. The Company also incurs a commitment fee of 0.50% or 0.40%, depending on utilization. At June 30, 2018, the interest rate was 3.49% and the commitment fee was 0.50%. In connection with the Presidio Acquisition, the committed amount of the Receivables Securitization Facility was increased from $150.0 million to $200.0 million, and the maturity date was extended from March 31, 2017 to the date three years after the closing of the Presidio Acquisition, which is February 2, 2018. The February 2, 2015 amendment to the Receivables Securitization Facility resulted in $0.8 million of additional debt issuance costs. On February 8, 2016, the Receivables Securitization Facility was amended to increase the commitment amount from $200.0 million to $250.0 million. All other terms and conditions remained unchanged. The Company incurred $0.1 million in deferred financing costs associated with the February 8, 2016 amendment. Accounts receivable purchased by PCF are subject to the satisfaction of customary conditions, including the absence of a termination event and the accuracy of representations and warranties. The obligations under the Receivables Securitization Facility are secured by PCF’s right, title and interest in the pool of receivables and certain related assets. The facility requires that Presidio LLC comply with a minimum fixed charge coverage ratio of 1.0 to 1.0 if its excess liquidity, as defined in the facility, falls below $35.0 million for at least five consecutive days. The Company was in compliance with this covenant as of June 30, 2017. On November 28, 2017, the Company entered into Amendment No. 2 to the Second Amended and Restated Receivables Purchase Agreement and Reaffirmation of Performance Guaranty which, among other things, extended the maturity of the facility to November 28, 2020. The Company incurred $0.6 million in deferred financing costs associated with this amendment. As of June 30, 2018 and 2017, respectively, there were no outstanding borrowings under the Receivables Securitization Facility. The Company had $248.0 million and $175.5 million available under the Receivables Securitization Facility based on the collateral available as of June 30, 2018 and 2017, respectively. Debt Issuance Costs The Company amortizes original issue discount and deferred financing costs (collectively, "debt issuance cost") using the effective interest method over the life of the related debt instrument, and such amortization is included in interest expense in the consolidated statements of operations. The following table details the debt issuance costs for the periods presented (in millions):
Long-Term Debt Maturities As of June 30, 2018, the maturities of long-term debt were as follows (in millions):
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Accrued Expenses and Other Current Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in millions):
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Long-Term Debt and Credit Agreements |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt and Credit Agreements | Accounts Payable - Floor Plan The accounts payable – floor plan balances on the consolidated balance sheets relate to an agreement with a financial institution that provides an indirect wholly-owned subsidiary of the Company with funding for discretionary inventory purchases from approved vendors. Payables are due within 90 days and are non-interest bearing provided they are paid when due. In accordance with the agreement, the financial institution has been granted a senior security interest in the indirect wholly-owned subsidiary’s inventory purchased under the agreement and accounts receivable arising from the sale thereof. Payments on the facility are guaranteed by Presidio LLC and subsidiaries. As of June 30, 2018, the aggregate availability for purchases under the floor plan is the lesser of $325.0 million or the liquidation value of the pledged assets. The balances outstanding under the accounts payable – floor plan facility were $210.6 million and $264.9 million as of June 30, 2018 and 2017, respectively. Long-Term Debt and Credit Agreements Long-term debt consisted of the following (in millions):
February 2015 Credit Facilities On February 2, 2015, Presidio LLC and PNS (the “Borrowers”), two wholly-owned subsidiaries of the Company, entered into a senior secured credit facility (the “February 2015 Credit Agreement”) which provided a $600.0 million term loan (“February 2015 Term Loan”) with a seven year maturity and a $50.0 million revolving credit facility (“February 2015 Revolver”) with a five year maturity (collectively referred to as the “February 2015 Credit Facilities”). On February 1, 2016, as part of the Netech Acquisition discussed in Note 2, the Borrowers entered into Incremental Assumption Agreement and Amendment No. 2 to the February 2015 Credit Agreement for an incremental $25.0 million term loan borrowing. The $25.0 million incremental term loan under the credit facility is subject to the same terms and conditions as the then-existing term loans under the February 2015 Credit Agreement. On May 27, 2016, the Borrowers entered into Incremental Assumption Agreement and Amendment No. 3 (the “May 2016 Amendment”) to the February 2015 Credit Agreement for an incremental $140.0 million term loan borrowing. The proceeds of the incremental term loan were used to, among other things, repay in full the remaining $115.0 million outstanding on the credit facility incurred in connection with the Netech Acquisition. The $140.0 million incremental term loan under the credit facility is subject to the same terms and conditions as the then-existing term loans under the February 2015 Credit Agreement. On January 19, 2017, the Borrowers entered into Incremental Assumption Agreement and Amendment No. 4 (the “January 2017 Amendment”) to, among other things, lower the applicable margin for all term loans outstanding under the February 2015 Credit Agreement to 3.50% in the case of LIBOR rate borrowings and 2.50% in the case of base rate borrowings. In addition, the January 2017 Amendment provided that from and after the date that Presidio Holdings delivers a certificate to the administrative agent certifying that (i) a qualifying initial public offering has occurred and (ii) as of the date of such certificate, the net total leverage ratio, calculated on a pro forma basis, is less than 4.00 to 1.00, the applicable margin for term loans outstanding under the February 2015 Credit Agreement would be reduced by an additional 0.25%. In addition, the January 2017 Amendment reset the amortization payments at a rate of 1.00% per annum, payable quarterly on the principal amount of term loans outstanding as of the date of the January 2017 Amendment, which principal amount was $703.6 million. On January 5, 2018, the Borrowers entered into an Incremental Assumption Agreement and Amendment No. 6 (the “Sixth Amendment” or the “January 2018 Amendment”) amending the February 2015 Credit Agreement, by and among the Borrowers, the guarantors party thereto, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent. Pursuant to the Sixth Amendment, the Borrowers (i) refinanced all $576.6 million in aggregate principal amount of term loans outstanding under the Credit Agreement (the “Existing Term Loans”) and (ii) borrowed $140.0 million in aggregate principal amount of incremental term loans, in each case with new term loans (the “New Term Loans”) under the February 2015 Credit Agreement. The New Term Loans have an interest rate of LIBOR plus 2.75% (with a LIBOR floor of 1.0%) or base rate plus 1.75% (reduced from the interest rates of LIBOR plus 3.25% or base rate plus 2.25% applicable to the Existing Term Loans), and a maturity date of February 2, 2024 (two years longer than the maturity date of the Existing Term Loans). The New Term Loans were issued at a price equal to 99.75% of their face value. In accordance with the terms of the February 2015 Credit Agreement, the Borrowers may request one or more incremental term loan facilities and/or increase commitments under the February 2015 Revolver in an aggregate amount of up to the sum of $125.0 million plus additional amounts so long as, (i) in the case of loans under additional credit facilities secured by liens (other than to the extent such liens are expressly subordinated in writing to the liens on the collateral securing the February 2015 Credit Agreement), the consolidated net first lien secured leverage ratio would be no greater than 3.75 to 1.00 and (ii) in the case of loans under additional credit facilities that would not be included in the computation of the consolidated net first lien secured leverage ratio, the consolidated net secured leverage ratio would be no greater than 4.25 to 1.00, subject to certain conditions and receipt of commitments by existing or additional lenders. The Borrowers may voluntarily repay outstanding loans under the February 2015 Credit Agreement at any time without prepayment premium or penalty except in connection with a repricing event, subject to customary “breakage” costs with respect to LIBOR rate loans. All obligations under the February 2015 Credit Agreement are unconditionally guaranteed by Presidio Holdings and each of its existing and future direct and indirect, wholly-owned domestic subsidiaries, subject to certain exceptions. The obligations are secured by substantially all assets of the Borrowers and each guarantor, including capital stock of the Borrowers and subsidiary guarantors, in each case subject to certain exceptions. The February 2015 Credit Agreement is subject to an intercreditor agreement with the accounts payable – floor plan that provides that certain security interests in assets securing the February 2015 Credit Agreement shall be subordinate to the security interests on the collateral securing the obligations under the accounts payable – floor plan described in Note 9. The February 2015 Credit Agreement contains certain customary affirmative covenants, negative covenants and events of default. The negative covenants in the February 2015 Credit Agreement include, among other things, limitations (subject in each case to exceptions) on the ability of the Borrowers, the guarantors and their restricted subsidiaries to:
February 2015 Term Loan – Borrowings under the February 2015 Term Loan bear interest at a rate equal to, at the Borrowers’ option, either:
The applicable margin for term loans is 2.75% in the case of LIBOR rate borrowings and 1.75% in the case of base rate borrowings as of June 30, 2018, resulting from the January 2018 Amendment. As of June 30, 2018, due to voluntary prepayments made on the term loans subsequent to the January 2018 Amendment, $11.2 million of amortization payments are due prior to the maturity of the February 2015 Term Loan. The February 2015 Credit Agreement requires the Borrowers to prepay outstanding term loan borrowings, subject to certain exceptions, with:
For the fiscal year ended June 30, 2018, there are no additional prepayments required based on the Borrowers’ calculation of the annual excess cash flow. The February 2015 Term Loan was originally a $600.0 million term loan with a seven year maturity of February 2, 2022. The borrowing was issued at 97.0% of par, resulting in an original issue discount of $18.0 million. The Company incurred $15.0 million of deferred financing costs associated with the original term loan, resulting in total deferred issuance costs of $33.0 million. The $140.0 million borrowing entered into pursuant to the May 2016 Amendment was issued at 99.5% of par, resulting in $0.7 million of original issue discount. In accordance with debt modification accounting, the Company recorded an additional $0.1 million in deferred issuance costs associated with the amendment. In association with the January 2018 Amendment, the Company incurred $2.9 million in professional fees which are presented within transaction costs on the Company's consolidated statement of operations and capitalized $2.4 million of debt issuance costs, inclusive of original issuance discount, presented on a net basis along with the associated debt obligations on the Company's consolidated balance sheet. The Company has made $80.0 million in aggregate voluntary prepayments of term loans under the February 2015 Credit Agreement during the fiscal year ended June 30, 2018, resulting in $2.1 million loss on extinguishment of debt reflected in the Company’s consolidated statement of operations associated with the write-off of debt issuance costs. February 2015 Revolver– The February 2015 Revolver provides a $50.0 million revolving credit facility with a $25.0 million sublimit available for letters of credit and a swingline loan sub facility maturing February 2, 2020. Borrowings under the February 2015 Revolver bear interest at a rate equal to, at the Borrowers’ option, either:
The applicable margin for revolving loans is 4.25% in the case of LIBOR rate borrowings and 3.25% in the case of base rate borrowings (with margins for revolving loans subject to certain reductions based on a net first lien leverage ratio). In addition to paying interest on the outstanding principal under the February 2015 Revolver, the Borrowers are required to pay a commitment fee equal to 0.50% (subject to a step-down to 0.375% based on achievement of a specified net first lien leverage ratio) in respect of the unutilized commitments under the facility. The Borrowers are also required to pay customary agency fees as well as letter of credit participation fees computed at a rate per annum equal to the applicable margin for LIBOR rate borrowings on the dollar equivalent of the daily stated amount of outstanding letters of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges and customary fronting fees. All borrowings under the February 2015 Revolver are subject to the satisfaction of customary conditions, including the absence of a default and the accuracy of representations and warranties. The February 2015 Revolver requires that Presidio Holdings, after an initial grace period and subject to a testing threshold, comply on a quarterly basis with a maximum first lien net senior secured leverage ratio. The testing threshold is met if, at the end of any applicable fiscal quarter, the sum of outstanding exposure under the February 2015 Revolver exceeds 30% of the outstanding commitments under the revolving credit facility at such time. In conjunction with entering into the February 2015 Credit Agreement, the Company incurred $1.3 million in deferred financing costs associated with the February 2015 Revolver. As of June 30, 2018 and 2017, there were no outstanding borrowings on the February 2015 Revolver and there were $1.8 million and $1.5 million in letters of credit outstanding, respectively. The Company is in compliance with the covenants and had and $48.2 million and $48.5 million available for borrowings under the facility as of June 30, 2018 and 2017, respectively. Senior and Senior Subordinated Notes In conjunction with the Presidio Acquisition, on February 2, 2015, Presidio Holdings issued a series of senior notes (“Senior Notes”) in an aggregate principal amount of $250.0 million, and a series of senior subordinated notes (“Senior Subordinated Notes”) in an aggregate amount of $150.0 million (collectively referred to as the “Notes”), each of which were to mature on February 15, 2023. On February 15, 2017, the Company entered into a senior subordinated notes purchase agreement with Deutsche Bank AG, who was the holder of 100% of the remaining $111.8 million of outstanding Senior Subordinated Notes, pursuant to which the Company agreed to use the net proceeds of the IPO to repurchase, and Deutsche Bank AG agreed to sell, all of the outstanding Senior Subordinated Notes at the Senior Subordinated Notes Repurchase Price as defined in the indenture. On March 15, 2017 (the “Repurchase Date”), the Company used proceeds from the initial public offering, together with cash on hand, to repurchase and cancel the $111.8 million in aggregate principal amount of outstanding 10.25% Senior Subordinated Notes at a repurchase price equal to 110.25% of the principal amount, plus accrued and unpaid interest to, but excluding, the Repurchase Date. In connection with the cancellation, the Company satisfied and discharged its obligations under the indenture. As a result of the repurchase and cancellation of the Senior Subordinated Notes, the Company recorded a $13.5 million loss on extinguishment of debt which includes the repurchase premium of $11.5 million and the write-off of $2.0 million of related debt issuance costs. On February 17, 2017, the Company provided notice to the trustee of the Senior Notes that on March 20, 2017 (the “Redemption Date”), the Company intended to redeem up to $97.5 million in aggregate principal amount of its 10.25% Senior Notes, subject to the satisfaction or waiver of certain conditions. Pursuant to the IPO, such conditions were satisfied and so on March 20, 2017, $97.5 million in aggregate principal amount of the Senior Notes were redeemed at a redemption price equal to 110.25% of the principal amount of the Senior Notes being redeemed, plus accrued and unpaid interest to, but excluding, the Redemption Date. As a result of the redemption of the $97.5 million in aggregate principal amount of Senior Notes, the Company recorded a $11.8 million loss on extinguishment of debt which includes the redemption premium of $10.0 million and the write-off of $1.8 million of related debt issuance costs. Proceeds from the New Term Loans obtained pursuant to the January 2018 Amendment noted above were used to (i) refinance all of the Existing Term Loans, (ii) redeem all of the $125.0 million remaining outstanding Senior Notes in accordance with the optional redemption provisions contained in the indenture governing the Senior Notes and (iii) pay the redemption premium on the Senior Notes, accrued and unpaid interest, and other fees and expenses payable in connection with the foregoing. In connection with the redemption of the Senior Notes, the Company recorded a loss on extinguishment of debt of $12.6 million, of which $1.9 million related to write-offs of unamortized debt issuance costs. Receivables Securitization Facility The Company maintains an accounts receivable securitization facility (“Receivables Securitization Facility”) originally issued in April 2008 whereby each of PNS and Atlantix (prior to its disposal) sells its trade receivables on a continuous basis to a wholly-owned non-operating subsidiary of the Company, Presidio Capital Funding, LLC (“PCF”). PCF then grants, without recourse, a senior undivided security interest in the pooled receivables to the administrative agent of the facility, PNC Bank, while maintaining a subordinated undivided security interest in any over-collateralization of the pooled receivables. Presidio LLC services the receivables for PCF at market rates, and accordingly, no servicing asset or liability has been recorded. Upon and after the sale or contribution of the accounts receivable to PCF, such accounts receivable are assets of PCF and, as such, are not available to creditors of the Company or its other subsidiaries. The Receivables Securitization Facility provides for borrowing capacity subject to a borrowing limit that is based on eligible receivables, as defined in the securitization agreements. Interest is calculated daily but payable monthly based on a Eurodollar borrowing rate plus a utilized program fee of 1.40%. The Company also incurs a commitment fee of 0.50% or 0.40%, depending on utilization. At June 30, 2018, the interest rate was 3.49% and the commitment fee was 0.50%. In connection with the Presidio Acquisition, the committed amount of the Receivables Securitization Facility was increased from $150.0 million to $200.0 million, and the maturity date was extended from March 31, 2017 to the date three years after the closing of the Presidio Acquisition, which is February 2, 2018. The February 2, 2015 amendment to the Receivables Securitization Facility resulted in $0.8 million of additional debt issuance costs. On February 8, 2016, the Receivables Securitization Facility was amended to increase the commitment amount from $200.0 million to $250.0 million. All other terms and conditions remained unchanged. The Company incurred $0.1 million in deferred financing costs associated with the February 8, 2016 amendment. Accounts receivable purchased by PCF are subject to the satisfaction of customary conditions, including the absence of a termination event and the accuracy of representations and warranties. The obligations under the Receivables Securitization Facility are secured by PCF’s right, title and interest in the pool of receivables and certain related assets. The facility requires that Presidio LLC comply with a minimum fixed charge coverage ratio of 1.0 to 1.0 if its excess liquidity, as defined in the facility, falls below $35.0 million for at least five consecutive days. The Company was in compliance with this covenant as of June 30, 2017. On November 28, 2017, the Company entered into Amendment No. 2 to the Second Amended and Restated Receivables Purchase Agreement and Reaffirmation of Performance Guaranty which, among other things, extended the maturity of the facility to November 28, 2020. The Company incurred $0.6 million in deferred financing costs associated with this amendment. As of June 30, 2018 and 2017, respectively, there were no outstanding borrowings under the Receivables Securitization Facility. The Company had $248.0 million and $175.5 million available under the Receivables Securitization Facility based on the collateral available as of June 30, 2018 and 2017, respectively. Debt Issuance Costs The Company amortizes original issue discount and deferred financing costs (collectively, "debt issuance cost") using the effective interest method over the life of the related debt instrument, and such amortization is included in interest expense in the consolidated statements of operations. The following table details the debt issuance costs for the periods presented (in millions):
Long-Term Debt Maturities As of June 30, 2018, the maturities of long-term debt were as follows (in millions):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements For certain of the Company’s financial instruments, including cash and cash equivalents, accounts and unbilled receivables, accounts payable – trade, accounts payable – floor plan, and other accrued liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. Additionally, the Company’s financing receivables and liabilties and acquisition-related liabilities were measured at their respective fair values upon initial recognition. The fair value hierarchy for the Company’s financial assets and liabilities measured at fair value were as follows as of June 30, 2017 (in millions):
The fair value hierarchy for the Company’s financial assets and liabilities measured at fair value were as follows as of June 30, 2018 (in millions):
The fair value of the Company’s term loans and senior notes are estimated based on quoted market prices for the debt, which is traded in over-the-counter secondary markets that are not considered active. The carrying value of the Company’s term loans and senior notes exclude unamortized debt issuance costs. For certain of the Company’s nonfinancial assets, including goodwill, intangible assets, and property and equipment, the Company may be required to assess the fair values of these assets, on a recurring or nonrecurring basis, and record an impairment if the carrying value exceeds the fair value. In determining the fair value of these assets, the Company may use a combination of valuation methods which include Level 3 inputs. For the periods presented, there were no impairments charges. See Notes 1 and 8 for additional information regarding the Company’s determination of fair value regarding goodwill and indefinite-lived intangible assets. In conjunction with the acquisitions discussed in Note 2, the Company used a combination of valuation methods which include Level 3 inputs in determining the fair values of the assets and liabilities acquired as well as the fair value of the consideration transferred, which included equity and equity instruments. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating leases– The Company leases office space in 68 locations under operating leases which were generally five to seven years in duration at lease inception, with an average remaining life of 3.1 years at June 30, 2018. Total rent expense charged to operations was $10.5 million for the fiscal year ended June 30, 2018, $11.2 million for the fiscal year ended June 30, 2017 and $9.0 million for the fiscal year ended June 30, 2016. Future minimum rental payments required under the leases are as follows (in millions):
Claims and assessments– In the normal course of business, the Company is subject to certain claims and assessments that arise in the ordinary course of business. The Company records a liability when the Company believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine the outcome and the estimated amount of a loss related to such matters. Management believes that there are no claims or assessments outstanding which would materially affect the consolidated results of operations or financial position of the Company. |
Stockholders' Equity |
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Jun. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Common Stock Holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. The holders of common stock will not have cumulative voting rights in the election of directors. Holders of common stock are entitled to ratably receive dividends if, and when, dividends are declared from time to time by our Board of Directors out of funds legally available for that purpose, after payment of dividends required to be paid on outstanding preferred stock, if any. Under Delaware law, the Company can only pay dividends either out of “surplus” or the current or immediately preceding year’s net profits. Surplus is defined as the excess, if any, at any given time, of the total assets of a corporation over its total liabilities and statutory capital. The value of a corporation’s assets can be measured in a number of ways and may not necessarily equal their book value. Upon liquidation, dissolution or winding-up, the holders of common stock are entitled to receive ratably the assets available for distribution to the stockholders after payment of liabilities and accrued but unpaid dividends and liquidation preferences on any outstanding preferred stock. Common stock does not have preemptive or conversion rights. There are no redemption or sinking fund provisions applicable to the common stock. Preferred Stock As of June 30, 2018, no preferred stock has been issued by the Company. Dividends In accordance with the terms of the credit agreements and the notes indentures, Presidio Holdings has certain limitations on its ability to declare and pay dividends. These limitations include restrictions on the transfer of cash and/or other property between Presidio LLC, Presidio Holdings and Presidio, Inc. All dividends declared are subject to Board approval and will depend on the Company’s results of operations, financial condition, business prospects, capital requirements, contractual restrictions, potential indebtedness the Company may incur, restrictions imposed by applicable law, tax considerations, and other factors that the Company’s Board of Directors deems relevant. |
Share-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation | Share-Based Compensation Effective as of February 24, 2017, the Company's Board of Directors adopted the Amended and Restated 2015 Long-Term Incentive Plan (the “2015 LTIP”), the 2017 Long-Term Incentive Plan (the “2017 LTIP”) and the Employee Stock Purchase Plan (the “ESPP”). Following the adoption of the 2017 LTIP Plan, no additional grants will be made under the 2015 LTIP. Prior to the adoption of the initial 2015 LTIP on February 2, 2015, concurrent with the Presidio Acquisition, the Predecessor's equity awards were issued under the Presidio Holdings Inc. LTIP ("Presidio Holdings LTIP"). 2017 LTIP The 2017 LTIP authorizes the issuance of up to 7,200,000 shares of common stock pursuant to the grant or exercise of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, and other equity-based awards. The maximum number of shares of common stock that may be delivered pursuant to incentive stock options is 1,600,000 shares of common stock. In addition, no participant may be granted stock options or stock appreciation rights covering in excess of 1,600,000 shares, restricted stock, restricted stock units, or performance stock units covering in excess of 550,000 shares, or other long-term incentive awards covering in excess of 550,000 shares, in each such case, during any given fiscal year of the Company. Furthermore, no non-employee director may be granted awards under the 2017 LTIP that have a grant date fair value in excess of $500,000 in any given fiscal year. The 2017 LTIP has a term expiring on February 24, 2027. The Board of Directors may amend, alter, or discontinue the 2017 LTIP, but no amendment, alteration, or discontinuance may materially impair the rights of an equity award previously granted under the 2017 LTIP without the award holder’s consent, except such amendments made to comply with applicable law. As indicated above, several types of awards are available for grant under the 2017 LTIP. As of June 30, 2018, nonqualified stock options and restricted stock units ("RSUs") have been granted pursuant to the 2017 LTIP as discussed further below. Stock Options - Stock options granted under the 2017 LTIP may either be incentive stock options or nonqualified stock options. The exercise price of stock options cannot be less than 100% of the fair market value of the stock underlying the stock options on the date of grant. Optionees may pay the exercise price in cash or by “cashless exercise” through a broker or by withholding shares otherwise receivable on exercise. The term of stock options may not have a term longer than ten years from the date of grant. Generally, and subject to the terms of the applicable award agreement, unvested stock options will terminate upon the termination of employment and vested stock options will remain exercisable for 90 days after the award holder’s termination for any other reason. Vested stock options also will terminate upon the award holder’s termination for cause (as defined in the 2017 LTIP). Stock options are transferable only by will or by the laws of descent and distribution, or pursuant to a qualified domestic relations order or, in the case of nonqualified stock options, as otherwise expressly permitted by the committee including, if so permitted, pursuant to a transfer to the participant’s family members, to a charitable organization, whether directly or indirectly, or by means of a trust or partnership or otherwise. Restricted Stock Units - Restricted stock units granted under the 2017 LTIP are awards denominated in shares that will be settled, subject to the terms and conditions of the restricted stock units, either by delivery of shares to the participant or by the payment of cash based upon the fair market value of a specified number of shares. Except as set forth in the applicable award agreement, any restricted stock units still subject to restriction will terminate upon an award holder's termination of employment for any reason during the restriction period. During the restriction period set by the Committee, the award holder shall not be permitted to sell, assign, transfer, pledge, or otherwise encumber restricted stock units. As of June 30, 2018, 2,085,764 non-qualified stock options were outstanding under the 2017 LTIP. The outstanding 2017 LTIP stock option grants vest in four equal installments on each of the anniversaries of the grant date, subject to continued services through such vesting date. As of June 30, 2018, 150,000 service-based restricted stock units were outstanding under the 2017 LTIP. The outstanding 2017 LTIP restricted stock units vest in two equal installments on each of the anniversaries of the grant date, subject to continued services through such vesting date. 2015 LTIP The nonqualified stock options issued under the 2015 LTIP are comprised of (i) fully vested stock options that were rolled over from the Presidio Holdings LTIP at the time of the Presidio Acquisition (the “Rolled options”) and (ii) stock options issued proportionally as 50% Tranche A stock options, 25% Tranche B stock options and 25% Tranche C stock options, except for awards issued to non-employee directors that were issued as three-year service-based awards. The Tranche A options are service-based stock options and vest in five equal installments on each of the first five anniversaries of the grant date, subject to the employee’s continued employment or the director’s continued service with the Company through these dates. The Tranche B and Tranche C stock options are performance-based and market-based stock options, with vesting being contingent upon the achievement of certain market conditions by the Apollo Funds in cash pursuant to a liquidity event, subject to the employee’s continued employment with the Company through the date of achievement. In the event of a change in control, any Tranche A options that have not previously vested shall become fully vested and exercisable at the time of such change in control, subject to the employee’s continued employment with the Company through this date. Any Tranche B and Tranche C stock options that have not vested prior to, or become vested at the time of, a change in control shall be converted into time-vesting options that vest in equal annual installments on each anniversary of the change in control occurring during the remainder of the stock option term, subject to the employee’s continued employment with the Company through these dates. Subsequent to the IPO, all stock options remained outstanding and continued to vest in accordance with their original vesting terms. As of June 30, 2018, 6,315,468 nonqualified stock options were outstanding under the 2015 LTIP, of which 946,152 were Rolled options that were fully vested, 2,343,348 were Tranche A stock options and 3,025,968 were Tranche B stock options and Tranche C stock options. In conjunction with the IPO, the performance condition for the Tranche B and Tranche C stock options was deemed met, but as of June 30, 2018, the market condition for vesting had not yet been realized. Nonqualified Option Activity A summary of the nonqualified stock option activity for the fiscal year ended June 30, 2018 was as follows:
Vested and Expected to Vest A summary of nonqualified stock options that are vested or expected to vest was as follows:
Intrinsic Values A summary of the intrinsic values of nonqualified stock options was as follows (in millions):
Fair Value Assumptions The weighted-average assumptions used in the Black-Scholes and Monte Carlo valuations to calculate the fair value of the awards granted during the periods were as follows:
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The expected stock price volatility is based on a combination of the historical volatility of the Company since its March 2017 IPO and an average of the historical volatility of public companies in industries similar to the Company prior to its IPO. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant over the expected term of the option. The Company has insufficient historical data regarding the expected life of options and therefore uses the simplified method to calculate the expected life. Share-Based Compensation Expense The following table summarizes the share-based compensation expense and the related income tax benefit as follows (in millions):
As of June 30, 2018, there was $6.9 million of unrecognized compensation costs related to service based awards from the 2015 LTIP and the 2017 LTIP nonqualified stock option awards which is expected to be recognized as expense over a weighted-average period of 1.9 years. The occurrence of the initial public offering deemed the performance condition associated with the performance and market stock options to be probable and as a result, the Company recognized $7.3 million in compensation expense associated with these awards during the fiscal year ended June 30, 2017. As of June 30, 2018, there was no unrecognized compensation expense related to the performance and market stock options as all compensation expense was recognized in connection with the initial public offering. As of June 30, 2018, the market condition for vesting has not been realized. Employee Stock Purchase Plan The ESPP permits employees to purchase common stock through payroll deductions during quarterly offerings periods, or during such other offering periods as the Compensation Committee may determine. Participants may authorize payroll deductions of a specific percentage of compensation between 1% and 15%, with such deductions being accumulated for quarterly purchase periods beginning on the first business day of each offering period and ending on the last business day of each offering period. Under the terms of the ESPP, the purchase price per share will equal 95.0% of the fair market value of a share of common stock on the last business day of each offering period, although the Compensation Committee has discretion to change the purchase price with respect to future offering periods. In no event can the purchase price per share be less than the lesser of (a) 85.0% of the fair market value of a share of common stock on the first day of the applicable offering period or (b) 85.0% of the fair market value of a share of common stock on the last day of the applicable offering period. At June 30, 2018, there were 1,274,564 shares available for issuance under this plan. On June 30, 2018, we held $0.6 million of contributions made by employees that were used to purchase 46,118 shares on July 3, 2018. Other Long-Term Incentive Awards Under the 2017 LTIP, the committee will be able to grant other types of equity-based awards based upon our common stock, including unrestricted stock, convertible debentures, and dividend equivalent rights. In addition, the committee may also grant other long-term incentive awards that are solely dollar-denominated, either alone or in conjunction with other awards granted under the 2017 LTIP. The maximum value of the property, including cash, that may be paid or distributed to any participant pursuant to a grant of any such long-term incentive award in any one calendar year is $10.0 million. |
Earnings (Loss) Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share | Earnings (Loss) Per Share The following is a reconciliation of the weighted-average number of shares used to compute basic and diluted net earnings (loss) per share (in millions, except for share and per share data):
___________________________________ (1) All options are considered anti-dilutive in years with a net loss. Potentially dilutive securities that have been excluded from the computation of diluted weighted-average shares of common stock outstanding because their inclusion would have been anti-dilutive consists of the following:
___________________________________ (1) For the fiscal year ended June 30, 2016, all performance and market stock options were excluded from EPS as the performance condition was not considered probable. For the fiscal years ended June 30, 2018 and 2017, the performance condition for all performance and market stock options had been deemed met due to the completion of the Company's IPO. As a result, the performance and market options are included in the Company's EPS calculation to the extent the market condition was deemed to have been met on June 30, 2018 and 2017 as if it was the end of the contingency period. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The following table summarizes the expense (benefit) for income taxes (in millions):
The difference between the tax provision at the statutory federal income tax rate and the effective rate on income was as follows:
Recent U.S. federal income tax legislation, commonly referred to as The Tax Cuts and Jobs Act (“TCJA”), was enacted on December 22, 2017 which, among other things, reduces the U.S. federal corporate tax rate from 35.0% to 21.0% effective on January 1, 2018. The rate change is administratively effective at the beginning of Presidio’s fiscal year on July 1, resulting in a blended rate of 28.1% for the fiscal year ending June 30, 2018, which is accounted for in the interim and annual periods that include December 22, 2017. As the Company has a June 30 fiscal year-end, the U.S. federal corporate tax rate for our fiscal year ended June 30, 2019 will be 21.0%. The Company recognized a provisional amount of $94.1 million of income tax benefit for the fiscal year ended June 30, 2018 relating to the revaluation of deferred tax asset and liability balances due to the change in tax rates enacted in the period. The Company is still analyzing certain aspects of the TCJA and refining its calculations, which could potentially affect the measurement of these balances. The changes included in the TCJA are broad and complex and could materially affect the estimates recorded for the quarter and year to date periods, due to, among other things, changes in legislative interpretations or further guidance issued on the application of certain provisions of the TCJA. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the TCJA to finalize the recording of the related tax impacts. The Company’s effective tax rate of (146.2)% for the fiscal year ended June 30, 2018 differed from the U.S. federal statutory tax rate primarily due to the $94.1 million income tax benefit impact of revaluation of deferred tax asset and liability balances. The other differences include the favorable excess tax benefit deduction for the fiscal year ended June 30, 2018 related to share-based compensation of $3.7 million, the impact of state taxes and the impact of permanent differences. The Company’s effective income tax rate of 37.1% for the fiscal year ended June 30, 2017 differed from the U.S. federal statutory rate primarily due to state income taxes and non-deductible meals and entertainment expenses which is offset by the favorable stock compensation excess benefit deduction. The Company’s effective income tax rate of 950.0% for the fiscal year ended June 30, 2016 differed from the U.S. federal statutory rate primarily due to the impact on the nominally small pre-tax income of unfavorable permanent differences and the impact of the revaluation of deferred tax balances related to the state effective tax rate change. Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company’s deferred tax assets (liabilities) were as follows (in millions):
The Company believes that it is more likely than not, based on the weight of available evidence, that the deferred tax assets as shown will be realized when future taxable income is generated through the reversal of existing taxable temporary differences and income that is expected to be generated by businesses that have a history of generating taxable income. As of June 30, 2018 and 2017, no valuation allowances have been recorded against the deferred tax assets. The Company records a liability for uncertain tax positions if it is not more likely than not that the position will be sustained in an audit, including resolution of related appeals or litigation, if any. For positions that are more likely than not to be sustained, the liability recorded is measured as the largest benefit amount that is more than 50% likely to be realized upon ultimate settlement. As of both June 30, 2018 and June 30, 2017, the Company had unrecognized tax benefits including interest and penalties of $1.1 million, respectively. As of June 30, 2018, the Company believes that it is reasonably possible that the total amounts of unrecognized tax benefits will decrease by $0.2 million all of which will impact the effective tax rate within the next 12 months related to statutes of limitations on certain federal and state income tax returns expiring. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $1.1 million. The liability for uncertain tax positions is presented within other liabilities in the consolidated balance sheets. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits excluding interest and penalties is as follows (in millions):
Interest and penalties recognized as part of income taxes from continuing operations was a net benefit of less than $0.1 million for the fiscal years ended June 30, 2018 and 2017. The cumulative interest and penalties recorded on the Company’s consolidated balance sheets was less than $0.1 million as of June 30, 2018 and $0.2 million as of June 30, 2017. The Company files a consolidated federal income tax return and various consolidated state income tax returns. The Company’s federal and material state income tax years remain open to examination for the fiscal year ended June 30, 2014. The Company is currently under examination by the Internal Revenue Service for fiscal year ended June 30, 2015. We currently do not believe that the outcome of the examination will have a material impact on our financial statements. |
Major Customers and Suppliers |
12 Months Ended |
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Jun. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Major Customers and Suppliers | Major Customers and Suppliers The Company’s revenue is derived from arrangements with enterprise, commercial, service provider, state, and U.S. government customers. No customer accounted for more than 10% of the Company’s revenue during the years ended June 30, 2018, 2017 and 2016. All accounts receivable are made on an unsecured basis and no customer balance comprised more than 10% of accounts receivable as of June 30, 2018 or 2017. The Company’s solutions include products and services purchased directly and indirectly from manufacturers. Our purchases from a single manufacturer comprised approximately 64% our purchases from all manufacturers for the fiscal year ended June 30, 2018, 67% for the fiscal year ended June 30, 2017, and 67% for the fiscal year ended June 30, 2016. No other manufacturers accounted for more than 10% of the Company’s purchases during these periods. |
Related Party Transactions |
12 Months Ended |
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Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Apollo Global Management, LLC (together with its subsidiaries, “Apollo”) is a leading alternative investment management firm which owns and operates businesses across a variety of industries. The Company recorded revenue to parties affiliated with Apollo or its directors of $1.8 million for the fiscal year ended June 30, 2018, $7.3 million for the fiscal year ended June 30, 2017 and $2.0 million for the fiscal year ended June 30, 2016. As of June 30, 2018 and June 30, 2017, the outstanding receivables associated with parties affiliated with Apollo or its directors were $1.7 million and $1.7 million, respectively. On January 19, 2017, in connection with the January 2017 Amendment, the Company paid certain fees totaling approximately $0.1 million to Apollo Global Securities, LLC, an affiliate of Apollo, for certain engagement and co-manager services provided in connection with such refinancing. Additionally, in connection with its role as an underwriter in the Company's IPO, the Company paid $0.2 million in fees to Apollo Global Securities, LLC. Prior to March 15, 2017, an alternative investment vehicle formed by the limited partners of the Apollo Funds owned substantially all of the economic interests in the Senior Subordinated Notes pursuant to certain derivative arrangements entered into with Deutsche Bank AG, who was the holder of 100% of the Senior Subordinated Notes. As of March 15, 2017, the Company repurchased and canceled all of the aggregate principal amount of outstanding Subordinated Notes and, as a result, satisfied and discharged its obligations under the indenture. See Note 11 for additional information. At issuance of the credit facility associated with the acquisition of Netech in February 2016, members of the Company’s management held $5.5 million of the $150.0 million term loan borrowing. This debt was fully repaid with the credit facility terminated at June 30, 2016. In issuing the credit facility, the Company incurred $0.5 million in deferred financing fees associated with an affiliate of Apollo. At issuance, Presidio, Inc. held the $25.0 million term loan borrowing issued by Presidio Holdings under the Incremental Assumption Agreement and Amendment No. 2 to the Company’s February 2015 Credit Agreement. As of June 30, 2016, Presidio, Inc. had sold its holdings of the debt to an unaffiliated third party for a loss of $0.1 million as a result of the sale. The Company leases an office that is owned by members of the Company’s management. The office location was carried over from a prior acquisition and the Company has continued to renew the lease. Rent expense for the office was $0.3 million for the fiscal year ended June 30, 2018, $0.3 million for the fiscal year ended June 30, 2017 and $0.3 million for the fiscal year ended June 30, 2016. |
Retirement Plan |
12 Months Ended |
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Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Retirement Plan | Retirement Plan The Company sponsors a defined contribution 401(k) plan covering substantially all employees of the Company who are age 21 or older and are not classified as excluded employees (which classification includes union employees, leased employees and certain nonresident aliens). Participants can elect to contribute a specific percentage or dollar amount and have that amount deposited into the plan as an elective deferral. All employee deferrals and Company contributions are subject to IRS limitations. The Company provides a fixed matching contribution equal to 25% of the employee’s elective deferrals on up to 6% of compensation. In addition to the fixed matching contribution, the Company may make an additional discretionary contribution equal to a uniform percentage or dollar amount of the employee’s elective deferral. The annual discretionary matching contribution is based on Company performance and may be an additional 25% on up to 6% of compensation. Employment on the last day of the year is required to receive the annual discretionary match and it is typically funded approximately ten months following the end of the calendar year to which it relates. Employer contributions in the plan generally vest equally over a five-year period based on plan years in which an employee works at least 1,000 hours. Total employer contribution expense was $3.0 million for the fiscal year ended June 30, 2018, $2.1 million for the fiscal year ended June 30, 2017 and $6.1 million for the fiscal year ended June 30, 2016. |
Segment Information |
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Segment Information | Segment Information Since October 22, 2015, the Company has operated as one reportable segment based on our assessment of how our chief operating decision maker allocates resources and assesses performance across the Company. Geographic Areas Revenue earned by the Company from customers outside of the United States is not material for any of the periods presented. Additionally, the Company does not have long-lived assets outside of the United States. Revenue by Solution Area The following table presents total revenue by solution area (in millions):
The type of solution sold by the Company to its customers is based upon internal classifications. |
Supplemental Consolidating Information |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Consolidating Information | Supplemental Consolidating Information The following financial statements set forth condensed consolidating financial information for the Company. The condensed consolidating financial information is presented as Presidio Holdings Inc. and subsidiaries, as borrowers or guarantors of the February 2015 Credit Agreement and Note Indenture, and Presidio, Inc., as the registrant, as well as the consolidating intercompany eliminations between the entities. The following condensed consolidating financing information was prepared on the same basis as the consolidated financial statements (in millions):
UNCONSOLIDATED CONDENSED BALANCE SHEETS (in millions, except for share and per share data)
The accompanying notes to Schedule I are an integral part of these financial statements. UNCONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in millions)
The accompanying notes to Schedule I are an integral part of these financial statements. UNCONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in millions)
The accompanying notes to Schedule I are an integral part of these financial statements. Note 1. Nature of Business and Significant Accounting Policies Description of the Company Presidio, Inc., formerly named Aegis Holdings, Inc. (“Aegis”), is a Delaware corporation that was incorporated on November 20, 2014 by certain investment funds affiliated with or managed by Apollo Global Management, LLC, including Apollo Investment Fund VIII, L.P., along with their parallel investment funds (the “Apollo Funds”) to complete the acquisition of Presidio Holdings Inc. (“Presidio Holdings”). Presidio, Inc. is a holding company with direct ownership of a single wholly-owned subsidiary, Presidio Holdings. Presidio Holdings, through its operating subsidiaries, conducts operations and generates income and cash flows, while Presidio, Inc. conducts no separate operations on a standalone basis. Basis of Presentation Pursuant to the terms of the credit agreements discussed in Note 11 of the consolidated financial statements, Presidio Holdings and its subsidiaries have restrictions on their ability to, among other things, incur additional indebtedness, make distributions to Presidio, Inc., or make certain intercompany loans and advances. As a result of these restrictions, these parent company financial statements have been prepared in accordance with Rule 12-04 of Regulation S-X, since the restricted net assets of Presidio, Inc.’s subsidiaries (as defined in Rule 4-08(e)(3) of Regulation S-X) exceeds 25% of the Company’s consolidated net assets as of June 30, 2018. All financial information presented in the financial statements and notes herein is presented in millions except for share and per share information and percentages. Principles of Consolidation On a standalone basis, Presidio, Inc. records its investment in Presidio Holdings under the equity method of accounting. Under the equity method, the investment in subsidiaries is stated at cost plus any contributions and its equity share in undistributed net income (loss) of the subsidiaries minus any dividends received. Presidio, Inc.’s share of net income (loss) of its unconsolidated subsidiaries is included in net income (loss) on equity investment in subsidiaries in the statements of operations. Intercompany balances and transactions have not been eliminated. The accompanying financial information should be read in conjunction with the consolidated financial statements and related notes included in this filing. Public Offerings On March 15, 2017, the Company completed an initial public offering (“IPO”) in which the Company issued and sold 18,766,465 shares of common stock, inclusive of 2,099,799 shares issued and sold on March 21, 2017, pursuant to the underwriters’ option to purchase additional shares, at the public offering price of $14.00 per share. The Company received net proceeds of $247.5 million, after deducting underwriting discounts and commissions from the sale of its shares in the IPO. In addition, the Company incurred $7.2 million of offering expenses in connection with the IPO. Also in March 2017, the Company used proceeds from the IPO, together with cash on hand, to repurchase from the holder thereof all of the approximately $112.2 million in aggregate principal amount of outstanding Senior Subordinated Notes at a repurchase price equal to 110.25% of the principal amount of the Senior Subordinated Notes being repurchased, plus accrued and unpaid interest to, but excluding, the date of repurchase. Immediately thereafter, the Company contributed to the capital of Presidio Holdings all of the Senior Subordinated Notes, and Presidio Holdings delivered or caused to be delivered to the applicable trustee all of the Senior Subordinated Notes for cancellation. On November 21, 2017, the Company completed a secondary public offering of 8,000,000 shares of the Company’s common stock by certain funds affiliated with Apollo Global Management, LLC (the “Selling Stockholder”) at a price to the public of $14.25 per share. In addition, the underwriters to such secondary public offering purchased an additional 1,200,000 shares of common stock from the Selling Stockholder. The Company did not sell any shares and did not receive any proceeds from the offering. In conjunction with this secondary offering, the Company incurred $1.0 million of expenses, which is presented within transaction costs on the consolidated statement of operations for the fiscal year ended June 30, 2018. Significant Accounting Policies The accounting policies used in the preparation of the parent financial statements are generally consistent with those used in the preparation of the consolidated financial statements of the Company. In conjunction with the acquisition of Presidio Holdings, Presidio, Inc. has applied the acquisition method of accounting in accordance with FASB ASC Topic 805, Business Combinations, and has also elected the application of push-down accounting. As a result, the fair value adjustments and goodwill recognized from the transactions are recorded in the financial statements of its subsidiaries and presented as part of Presidio, Inc.’s investment in subsidiaries on the balance sheet. As discussed in Note 17 of the annual consolidated financial statements, Presidio, Inc. and its subsidiaries file a consolidated federal income tax return and various consolidated state income tax returns. Taxes are allocated to the members of the consolidated return, based on an estimate of the amounts that would be reported if the members were separately filing their tax returns. As a result, for the fiscal years ended June 30, 2018, 2017 and 2016, Presidio, Inc.’s income tax benefit and deferred tax assets excludes any taxes associated with Presidio, Inc.’s investment in its subsidiaries. During the year ended June 30, 2018, we did not declare or pay any distributions to stockholders. We intend to declare quarterly dividends to holders of common stock. However, any future declaration and payment of future dividends to holders of common stock will be at the discretion of the Board of Directors and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends, and other considerations that the Board of Directors deems relevant. Presidio, Inc., as a holding company, has no direct operations and our ability to pay dividends is limited to our available cash on hand and any funds received from subsidiaries. The terms of the indebtedness may restrict Presidio, Inc.’s ability to pay dividends, or may restrict the subsidiaries from paying dividends to Presidio, Inc. Under Delaware law, dividends may be payable only out of surplus, which is net assets minus liabilities and capital, or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. |
Quarterly Financial Data (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Data (Unaudited) | Quarterly Financial Data (Unaudited)
The sum of the earnings (loss) per share amounts may not equal the annual amounts due to changes in the number of weighted average common shares outstanding during the year. On February 24, 2017, the Board of Directors of the Company declared a 2-for-1 stock split of the Company’s common stock in the form of a stock dividend payable on each share of common stock issued and outstanding as of February 24, 2017. The number of shares subject to and the exercise price of the Company’s outstanding options were adjusted to equitably reflect the split. All per-share data included in these financial statements give effect to the stock split and have been adjusted retroactively for all periods presented. |
Subsequent Events |
12 Months Ended |
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Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On September 5, 2018, the Company, entered into a stock repurchase agreement (the “Stock Repurchase Agreement”) with AP VIII Aegis Holdings, L.P. (“Aegis LP”), an affiliate of investment funds affiliated with Apollo Global Management, LLC. Pursuant to the Stock Repurchase Agreement, the Company agreed to repurchase 10,750,000 shares of our common stock from Aegis LP for aggregate consideration of approximately $160 million, representing a purchase price of $14.75 per share of common stock (the “Repurchase”). To fund the Repurchase, the Company intends to use proceeds of $160 million of additional term loans under an incremental term loan B facility to be established pursuant to the February 2015 Credit Agreement, subject to customary closing conditions. The Stock Repurchase Agreement, the Repurchase and the related transactions were approved by the Company’s board of directors and a committee of independent directors. The Repurchase is expected to close in mid-September 2018. Following consummation of the Repurchase, Aegis LP will continue to own 47,050,000 shares of our common stock, or approximately 57% of our shares of common stock outstanding. |
Schedule I - Condensed Financial Information of Registrant |
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Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule I - Condensed Financial Information of Registrant | Supplemental Consolidating Information The following financial statements set forth condensed consolidating financial information for the Company. The condensed consolidating financial information is presented as Presidio Holdings Inc. and subsidiaries, as borrowers or guarantors of the February 2015 Credit Agreement and Note Indenture, and Presidio, Inc., as the registrant, as well as the consolidating intercompany eliminations between the entities. The following condensed consolidating financing information was prepared on the same basis as the consolidated financial statements (in millions):
UNCONSOLIDATED CONDENSED BALANCE SHEETS (in millions, except for share and per share data)
The accompanying notes to Schedule I are an integral part of these financial statements. UNCONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in millions)
The accompanying notes to Schedule I are an integral part of these financial statements. UNCONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in millions)
The accompanying notes to Schedule I are an integral part of these financial statements. Note 1. Nature of Business and Significant Accounting Policies Description of the Company Presidio, Inc., formerly named Aegis Holdings, Inc. (“Aegis”), is a Delaware corporation that was incorporated on November 20, 2014 by certain investment funds affiliated with or managed by Apollo Global Management, LLC, including Apollo Investment Fund VIII, L.P., along with their parallel investment funds (the “Apollo Funds”) to complete the acquisition of Presidio Holdings Inc. (“Presidio Holdings”). Presidio, Inc. is a holding company with direct ownership of a single wholly-owned subsidiary, Presidio Holdings. Presidio Holdings, through its operating subsidiaries, conducts operations and generates income and cash flows, while Presidio, Inc. conducts no separate operations on a standalone basis. Basis of Presentation Pursuant to the terms of the credit agreements discussed in Note 11 of the consolidated financial statements, Presidio Holdings and its subsidiaries have restrictions on their ability to, among other things, incur additional indebtedness, make distributions to Presidio, Inc., or make certain intercompany loans and advances. As a result of these restrictions, these parent company financial statements have been prepared in accordance with Rule 12-04 of Regulation S-X, since the restricted net assets of Presidio, Inc.’s subsidiaries (as defined in Rule 4-08(e)(3) of Regulation S-X) exceeds 25% of the Company’s consolidated net assets as of June 30, 2018. All financial information presented in the financial statements and notes herein is presented in millions except for share and per share information and percentages. Principles of Consolidation On a standalone basis, Presidio, Inc. records its investment in Presidio Holdings under the equity method of accounting. Under the equity method, the investment in subsidiaries is stated at cost plus any contributions and its equity share in undistributed net income (loss) of the subsidiaries minus any dividends received. Presidio, Inc.’s share of net income (loss) of its unconsolidated subsidiaries is included in net income (loss) on equity investment in subsidiaries in the statements of operations. Intercompany balances and transactions have not been eliminated. The accompanying financial information should be read in conjunction with the consolidated financial statements and related notes included in this filing. Public Offerings On March 15, 2017, the Company completed an initial public offering (“IPO”) in which the Company issued and sold 18,766,465 shares of common stock, inclusive of 2,099,799 shares issued and sold on March 21, 2017, pursuant to the underwriters’ option to purchase additional shares, at the public offering price of $14.00 per share. The Company received net proceeds of $247.5 million, after deducting underwriting discounts and commissions from the sale of its shares in the IPO. In addition, the Company incurred $7.2 million of offering expenses in connection with the IPO. Also in March 2017, the Company used proceeds from the IPO, together with cash on hand, to repurchase from the holder thereof all of the approximately $112.2 million in aggregate principal amount of outstanding Senior Subordinated Notes at a repurchase price equal to 110.25% of the principal amount of the Senior Subordinated Notes being repurchased, plus accrued and unpaid interest to, but excluding, the date of repurchase. Immediately thereafter, the Company contributed to the capital of Presidio Holdings all of the Senior Subordinated Notes, and Presidio Holdings delivered or caused to be delivered to the applicable trustee all of the Senior Subordinated Notes for cancellation. On November 21, 2017, the Company completed a secondary public offering of 8,000,000 shares of the Company’s common stock by certain funds affiliated with Apollo Global Management, LLC (the “Selling Stockholder”) at a price to the public of $14.25 per share. In addition, the underwriters to such secondary public offering purchased an additional 1,200,000 shares of common stock from the Selling Stockholder. The Company did not sell any shares and did not receive any proceeds from the offering. In conjunction with this secondary offering, the Company incurred $1.0 million of expenses, which is presented within transaction costs on the consolidated statement of operations for the fiscal year ended June 30, 2018. Significant Accounting Policies The accounting policies used in the preparation of the parent financial statements are generally consistent with those used in the preparation of the consolidated financial statements of the Company. In conjunction with the acquisition of Presidio Holdings, Presidio, Inc. has applied the acquisition method of accounting in accordance with FASB ASC Topic 805, Business Combinations, and has also elected the application of push-down accounting. As a result, the fair value adjustments and goodwill recognized from the transactions are recorded in the financial statements of its subsidiaries and presented as part of Presidio, Inc.’s investment in subsidiaries on the balance sheet. As discussed in Note 17 of the annual consolidated financial statements, Presidio, Inc. and its subsidiaries file a consolidated federal income tax return and various consolidated state income tax returns. Taxes are allocated to the members of the consolidated return, based on an estimate of the amounts that would be reported if the members were separately filing their tax returns. As a result, for the fiscal years ended June 30, 2018, 2017 and 2016, Presidio, Inc.’s income tax benefit and deferred tax assets excludes any taxes associated with Presidio, Inc.’s investment in its subsidiaries. During the year ended June 30, 2018, we did not declare or pay any distributions to stockholders. We intend to declare quarterly dividends to holders of common stock. However, any future declaration and payment of future dividends to holders of common stock will be at the discretion of the Board of Directors and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends, and other considerations that the Board of Directors deems relevant. Presidio, Inc., as a holding company, has no direct operations and our ability to pay dividends is limited to our available cash on hand and any funds received from subsidiaries. The terms of the indebtedness may restrict Presidio, Inc.’s ability to pay dividends, or may restrict the subsidiaries from paying dividends to Presidio, Inc. Under Delaware law, dividends may be payable only out of surplus, which is net assets minus liabilities and capital, or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. |
Schedule II - Valuation and Qualifying Accounts |
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Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II - Valuation and Qualifying Accounts | (in millions)
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Nature of Business and Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All financial information presented in the financial statements and notes herein is presented in millions except for share and per share information and percentages. In management’s opinion, all adjustments necessary for a fair presentation of the results of operations, financial position, and cash flows for the periods shown have been made. With the exception of acquisition related accounting, all other adjustments are of a normal recurring nature. The Company has evaluated subsequent events through the issue date of these consolidated financial statements. |
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Principles of Consolidation | Principles of Consolidation The Company’s consolidated financial statements include the accounts of Presidio, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. |
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Reclassifications | Reclassifications We have reclassified some prior period amounts in our consolidated financial statements to conform to our current presentation. |
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Use of Estimates | Use of Estimates The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, asset residual values, vendor rebates and consideration, goodwill, identifiable intangibles, measurement of income tax assets and liabilities and provisions for doubtful accounts, credit losses, inventory obsolescence, and other contingencies. Actual results could differ from management’s estimates. |
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Revenue Recognition | Revenue Recognition The Company's revenue is generally derived from the sale of IT-solutions to customers. Incorporated in those solutions are third-party products including hardware, software and support service contracts and the sale of Company services and third-party services. Revenue is generally recognized when all of the following criteria have been met:
As a provider of third-party products and services, the Company considers the principal versus agent accounting guidance to determine if the Company is the primary obligor in the arrangement and if revenue should be recognized gross or net of the associated costs. Applying the principal versus agent accounting guidance is a matter of judgment based on the consideration of several factors and indicators. The Company's solutions may consist of a combination of deliverables including third-party products along with services delivered by the Company and/or third-parties. These types of arrangements generally contain multiple revenue generating activities or elements where delivery or performance may occur at different times or over different periods of time as discussed in the policies below. For arrangements that contain multiple elements, the total consideration of the arrangement is allocated to the deliverables which qualify as separate units of accounting. Generally, each of the above items qualifies as separate units of accounting since they provide stand-alone value to the customer and the delivery or performance of any undelivered items is considered probable and substantially in our control. The allocation of the arrangement consideration to the separate units of accounting is based on the relative selling price of each deliverable. The relative selling price is determined based on an assessment of the cost plus a reasonable margin. The identification of the deliverables, the separate units of accounting, the estimated selling prices and the allocation of the arrangement require management estimates and judgment. Product Revenue Revenue for hardware and software – Revenue from the sale of third-party hardware and third-party software products is generally recognized on a gross basis with the sales price to the customer recorded as revenue and the acquisition cost of the product recorded as cost of revenue, net of vendor rebates. Revenue is recognized when the title and risk of loss are passed to the customer. Hardware and software items can be delivered to customers in a variety of ways including drop-shipped by our vendor or supplier, shipped from our warehouse or via electronic delivery for software licenses. In certain cases, our solutions include the sale of software subscriptions where we are the agent in the arrangement with the customer and recognize the related revenue at the date of sale, net of the related cost of revenue. As the Company is under no obligation to perform additional services, such as post-customer support or upgrades, revenue is recognized at the time of sale as opposed to over the life of the software license. The Company maintains an estimate for sales returns and credit losses based on historical experience. The Company’s vendor partners provide warranties to our customers on equipment sold and as such we have not estimated a warranty reserve or deferred revenue for potential warranty work. Revenue for third-party support service contracts – Revenue from the sale of third-party support service contracts is recognized net of the related cost of revenue. In a third-party support service contract, all services are performed by third-party providers and as a result, the Company concluded that it is acting as an agent and recognizes revenue on a net basis at the date of sale with revenue being equal to the gross margin on the transaction. As the Company is under no obligation to perform additional services, revenue is recognized at the time of sale as opposed to over the life of the third-party support agreement. Revenue from leasing arrangements – Revenue from information technology products leased to customers is based on the type of lease entered into with each customer. Each lease is classified as either a direct financing lease, sales-type lease or operating lease. If a lease meets one or more of the four criteria listed below and both the collectability of the minimum lease payments is reasonably predictable and there are no material uncertainties surrounding the amount of unreimbursable costs yet to be incurred, the lease is classified as either a sales-type or direct financing lease; otherwise, it is classified as an operating lease:
Interest earned on direct financing leases is recognized over the term of the lease using the effective interest method. Revenue on sales-type leases is recognized at the inception of the lease at the present value of the minimum lease payments using the discount rate implicit in the lease, with the earned interest being recognized over the term of the lease using the effective interest method. Minimum lease payments comprise the rental payments that the lessee is obligated to make, excluding contingent rentals and any guarantee by the lessee to pay executory costs. Revenue from operating leases is recognized ratably on a straight-line basis over the term of the lease agreement. Revenue from the sale of the residual asset at the end of a lease term is recognized at the date of sale. The interest income from direct financing and sales-type leases and the revenue recognized from sales-type leases, operating leases and residual asset sales are presented as product revenue in the consolidated statements of operations. For additional information on the accounting treatment of leases, see the Financing Receivables and Operating Leases policies described in this footnote below as well as Note 6. Sales taxes – The Company records sales and use taxes collected from customers for remittance to governmental authorities on a net basis within the Company’s consolidated statements of operations. Shipping and freight – Shipping and freight costs billed to customers are recognized within revenue with the related shipping and freight costs incurred by the Company recorded as a cost of revenue. Service Revenue Revenue for Services – Revenue from professional services and cloud services is recognized as the services are performed. For time and material service contracts revenue is recognized at the contractual hourly rates for the labor hours performed during the period. For fixed price service contracts revenue is recognized on a proportional performance basis. Milestone payments are recognized against the labor hours completed compared to the total estimated hours for the scope of work with contract and revenue accrued or deferred as appropriate. Revenue for managed services is recognized on a straight-line basis over the term of the arrangement. The Company may incur upfront costs associated with professional and managed services, including, but not limited to, purchasing support service contracts and software licenses. These costs are initially deferred as prepaid expenses or other assets and expensed over the period that services are being provided. |
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Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of less than three months at the date of purchase to be cash equivalents. The Company’s cash management program utilizes zero balance accounts and overnight money market investments. The Company does not have any compensating balance requirements. |
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Accounts Receivable | Accounts Receivable Accounts receivable are carried at the original invoice amount less a provision for credit losses. Management determines the provision for credit losses by reviewing all outstanding amounts to identify troubled accounts, using historical experience applied to the aging of accounts, and considering current economic conditions that may affect a customer’s ability to pay. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. Accounts receivable are generally due within 30 days of the date of the invoice and typically do not bear interest. Any interest income received on accounts receivable is recorded as received or when collectability is reasonably assured. |
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Unbilled Accounts Receivable | Unbilled Accounts Receivable Unbilled accounts receivable represent the revenue that has been earned but not yet billed to the customer as of the balance sheet date, less a provision for credit losses. Unbilled accounts receivable typically are comprised of receivables for hardware and software products delivered but not yet invoiced as a result of bill in full provisions, support service contract sales that are being billed over the contract term to customers, and revenue on professional service contracts in which revenue has been recognized in accordance with a proportional performance method but invoicing milestones have not yet been achieved. Management determines the provision for credit losses by reviewing unbilled amounts to identify troubled accounts, using historical experience and considering economic conditions that may affect a customer’s ability to pay. Unbilled receivables are written off when deemed uncollectible. |
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Inventory | Inventory During the fiscal year, the Company adopted ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which restricts the valuation of inventory to the lower of cost or net realizable value, which is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. The Company's inventory primarily consists of finished goods valued at the lower of cost or market, with cost determined on the first-in, first-out method (“FIFO”). The Company decreases the value of inventory when evidence exists that the net realizable value of inventory is lower than its cost, based upon an aging analysis of the inventory on hand, specifically known inventory-related risks, and assumptions about future demand and market conditions. |
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Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation, with the exception that property and equipment acquired in an acquisition are recorded at estimated fair value on the date of the acquisition. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Estimated useful lives of three to seven years are used for equipment, software and furniture and fixtures. Depreciation and amortization of leasehold improvements are computed using the shorter of the estimated useful life or the remaining lease term. Depreciation of certain equipment, software, and other property utilized directly in product revenue generation is recorded in cost of product revenue in the Company’s consolidated statements of operations. Similarly, depreciation expense associated with equipment and software directly utilized in support of cloud and managed services contracts is included in cost of service revenue within the Company’s consolidated statements of operations. All other depreciation and amortization are recorded in depreciation and amortization within operating expenses in the Company’s consolidated statements of operations. |
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Debt Issuance Costs | Debt Issuance Costs Debt issuance costs arising from the Company’s borrowings and credit agreements are amortized using the effective interest rate method over the term of the related debt financing. Debt issuance costs associated with non-revolving credit facilities are presented on a net basis along with the associated debt obligation in the consolidated balance sheets. Debt issuance costs associated with revolving credit facilities are presented net of accumulated amortization within other assets in the consolidated balance sheets. |
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Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company reviews its long-lived assets for impairment whenever events or circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of long-lived assets is measured by a comparison of the carrying amount of the asset or asset group to the future undiscounted net cash flows expected to be generated by that asset or asset group. If such asset(s) are considered to be impaired, the impairment loss is measured as the amount by which the carrying amount of the asset(s) exceeds their estimated fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less cost to sell. |
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Identifiable Intangible Assets | Identifiable Intangible Assets Finite-lived intangible assets such as customer relationships assets, developed technology, trade names, and non-compete agreements are amortized over their estimated useful lives, generally on a straight-line basis. Finite-lived intangible assets are reviewed for impairment or obsolescence whenever events or circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of intangible assets is measured by a comparison of the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by that asset. If the asset is considered to be impaired, the impairment loss is measured as the amount by which the carrying amount of the asset exceeds the estimated fair value. |
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Goodwill and Other Indefinite-lived Intangibles | Goodwill and Other Indefinite-lived Intangibles The Company records goodwill when the purchase price of a business acquisition exceeds the estimated fair value of net identified tangible and intangible assets acquired. Goodwill is assigned to a reporting unit on the acquisition date and assessed for impairment at least annually, or more frequently when events or changes in circumstances indicate that the fair value of a reporting unit has more likely than not declined below its carrying value. In accordance with ASC Topic 805, Business Combinations, if, at the time of issuance of any consolidated financial statements, the Company has not yet finalized the acquisition method of accounting and calculation of goodwill, the corresponding consolidated financial statements are prepared using provisional amounts. Upon finalizing the acquisition method of accounting, the Company applies any adjustments to the provisional amounts in the period in which the adjustments are determined. The Company assesses goodwill for impairment at least annually on March 31 of each year for each reporting unit. During the year, the Company adopted ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), which simplified the test for goodwill impairment. To perform its impairment assessment, the Company compared the fair value of our reporting unit with its carrying amount. If our carrying amount exceeds our fair value, an impairment charge would be recognized for the difference. When the fair value of our reporting unit exceeds the carrying amount, no impairment is recognized. As of March 31, 2018, our estimated fair value exceeded our carrying value by approximately 96.6%. Our fair value was calculated based on our total market capitalization on March 31, 2018. On a qualitative basis, no economic, industry or our company-specific indicators were noted which would have led us to believe that it is more likely than not that goodwill was impaired since March 31, 2018. Similar to goodwill, indefinite-lived intangible assets other than goodwill are assessed annually on March 31, or more frequently if indicated, for impairment. The impairment assessment first considers qualitative and quantitative factors to determine whether events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired, including, but not limited to, the following: (i) the performance of the underlying business related to the intangible asset; (ii) the use of the intangible asset to market to customers and transact with vendors; and (iii) the expectation that the intangible asset will continue to be used going forward. If after assessing the qualitative and quantitative factors the Company determines that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value, then the Company will write down the value of the intangible asset to its fair value. The fair value of the Company's indefinite-lived intangible asset is determined using the relief from royalty method. The significant estimates and assumptions utilized in the fair value estimates include revenue projections, the royalty rate and the weighted average cost of capital. See Note 8 for additional information about the accounting for goodwill and indefinite-lived intangible assets, including the results of the Company’s impairment assessments. |
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Financing Receivables and Operating Leases | Financing Receivables and Operating Leases The Company’s lessor lease transactions are classified at the inception of the lease as either direct financing leases, sales-type leases or operating leases. At the inception of direct financing and sales-type leases, the net investment in leases is recorded, which consists of the minimum lease payments, the initial direct costs applicable for direct financing leases, the unguaranteed residual value of the leased asset and the unearned interest income. Upon entering into a lease transaction, the Company generally assigns the customer lease payments to a financial institution along with a first priority security interest in the leased equipment (“discounting”). These assignments do not qualify for sale accounting in accordance with ASC 860, Transfers and Servicing, and as such are not derecognized from the consolidated balance sheet and instead reported as collateralized borrowings. Accordingly, the related assets remain on the Company’s balance sheets and continue to be reported and accounted for as if the sale or assignment had not occurred. The majority of our assigned lease payments are on a nonrecourse basis with the financial institutions. At the time the lease is discounted, the Company receives a cash payment from the financial institution equal to the present value of the lease payments discounted at a fixed interest rate, and a related liability is established equal to this cash payment received. The asset and liability are both decreased over the term of the lease as payments are received by the financial institution from the lessee. The typical term of our leases and the discounting arrangements is between two and five years. Sales-type leases – At the inception of the lease, the present value of the non-cancelable rentals is recorded as product revenue. Equipment costs, less the present value of the estimated residual values, are recorded in cost of product revenue. The difference between the present value of the non-cancelable rentals and the minimum lease payments receivable and the difference between the present value of the estimated residual values and the future value of residuals are recorded as unearned income, which is amortized to product revenue over the lease term using the effective interest rate method. Direct financing leases – At the inception of a lease, the difference between the cost of the equipment and the present value of the non-cancelable rentals is recorded as unearned income, which is amortized to product revenue over the lease term using an effective interest rate method. Residual values – Residual values represent management’s estimates of the fair market or realizable values of equipment under leases at the maturity of the leases. Management reviews the residual values and they are reduced as necessary to reflect any decrease in the estimated fair market or realizable values. Residual values are evaluated on a quarterly basis and any impairment, other than temporary, is recorded in the period in which the impairment is determined. The resulting reduction in the net investment in leases is recognized as a loss in the period in which the estimate is changed. No upward revision of residual value is made subsequent to the inception of the lease. Operating leases – At the inception of a lease, the equipment assigned to the lease is recorded at cost as equipment under operating leases presented within other assets in the Company’s consolidated balance sheets and is depreciated on a straight-line basis over its useful life. Monthly payments from customers are recorded as part of product revenue, with the depreciation expense associated with the equipment recorded in cost of product revenue within the Company’s consolidated statements of operations. |
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Provision for Sales Returns and Credit Losses | Provision for Sales Returns and Credit Losses A provision for sales returns is maintained for potential future product returns. A corresponding provision is maintained for those product returns that the Company is able to return to our vendors or original equipment manufacturers. These provisions are based on an evaluation of historical trends in product return rates and are presented net as a reduction in accounts receivable and product revenue. Provisions for credit losses are maintained for potentially uncollectible accounts receivable, unbilled receivables and financing receivables. The provisions are increased for potential credit losses, which increases expenses, and decreased by subsequent recoveries. The provisions for credit losses are decreased by write-offs and reductions to the provision for potential credit losses. Accounts are either written off or written down when the loss is both probable and determinable. Management’s determination of the adequacy of the provisions for credit losses for accounts receivable, unbilled receivables and financing receivables are based on the age of the receivable balance, the customer’s credit quality rating, an evaluation of historical credit losses, current economic conditions, and other relevant factors. |
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Income Taxes | Income Taxes Deferred taxes are calculated using the liability method, whereby deferred tax assets are recognized for deductible temporary differences, operating losses and tax credit carry-forwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities in the Company’s consolidated balance sheets and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are presented based on the tax rates currently in effect and adjusted for changes in tax laws and rates on the date of enactment. Deferred tax assets and liabilities are classified as noncurrent and presented net in the consolidated balance sheets. The Company evaluates its tax positions under a more-likely-than-not recognition threshold and measurement analysis before they can be recognized for financial statement reporting. Uncertain tax positions have been classified as current or non-current income tax liabilities based on the expectation of whether they will be paid in the next fiscal year. The Company recognizes interest and penalties related to income tax exposures as a component of income tax expense (benefit) in the Company’s consolidated statements of operations. |
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Share-based Compensation | Share-based Compensation The Company measures and recognizes share-based compensation expense for all share-based awards made to employees and directors using fair value based methods over the requisite service period. Prior to the fiscal year ended June 30, 2017 adoption of ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, the Company included an estimated forfeiture rate in its calculation of compensation expense. Subsequently, the Company recognizes forfeitures as they occur. The cost of equity-classified awards is based on the grant-date fair value calculated using a Black-Scholes or Monte Carlo valuation model, depending on the nature and classification of the award. Share-based compensation expense for awards with a service-only condition is recognized over the employee’s requisite service period using a graded vesting method. For awards with a performance condition that affects vesting, the performance condition is not considered in determining the award’s grant-date fair value; however, the conditions are considered when estimating the quantity of awards that are expected to vest. No compensation expense is recorded for awards with performance conditions until the performance condition is determined to be probable of achievement. For awards with a market condition that affects vesting, the market condition is considered in determining the award’s grant-date fair value. Compensation expense for awards with a market condition is recognized straight-line over the derived or implied service period. For awards with both performance and market conditions, the market condition is incorporated into the fair value of the award, while the performance condition impacts the timing of expense recognition. Prior to the fiscal year ended June 30, 2017 adoption of ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, the Company recorded excess tax benefits to additional paid in capital on the consolidated balance sheet. Subsequently, excess tax benefits are recorded as a component of income tax expense in the consolidated statement of operations. Additionally, subsequent to the adoption of ASU 2016-09, excess tax benefits are presented as an operating activity on the consolidated statement of cash flows, instead of as a financing activity. In the case of modifications of awards, additional share-based compensation expense is based on the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified. Share-based compensation expense is classified as selling expenses or general and administrative expenses consistent with other compensation expense associated with the award recipient. The Company uses the simplified method in estimating the expected life of its service-only condition awards because the Company does not have sufficient historical exercise data to provide a reasonable basis to estimate future exercise patterns. |
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Earnings (Loss) Per Share | Earnings Per Share Basic earnings per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed using the weighted-average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Dilutive potential shares of common stock outstanding includes the dilutive effect of vested and unvested in-the-money service-only condition stock options and stock options with performance conditions once the performance condition is considered probable of achievement. Stock options with market conditions are included in the calculation of potential dilutive shares to the extent the market conditions are deemed to have been met based on information as of the end of the period as if it were the end of the contingency period. The dilutive effect of such equity-classified awards is calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that the Company has not yet recognized are collectively assumed to be used to repurchase shares. Prior to the fiscal year ended June 30, 2017 adoption of ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, the amount of excess tax benefits that would be recorded in additional paid-in capital when the award became deductible was considered an assumed proceed. Shares issued under the Company's Employee Stock Purchase Plan are included as dilutive potential shares of common stock outstanding as of the beginning of the applicable offering period, to the extent they are not anti-dilutive. |
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Partner Incentive Program Consideration | Partner Incentive Program Consideration The Company receives payments and credits from vendors for various programs, including rebates, volume incentive programs, and shared marketing expense programs. Each program varies in length and has varying conditions or achievement targets that determine the amount of consideration the Company is eligible for. The Company estimates and recognizes the amount of partner incentive program consideration earned when it is probable and reasonably estimable using the information available or historical data. Such partner incentive program consideration is recognized as a reduction of cost of revenue with respect to rebates, volume incentive programs and similar programs or as a reduction to operating expenses with respect to shared marketing expense programs. |
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Business Combinations | Business Combinations The Company accounts for business combinations and acquisitions using the acquisition method. The acquisition method requires that the total purchase price of the acquired entity be allocated to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The assets acquired include the analysis and recognition of intangible assets such as customer relationships, trade names, developed technology and contractual rights and the liabilities assumed include contractual commitments and contingencies. Any premium paid over the fair value of the net assets and liabilities acquired is recorded as goodwill in connection with the business combination. The results of operations for an acquired entity are included in the consolidated financial statements from the date of acquisition. |
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Fair Value Measurements | Fair Value Measurements Fair value is defined under U.S. GAAP as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also provides a fair value hierarchy for valuation inputs to prioritize the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
For those financial instruments with no quoted market prices available, fair value is estimated using present value calculations or other valuation methods. Determining the fair value incorporates management’s best judgment with respect to current economic conditions, discount rates and estimates of future cash flows. The Company did not elect the fair value measurement option for any of its financial assets or liabilities. |
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Derivative Instruments | Derivative Instruments The Company may periodically use interest rate swap and cap agreements to reduce the impact of interest rate changes on its long-term debt. All derivative instruments that are not clearly and closely related to the economic characteristics and risks of the host contract are recognized in the Company’s consolidated balance sheets at their fair value and are appropriately classified as current or non-current assets and liabilities. The Company has not elected hedge accounting for its derivative instruments, and as a result, changes in the fair value are recorded within the Company’s consolidated statements of operations within general and administrative expenses along with the periodic settlements on the variable rate asset or liability. For the periods presented, the Company had no derivative agreements or activity. |
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Reportable Segments | Reportable Segments Segment information is presented in accordance with a “management approach.” The “management approach” is based on the way that the Company’s chief operating decision-maker reviews operating segment information for use in making decisions, allocating resources and assessing performance. An operating segment is a component of the Company (i) that engages in business activities from which it may earn revenue and incur expense, (ii) whose operating results are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and (iii) for which discrete financial information is available. |
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Recent Accounting Pronouncements Adopted During the Period and Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Adopted During the Fiscal Year In July 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which restricts the valuation of inventory to the lower of cost or net realizable value, which is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. The standard has an effective date for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, with early adoption permitted. The Company adopted this standard in the three months ended September 30, 2017. The adoption of this standard had an immaterial impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this update eliminate Step 2 of the current two-step process, which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 is effective for the Company beginning in the first quarter of 2020 and allows for early adoption. The Company elected to early adopt this standard during the three months ended March 31, 2018. The adoption of this ASU did not have an impact on the Company's Consolidated Financial Statements. Recent Accounting Pronouncements Not Yet Adopted as of June 30, 2018 |
Nature of Business and Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact of ASU on Company's Results | The adoption of the ASU is expected to impact the Company's results as follows (in millions, except per-share data):
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Acquisitions (Tables) |
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Red Sky Solutions, LLC [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | The following table summarizes the purchase price allocation for the Red Sky Acquisition (in millions):
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Netech Corporation [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | The following table summarizes the purchase price allocation for the Netech Acquisition (in millions):
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Sequoia Acquisition [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | The following table summarizes the purchase price allocation for the Sequoia acquisition (in millions):
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Disposition of Business (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amounts of Assets and Liabilities Included in the Disposal | The carrying amounts of the assets and liabilities included as part of the disposal were as follows (in millions):
|
Accounts and Unbilled Receivables (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Receivable | Accounts receivable consisted of the following (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||
Unbilled Revenues [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Receivable | Unbilled receivables consisted of the following (in millions):
|
Prepaid Expenses and Other Current Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following (in millions):
|
Financing Receivables and Operating Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financing Receivable | The assets and related liabilities for discounted and not discounted sales-type and direct financing leases to financial institutions were as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales-type and Direct Financing Leases, Lease Receivable, Maturity | Minimum lease payments for discounted and non-discounted sales-type and direct financing leases were as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available for Operating Lease | Equipment under operating leases and accumulated depreciation presented within other assets in the consolidated balance sheets was as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lessor, Operating Lease, Payments to be Received, Maturity | The minimum lease payments related to operating leases discounted or non-discounted were as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Discounted Operating Lease | Liabilities for discounted operating leases was follows (in millions):
|
Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property and equipment and accumulated depreciation and amortization was as follows (in millions):
|
Goodwill and Identifiable Intangible Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Goodwill consisted of the following (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | Identifiable intangible assets consisted of the following (in millions):
|
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Schedule of Indefinite-Lived Intangible Assets | Identifiable intangible assets consisted of the following (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Amortization Expense | Based on the finite-lived intangible assets recorded at June 30, 2018, the annual amortization expense is expected to be as follows (in millions):
|
Accrued Expenses and Other Current Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses | Accrued expenses and other current liabilities consisted of the following (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following (in millions):
|
Long-Term Debt and Credit Agreements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Long-term debt consisted of the following (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Issuance Costs | The following table details the debt issuance costs for the periods presented (in millions):
|
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Schedule of Maturities of Long-term Debt | As of June 30, 2018, the maturities of long-term debt were as follows (in millions):
|
Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value by Balance Sheet Grouping | The fair value hierarchy for the Company’s financial assets and liabilities measured at fair value were as follows as of June 30, 2017 (in millions):
The fair value hierarchy for the Company’s financial assets and liabilities measured at fair value were as follows as of June 30, 2018 (in millions):
|
Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum rental payments required under the leases are as follows (in millions):
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Share-based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Nonqualified Stock Option Activity | A summary of the nonqualified stock option activity for the fiscal year ended June 30, 2018 was as follows:
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Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding | A summary of nonqualified stock options that are vested or expected to vest was as follows:
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Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value | A summary of the intrinsic values of nonqualified stock options was as follows (in millions):
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted-average assumptions used in the Black-Scholes and Monte Carlo valuations to calculate the fair value of the awards granted during the periods were as follows:
___________________________________
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Schedule of Share-based Compensation Expense and Realized Tax Benefits | The following table summarizes the share-based compensation expense and the related income tax benefit as follows (in millions):
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Earnings (Loss) Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Number of Shares | The following is a reconciliation of the weighted-average number of shares used to compute basic and diluted net earnings (loss) per share (in millions, except for share and per share data):
___________________________________ (1) All options are considered anti-dilutive in years with a net loss. |
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Schedule of Antidilutive Securities Excluded from Computation of EPS | Potentially dilutive securities that have been excluded from the computation of diluted weighted-average shares of common stock outstanding because their inclusion would have been anti-dilutive consists of the following:
___________________________________ (1) For the fiscal year ended June 30, 2016, all performance and market stock options were excluded from EPS as the performance condition was not considered probable. For the fiscal years ended June 30, 2018 and 2017, the performance condition for all performance and market stock options had been deemed met due to the completion of the Company's IPO. As a result, the performance and market options are included in the Company's EPS calculation to the extent the market condition was deemed to have been met on June 30, 2018 and 2017 as if it was the end of the contingency period. |
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) | The following table summarizes the expense (benefit) for income taxes (in millions):
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Schedule of Effective Income Tax Rate Reconciliation | The difference between the tax provision at the statutory federal income tax rate and the effective rate on income was as follows:
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Schedule of Deferred Tax Assets and Liabilities | The significant components of the Company’s deferred tax assets (liabilities) were as follows (in millions):
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Summary of Positions for which Significant Change in Unrecognized Tax Benefits is Reasonably Possible | A reconciliation of the beginning and ending amount of gross unrecognized tax benefits excluding interest and penalties is as follows (in millions):
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Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of revenue by solution area | The following table presents total revenue by solution area (in millions):
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Supplemental Consolidating Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Balance Sheet |
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Condensed Consolidating Statement of Operations |
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Condensed Consolidating Statement of Cash Flows |
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Quarterly Financial Data (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information |
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Disposition of Business - Carrying Amounts of Assets and Liabilities Included in the Disposal (Details) - Atlantix [Member] - Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations [Member] $ in Millions |
Oct. 22, 2015
USD ($)
|
---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Consideration received | $ 36.3 |
Gain (loss) on disposal | (6.8) |
Carrying amount of assets disposed | |
Accounts receivable | 13.4 |
Inventory | 7.4 |
Prepaid expenses and other current assets | 1.1 |
Property and equipment | 7.0 |
Equipment under operating leases, net | 0.3 |
Identifiable intangible assets, net | 26.4 |
Carrying amount of liabilities disposed | |
Accounts payable - trade | (3.2) |
Accrued expenses and other current liabilities | (9.3) |
Net assets disposed | $ 43.1 |
Accounts and Unbilled Receivables - Accounts Receivable and Unbilled Receivables (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross accounts receivable | $ 616.4 | $ 580.0 |
Gross unbilled accounts receivable | 157.0 | 160.6 |
Provision for sales returns and credit losses | (3.1) | (3.7) |
Total accounts receivable, net | 613.3 | 576.3 |
Total unbilled accounts receivable, net | 156.7 | 159.8 |
Unbilled Revenues [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Provision for sales returns and credit losses | $ (0.3) | $ (0.8) |
Prepaid Expenses and Other Current Assets - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Partner incentive program receivable | $ 32.7 | $ 26.2 |
Prepaid income taxes | 4.9 | 0.0 |
Deferred product costs and other current assets | 43.1 | 37.2 |
Total prepaid expenses and other current assets | $ 80.7 | $ 63.4 |
Financing Receivables and Operating Leases - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Operating Leased Assets [Line Items] | |||
Depreciation | $ 1.4 | $ 1.7 | $ 2.5 |
Minimum [Member] | Discounted Leases [Member] | |||
Operating Leased Assets [Line Items] | |||
Interest rate on discounted leases | 0.00% | 2.00% | |
Maximum [Member] | Discounted Leases [Member] | |||
Operating Leased Assets [Line Items] | |||
Interest rate on discounted leases | 10.00% | 10.50% |
Financing Receivables and Operating Leases - Operating Leases (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Leases [Abstract] | ||
Equipment under operating leases | $ 3.4 | $ 4.6 |
Accumulated depreciation | (1.9) | (2.9) |
Total equipment under operating leases, net | $ 1.5 | $ 1.7 |
Financing Receivables and Operating Leases - Discounted Operating Leases (Details) - Discounted Leases [Member] - USD ($) $ in Millions |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Discounted operating leases: | ||
Current | $ 0.7 | $ 0.7 |
Noncurrent | 0.5 | 0.2 |
Total | $ 1.2 | $ 0.9 |
Property and Equipment - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Property, Plant and Equipment [Line Items] | |||
Depreciation and amortization | $ 83.7 | $ 81.8 | $ 76.0 |
Depreciation and amortization | 9.3 | 8.2 | 8.8 |
Cost of Product Revenue [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation and amortization | $ 4.4 | $ 3.7 | $ 3.2 |
Goodwill and Identifiable Intangible Assets - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Apr. 03, 2018 |
Aug. 31, 2017 |
|
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 803.7 | $ 781.5 | $ 781.5 | ||
Goodwill acquired | 22.2 | 0.0 | |||
Amortization of intangible assets | $ 74.4 | $ 73.6 | $ 67.2 | ||
Weighted Average [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Range of life | 6 years 7 months 5 days | ||||
Red Sky Solutions, LLC [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 19.6 | ||||
Goodwill acquired | $ 19.6 | ||||
Emergent Networks, LLC [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 2.6 | ||||
Goodwill acquired | $ 2.6 |
Goodwill and Identifiable Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Goodwill [Roll Forward] | ||
Beginning Balance | $ 781.5 | $ 781.5 |
Acquisitions | 22.2 | 0.0 |
Impairment charges | 0.0 | 0.0 |
Ending Balance | $ 803.7 | $ 781.5 |
Goodwill and Identifiable Intangible Assets - Future Amortization Expense (Details) $ in Millions |
Jun. 30, 2018
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 | $ 75.2 |
2020 | 74.3 |
2021 | 73.6 |
2022 | 73.5 |
2023 | 72.8 |
2024 and thereafter | 125.9 |
Total | $ 495.3 |
Accounts Payable - Floor Plan (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Line of Credit Facility [Line Items] | ||
Accounts payable – floor plan | $ 210,600,000 | $ 264,900,000 |
Line of Credit [Member] | Secured Debt [Member] | ||
Line of Credit Facility [Line Items] | ||
Payables repayment period | 90 days | |
Aggregate availability | $ 325,000,000.0 |
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 61.1 | $ 64.5 |
Accrued interest | 8.3 | 11.7 |
Accrued equipment purchases/vendor expenses | 56.9 | 78.3 |
Accrued income taxes | 5.7 | 7.3 |
Accrued non-income taxes | 8.2 | 7.4 |
Customer deposits, current portion | 3.5 | 5.1 |
Unearned revenue | 47.6 | 40.0 |
Other accrued expenses and current liabilities | 1.9 | 2.0 |
Total accrued expenses and other current liabilities | $ 193.2 | $ 216.3 |
Long-Term Debt and Credit Agreements - Long-term Debt (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Total long-term debt | $ 686.6 | $ 751.6 |
Unamortized debt issuance costs | (15.4) | (20.9) |
Total long-term debt, net of debt issuance costs | 671.2 | 730.7 |
Reported as: | ||
Current | 0.0 | 0.0 |
Long-term | 671.2 | 730.7 |
Line of Credit [Member] | Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 0.0 | 0.0 |
Line of Credit [Member] | Receivables Securitization Loan [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 0.0 | 0.0 |
Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 10.25% | |
Total long-term debt | $ 0.0 | 125.0 |
Existing Term Loans [Member] | Term Loan Facility [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 0.0 | 626.6 |
New Term Loans [Member] | Term Loan Facility [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 686.6 | $ 0.0 |
Long-Term Debt and Credit Agreements - Receivables Securitization Facility (Details) - Line of Credit [Member] - Receivables Securitization Loan [Member] |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Nov. 28, 2017
USD ($)
|
Feb. 02, 2015
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Feb. 08, 2016
USD ($)
|
Feb. 01, 2015
USD ($)
|
|
Debt Instrument [Line Items] | ||||||
Utilized program fee (percent) | 1.40% | |||||
Commitment fee (percent) | 0.50% | |||||
Interest rate | 3.49% | |||||
Aggregate availability | $ 200,000,000 | $ 250,000,000 | $ 150,000,000 | |||
Debt issuance costs | $ 800,000 | $ 100,000 | ||||
Fixed charge coverage ratio | 1.0 | |||||
Amount of fixed care coverage ratio | $ 35,000,000.0 | |||||
Period of fixed charge coverage ratio | 5 days | |||||
Deferred financing costs | $ 600,000 | |||||
Amount outstanding | $ 0 | $ 0 | ||||
Available borrowing capacity | $ 248,000,000 | $ 175,500,000 | ||||
Maximum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fee (percent) | 0.50% | |||||
Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fee (percent) | 0.40% |
Long-Term Debt and Credit Agreements - Long-Term Debt Maturities (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
2019 | $ 0.0 | |
2020 | 0.0 | |
2021 | 0.0 | |
2022 | 0.4 | |
2023 | 7.2 | |
2024 and thereafter | 679.0 | |
Total | $ 686.6 | $ 751.6 |
Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Reported Value Measurement [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term loan | $ 686.6 | $ 626.6 |
Senior notes | 125.0 | |
Total | 686.6 | 751.6 |
Fair Value Measurement [Member] | Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term loan | 0.0 | 0.0 |
Senior notes | 0.0 | |
Total | 0.0 | 0.0 |
Fair Value Measurement [Member] | Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term loan | 684.1 | 627.4 |
Senior notes | 138.8 | |
Total | 684.1 | 766.2 |
Fair Value Measurement [Member] | Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term loan | 0.0 | 0.0 |
Senior notes | 0.0 | |
Total | $ 0.0 | $ 0.0 |
Commitments and Contingencies - Narrative (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018
USD ($)
location
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2016
USD ($)
|
|
Operating Leased Assets [Line Items] | |||
Number of locations leased | location | 68 | ||
Average remaining life | 3 years 1 month 10 days | ||
Rent expense | $ | $ 10.5 | $ 11.2 | $ 9.0 |
Minimum [Member] | |||
Operating Leased Assets [Line Items] | |||
Term of contract | 5 years | ||
Maximum [Member] | |||
Operating Leased Assets [Line Items] | |||
Term of contract | 7 years |
Commitments and Contingencies - Future Minimum Payments (Details) $ in Millions |
Jun. 30, 2018
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 11.3 |
2020 | 10.9 |
2021 | 9.4 |
2022 | 7.0 |
2023 | 5.3 |
2024 and thereafter | 10.4 |
Total | $ 54.3 |
Stockholders' Equity (Details) - shares |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Equity [Abstract] | ||
Preferred stock, shares issued | 0 | 0 |
Share-based Compensation - Summary of Options Vested and Expected to Vest (Details) - Non-qualified stock options [Member] $ / shares in Units, $ in Millions |
12 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of options (in shares) | shares | 7,634,664 |
Weighted average exercise price (in dollars per share) | $ / shares | $ 7.52 |
Intrinsic value | $ | $ 42.6 |
Weighted-average remaining contractual term | 6 years 4 months |
Share-based Compensation - Summary of Intrinsic Value (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercised during the period end | $ 16.2 | $ 3.1 | $ 0.2 |
Service Based Options and Rolled Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total outstanding options | 28.3 | 50.6 | 24.6 |
Vested (exercisable) options | 19.3 | 31.2 | 15.4 |
Nonvested options | 9.0 | 19.4 | 9.2 |
Performance and Market Options Outstanding [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Nonvested options | $ 22.7 | $ 30.2 | $ 11.7 |
Share-based Compensation - Weighted Average Assumptions Used (Details) - Non-qualified stock options [Member] |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected life (in years) | 6 years 3 months | 6 years 4 months 24 days | 6 years 6 months |
Expected volatility | 32.50% | 32.30% | 32.20% |
Average risk-free interest rate | 2.40% | 2.20% | 1.80% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Earnings (Loss) Per Share - Reconciliation of Weighted Average Number of Shares to Compute Basic and Diluted EPS(Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Numerator: | |||||||||||
Earnings (loss) | $ 14.6 | $ 0.6 | $ 99.2 | $ 19.8 | $ 10.4 | $ (15.0) | $ 3.4 | $ 5.6 | $ 134.2 | $ 4.4 | $ (3.4) |
Denominator: | |||||||||||
Weighted-average shares – basic | 91,891,295 | 77,517,700 | 71,117,962 | ||||||||
Effect of dilutive securities: | |||||||||||
Stock options (in shares) | 4,336,283 | 4,344,139 | 0 | ||||||||
Weighted-average shares – diluted | 96,227,578 | 81,861,839 | 71,117,962 | ||||||||
Earnings per share: | |||||||||||
Basic (in dollars per share) | $ 0.16 | $ 0.01 | $ 1.08 | $ 0.22 | $ 0.11 | $ (0.20) | $ 0.05 | $ 0.08 | $ (0.05) | ||
Diluted (in dollars per share) | $ 0.15 | $ 0.01 | $ 1.03 | $ 0.21 | $ 0.11 | $ (0.20) | $ 0.05 | $ 0.08 | $ (0.05) |
Earnings (Loss) Per Share - Potentially Dilutive Securities (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Stock options excluded from EPS (in shares) | 2,878,792 | 2,387,226 | 8,836,288 |
Stock Options [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Stock options excluded from EPS (in shares) | 2,112,224 | 2,069,551 | 5,301,576 |
Performance Shares [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Stock options excluded from EPS (in shares) | 766,568 | 317,675 | 3,534,712 |
Income Taxes - Income Tax Expense (Benefit) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Current: | |||
Federal | $ 9.0 | $ 16.8 | $ 18.4 |
State | 4.5 | 3.6 | 5.0 |
Deferred: | |||
Federal | (92.1) | (16.0) | (17.4) |
State | (1.1) | (1.8) | (2.2) |
Total income tax expense (benefit) | $ (79.7) | $ 2.6 | $ 3.8 |
Income Taxes - Income Tax Rate Reconciliation (Details) |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Statutory federal income tax rate | 28.10% | 35.00% | 35.00% |
Increase (decrease) in rate resulting from: | |||
State taxes, net of federal benefits | 5.00% | 7.10% | 175.00% |
Permanent adjustments | 2.00% | 11.40% | 250.00% |
Stock compensation adjustments | (6.70%) | (11.40%) | 0.00% |
Deferred tax impacts of TCJA | (172.60%) | 0.00% | 0.00% |
State tax rate change on deferred items | 0.00% | 1.50% | 340.00% |
Provision to return adjustments | (0.70%) | (4.70%) | 125.00% |
Uncertain tax positions | (0.40%) | (3.20%) | 25.00% |
Other | (0.90%) | 1.40% | 0.00% |
Effective tax rate | (146.20%) | 37.10% | 950.00% |
Income Taxes - Narrative (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Income Tax Examination [Line Items] | ||||
Statutory federal income tax rate | 28.10% | 35.00% | 35.00% | |
Tax cuts and jobs act of 2017, income tax benefit | $ 94,100,000 | |||
Effective tax rate | (146.20%) | 37.10% | 950.00% | |
Valuation allowance | $ 0 | $ 0 | ||
Income tax penalties and interest accrued | 1,100,000 | 1,100,000 | ||
Expiration of statute of limitations | 700,000 | 400,000 | $ 500,000 | |
Decrease in unrecognized tax benefits is reasonably possible | 200,000 | |||
Interest and penalties expense | 100,000 | 100,000 | ||
Cumulative interest and penalties | 100,000 | $ 200,000 | ||
Tax benefit for decrease in statutory tax rate | 94,100,000 | |||
Amount of excess tax benefit | 3,700,000 | |||
Total amount of unrecognized tax benefits if recognized would affect the effective tax rate | $ 1,100,000 | |||
Forecast [Member] | ||||
Income Tax Examination [Line Items] | ||||
Statutory federal income tax rate | 21.00% |
Income Taxes - Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Jun. 30, 2017 |
---|---|---|
Deferred tax assets: | ||
Accrued expenses | $ 5.4 | $ 16.5 |
Bad debt | 0.9 | 1.5 |
Share-based compensation | 5.5 | 7.5 |
Acquisition related | 2.3 | 3.8 |
Net operating losses | 0.0 | 0.0 |
Total deferred tax assets | 14.1 | 29.3 |
Deferred tax liabilities: | ||
Intangibles | (156.9) | (252.3) |
Leases | (29.4) | (34.2) |
Debt issuance costs | (2.8) | (8.6) |
Depreciation | (0.5) | (3.4) |
Other | (2.2) | (1.2) |
Total deferred tax liabilities | (191.8) | (299.7) |
Total deferred tax assets (liabilities) | $ (177.7) | $ (270.4) |
Income Taxes - Movement in Unrecognized Tax Benefits (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance, beginning of the period | $ 0.9 | $ 1.3 | $ 1.5 |
Increases for tax positions taken on acquired entities | 0.0 | 0.0 | 0.0 |
Increases for tax positions taken in current period | 0.0 | 0.0 | 0.0 |
Increases for tax positions taken in a previous period | 0.9 | 0.0 | 0.3 |
Expiration of statute of limitations | (0.7) | (0.4) | (0.5) |
Balance, end of period | $ 1.1 | $ 0.9 | $ 1.3 |
Major Customers and Suppliers (Details) |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Products and Services [Member] | Supplier Concentration Risk [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk percentage | 64.00% | 67.00% | 67.00% |
Retirement Plan - Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Retirement Benefits [Abstract] | |||
Minimum age requirement | 21 years | ||
Fixed matching contribution percentage | 25.00% | ||
Maximum employer matching contribution percent of employees' compensation | 6.00% | ||
Discretionary matching contribution percentage | 25.00% | ||
Employers matching contribution vesting period | 5 years | ||
Minimum hours worked per year | 1000 hours | ||
Total employer contribution amount | $ 3.0 | $ 2.1 | $ 6.1 |
Segment Information (Details) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Mar. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Sep. 30, 2016
USD ($)
|
Jun. 30, 2018
USD ($)
segment
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2016
USD ($)
|
|
Segment Reporting [Abstract] | |||||||||||
Number of reportable segments | segment | 1 | ||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Total revenue | $ 766.3 | $ 665.1 | $ 661.6 | $ 765.0 | $ 729.3 | $ 628.8 | $ 721.8 | $ 737.7 | $ 2,858.0 | $ 2,817.6 | $ 2,714.9 |
Cloud [Member] | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Total revenue | 450.3 | 501.1 | 391.7 | ||||||||
Security [Member] | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Total revenue | 376.9 | 324.1 | 249.4 | ||||||||
Digital Infrastructure [Member] | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Total revenue | $ 2,030.8 | $ 1,992.4 | $ 2,073.8 |
Quarterly Financial Data (Unaudited) (Details) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 24, 2017 |
Jun. 30, 2018
USD ($)
$ / shares
|
Mar. 31, 2018
USD ($)
$ / shares
|
Dec. 31, 2017
USD ($)
$ / shares
|
Sep. 30, 2017
USD ($)
$ / shares
|
Jun. 30, 2017
USD ($)
$ / shares
|
Mar. 31, 2017
USD ($)
$ / shares
|
Dec. 31, 2016
USD ($)
$ / shares
|
Sep. 30, 2016
USD ($)
$ / shares
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2016
USD ($)
$ / shares
|
|
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||
Total revenue | $ 766.3 | $ 665.1 | $ 661.6 | $ 765.0 | $ 729.3 | $ 628.8 | $ 721.8 | $ 737.7 | $ 2,858.0 | $ 2,817.6 | $ 2,714.9 | |
Gross margin | 151.8 | 139.4 | 137.4 | 156.4 | 152.3 | 142.1 | 142.9 | 148.6 | 540.6 | |||
Operating income | 29.3 | 18.3 | 23.3 | 44.1 | 35.9 | 14.4 | 27.5 | 30.3 | 98.9 | |||
Net income (loss) | $ 14.6 | $ 0.6 | $ 99.2 | $ 19.8 | $ 10.4 | $ (15.0) | $ 3.4 | $ 5.6 | $ 134.2 | $ 4.4 | $ (3.4) | |
Earnings (loss) per share, basic (in dollars per share) | $ / shares | $ 0.16 | $ 0.01 | $ 1.08 | $ 0.22 | $ 0.11 | $ (0.20) | $ 0.05 | $ 0.08 | $ (0.05) | |||
Earnings (loss) per share, diluted (in dollars per share) | $ / shares | $ 0.15 | $ 0.01 | $ 1.03 | $ 0.21 | $ 0.11 | $ (0.20) | $ 0.05 | $ 0.08 | $ (0.05) | |||
Stock split conversion ratio | 2 |
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Sep. 06, 2018 |
Sep. 05, 2018 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Subsequent Event [Line Items] | |||||
Consideration for repurchase of common stock | $ 0.0 | $ 0.0 | $ 0.1 | ||
Subsequent Event [Member] | Presidio, Inc. [Member] | Aegis LP [Member] | |||||
Subsequent Event [Line Items] | |||||
Ownership interest (in shares) | 47,050,000 | ||||
Ownership interest | 57.00% | ||||
Aegis LP Stock Repurchase Agreement [Member] | Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Shares to be repurchased (in shares) | 10,750,000 | ||||
Consideration for repurchase of common stock | $ 160.0 | ||||
Purchase price (in dollars per share) | $ 14.75 | ||||
Aegis LP Stock Repurchase Agreement [Member] | Subsequent Event [Member] | Incremental Term Loan B Facility [Member] | |||||
Subsequent Event [Line Items] | |||||
Proceeds from additional term loans for repurchase of common stock | $ 160.0 |
Schedule I - Condensed Financial Information of Registrant - Unconsolidated Condensed Statements of Operations (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Operating expenses | |||||||||||
Selling, general and administrative, and transaction costs | $ 386.3 | $ 396.0 | |||||||||
Total operating expenses | 470.0 | 477.8 | $ 441.7 | ||||||||
Operating income | $ 29.3 | $ 18.3 | $ 23.3 | $ 44.1 | $ 35.9 | $ 14.4 | $ 27.5 | $ 30.3 | 98.9 | ||
Interest and other (income) expense | |||||||||||
Other (income) expense, net | (0.3) | 0.1 | 0.1 | ||||||||
Total interest and other (income) expense | 60.5 | 101.1 | 98.5 | ||||||||
Income before income taxes | 54.5 | 7.0 | 0.4 | ||||||||
Income tax expense (benefit) | (79.7) | 2.6 | 3.8 | ||||||||
Net income (loss) | $ 14.6 | $ 0.6 | $ 99.2 | $ 19.8 | $ 10.4 | $ (15.0) | $ 3.4 | $ 5.6 | 134.2 | 4.4 | (3.4) |
Presidio, Inc. [Member] | |||||||||||
Operating expenses | |||||||||||
Selling, general and administrative, and transaction costs | 1.7 | 0.5 | 0.3 | ||||||||
Total operating expenses | 1.7 | 0.5 | 0.3 | ||||||||
Operating income | (1.7) | (0.5) | (0.3) | ||||||||
Interest and other (income) expense | |||||||||||
Unrealized loss (income) on equity investment in subsidiaries | (136.2) | (4.7) | 3.2 | ||||||||
Other (income) expense, net | 0.0 | 0.0 | (0.3) | ||||||||
Total interest and other (income) expense | (136.2) | (4.7) | 2.9 | ||||||||
Income before income taxes | 134.5 | 4.2 | (3.2) | ||||||||
Income tax expense (benefit) | 0.3 | (0.2) | 0.2 | ||||||||
Net income (loss) | $ 134.2 | $ 4.4 | $ (3.4) |
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