Company Quick10K Filing
Quick10K
Infor
10-Q 2019-07-31 Quarter: 2019-07-31
10-K 2019-04-30 Annual: 2019-04-30
10-Q 2019-01-31 Quarter: 2019-01-31
10-Q 2018-10-31 Quarter: 2018-10-31
10-Q 2018-07-31 Quarter: 2018-07-31
10-K 2018-04-30 Annual: 2018-04-30
10-Q 2018-01-31 Quarter: 2018-01-31
10-Q 2017-10-31 Quarter: 2017-10-31
10-Q 2017-07-31 Quarter: 2017-07-31
10-K 2017-04-30 Annual: 2017-04-30
10-Q 2017-01-31 Quarter: 2017-01-31
10-Q 2016-10-31 Quarter: 2016-10-31
10-Q 2016-07-31 Quarter: 2016-07-31
10-K 2016-04-30 Annual: 2016-04-30
10-Q 2016-01-31 Quarter: 2016-01-31
10-Q 2015-10-31 Quarter: 2015-10-31
10-Q 2015-07-31 Quarter: 2015-07-31
10-Q 2015-01-31 Quarter: 2015-01-31
10-Q 2014-10-31 Quarter: 2014-10-31
10-Q 2014-07-31 Quarter: 2014-07-31
10-K 2014-05-31 Annual: 2014-05-31
10-Q 2014-02-28 Quarter: 2014-02-28
10-Q 2013-11-30 Quarter: 2013-11-30
8-K 2019-08-26 Officers, Amend Bylaw, Regulation FD, Exhibits
8-K 2019-01-16 Officers, Other Events, Exhibits
8-K 2018-07-11 Officers
8-K 2018-05-04 Officers
8-K 2018-02-23 Enter Agreement, Off-BS Arrangement, Exhibits
KSHB Kush Bottles 330
BUDZ Weed 46
GRMC Goldrich Mining 3
GOVX Geovax Labs 0
UBIA UBI Blockchain 0
TDRP Teardroppers 0
LBSR Liberty Star Uranium & Metals 0
FCE Forest City Realty Trust 0
LUNG Prolung 0
INCT InCapta 0
INFOR 2019-07-31
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 d782143dex101.htm
EX-31.1 d782143dex311.htm
EX-31.2 d782143dex312.htm
EX-32.1 d782143dex321.htm
EX-32.2 d782143dex322.htm

Infor Earnings 2019-07-31

INFOR 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 d782143d10q.htm 10-Q 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

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

FOR THE QUARTERLY PERIOD ENDED JULY 31, 2019

OR

 

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

FOR THE TRANSITION PERIOD FROM                      TO                     

Commission file number:    333-183494-06

 

 

LOGO

INFOR, INC.

(Exact name of registrant as specified in its charter)

 

 

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

641 AVENUE OF THE AMERICAS

NEW YORK, NEW YORK

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

(646) 336-1700

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to section 12(b) of the act: None

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

N/A   N/A   N/A

Securities registered pursuant to section 12(g) of the act: None

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

Note: The registrant is a voluntary filer and is not subject to the filing requirements. However, the registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

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

Large accelerated filer      Accelerated filer    
Non-accelerated filer      Smaller reporting company   
Emerging growth company       

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

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

The number of shares of our common stock outstanding on September 9, 2019, was 1,000, par value $0.01 per share.

 

 

 


Table of Contents

INFOR, INC.

Form 10-Q

Index

 

PART I.

 

FINANCIAL INFORMATION

     2  

Item 1.

 

Financial Statements (unaudited)

     2  
 

Condensed Consolidated Balance Sheets at July  31, 2019 and April 30, 2019

     2  
 

Condensed Consolidated Statements of Operations for the three months ended July 31, 2019 and 2018

     3  
 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended July 31, 2019 and 2018

     4  
 

Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended July 31, 2019 and 2018

     5  
 

Condensed Consolidated Statements of Cash Flows for the three months ended July 31, 2019 and 2018

     7  
 

Notes to Condensed Consolidated Financial Statements

     8  

Item 2.

 

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

     43  

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

     58  

Item 4.

 

Controls and Procedures

     59  

PART II.

 

OTHER INFORMATION

     60  

Item 1.

 

Legal Proceedings

     60  

Item 1A.

 

Risk Factors

     60  

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

     60  

Item 3.

 

Defaults Upon Senior Securities

     60  

Item 4.

 

Mine Safety Disclosures

     60  

Item 5.

 

Other Information

     60  

Item 6.

 

Exhibits

     61  
 

Signatures

     62  


Table of Contents

Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q for the quarter ended July 31, 2019 (this Quarterly Report on Form 10-Q), contains forward-looking statements within the meaning of securities laws. The forward-looking statements are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “forecast,” “project,” “should” and similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among others, statements about our future performance, the continuation of historical trends, the sufficiency of our sources of capital for future needs, the effects of acquisitions, the outcome of pending litigation and the expected impact of recently issued accounting pronouncements. These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. The forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those anticipated in the forward-looking statements; including those that are discussed under Risk Factors in documents we have filed with the U.S. Securities and Exchange Commission (the SEC), including our Annual Report on Form 10-K for our fiscal year ended April 30, 2019, filed with the SEC on June 25, 2019 (our Annual Report on Form 10-K).

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

Available Information

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

 

1


Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INFOR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts which are actuals)

(unaudited)

 

     July 31,
2019
    April 30,
2019
 

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 253.5     $ 356.4  

Accounts receivable, net

     423.0       516.8  

Prepaid expenses

     203.9       208.5  

Income tax receivable

     4.4       14.9  

Other current assets

     43.7       44.8  
  

 

 

   

 

 

 

Total current assets

     928.5       1,141.4  

Property and equipment, net

     173.7       172.1  

Operating lease right-of-use assets

     197.1       —    

Intangible assets, net

     530.2       565.0  

Goodwill

     4,548.8       4,582.4  

Deferred tax assets

     112.9       116.4  

Other assets

     162.4       175.4  
  

 

 

   

 

 

 

Total assets

   $ 6,653.6     $ 6,752.7  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Deficit

    

Current liabilities:

    

Accounts payable

   $ 79.9     $ 122.6  

Income tax payable

     53.1       51.4  

Accrued expenses

     371.4       466.3  

Deferred revenue

     1,138.2       1,188.0  

Current portion of long-term obligations

     32.6       27.5  

Operating lease liabilities

     45.4       —    
  

 

 

   

 

 

 

Total current liabilities

     1,720.6       1,855.8  

Long-term debt, net

     5,130.7       5,154.2  

Operating lease liabilities, noncurrent

     178.3       —    

Deferred tax liabilities

     12.1       38.6  

Other long-term liabilities

     170.9       247.5  
  

 

 

   

 

 

 

Total liabilities

     7,212.6       7,296.1  
  

 

 

   

 

 

 

Commitments and contingencies (Note 16)

    

Stockholders’ deficit:

    

Common stock, $0.01 par value; 1,000 shares authorized; 1,000 shares issued and outstanding at July 31, 2019 and April 30, 2019

     —         —    

Additional paid-in capital

     1,672.9       1,677.8  

Receivable from stockholders

     (51.4     (58.8

Accumulated other comprehensive income (loss)

     (297.2     (271.9

Accumulated deficit

     (1,890.6     (1,897.9
  

 

 

   

 

 

 

Total Infor, Inc. stockholders’ deficit

     (566.3     (550.8

Noncontrolling interests

     7.3       7.4  
  

 

 

   

 

 

 

Total stockholders’ deficit

     (559.0     (543.4
  

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

   $ 6,653.6     $ 6,752.7  
  

 

 

   

 

 

 

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

 

2


Table of Contents

INFOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions)

(unaudited)

 

     Three Months Ended  
     July 31,  
         2019             2018      

Revenues

    

SaaS subscriptions

   $ 171.8     $ 156.2  

Software license fees

     54.9       65.9  
  

 

 

   

 

 

 

Software subscriptions and license fees

     226.7       222.1  

Product updates and support fees

     340.6       351.0  
  

 

 

   

 

 

 

Software revenues

     567.3       573.1  

Consulting services and other fees

     212.7       209.6  
  

 

 

   

 

 

 

Total revenues

     780.0       782.7  
  

 

 

   

 

 

 

Operating expenses

    

Cost of SaaS subscriptions (1)

     75.6       68.2  

Cost of software license fees (1)

     10.6       9.5  

Cost of product updates and support fees (1)

     56.5       56.0  

Cost of consulting services and other fees (1)

     172.9       171.3  

Sales and marketing

     121.2       117.8  

Research and development

     126.8       123.5  

General and administrative

     60.1       60.1  

Amortization of intangible assets and depreciation

     56.6       51.6  

Restructuring costs

     6.5       5.1  

Acquisition-related and other costs

     1.0       4.7  
  

 

 

   

 

 

 

Total operating expenses

     687.8       667.8  
  

 

 

   

 

 

 

Income from operations

     92.2       114.9  
  

 

 

   

 

 

 

Other expense, net:

    

Interest expense, net

     87.7       80.3  

Other (income) expense, net

     (11.9     (45.2
  

 

 

   

 

 

 

Total other expense, net

     75.8       35.1  
  

 

 

   

 

 

 

Income before income tax

     16.4       79.8  

Income tax provision

     8.8       2.2  
  

 

 

   

 

 

 

Net income

     7.6       77.6  

Net income attributable to noncontrolling interests

     0.3       0.3  
  

 

 

   

 

 

 

Net income attributable to Infor, Inc.

   $ 7.3     $ 77.3  
  

 

 

   

 

 

 

 

(1)

Excludes amortization of intangible assets and depreciation, which are separately stated below.

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

 

3


Table of Contents

INFOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

(unaudited) 

 

     Three Months Ended  
     July 31,  
     2019     2018  

Net income

   $ 7.6     $ 77.6  
  

 

 

   

 

 

 

Other comprehensive income (loss):

    

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

     (26.4     (42.4

Change in defined benefit plan funding status, net of tax

     1.1       0.9  
  

 

 

   

 

 

 

Total other comprehensive income (loss)

     (25.3     (41.5
  

 

 

   

 

 

 

Comprehensive income (loss)

     (17.7     36.1  
  

 

 

   

 

 

 

Noncontrolling interests comprehensive income (loss)

     0.3       0.2  
  

 

 

   

 

 

 

Comprehensive income (loss) attributable to Infor, Inc.

   $ (18.0   $ 35.9  
  

 

 

   

 

 

 

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

 

4


Table of Contents

INFOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(in millions, except share amounts which are actuals)

 

     Infor, Inc. Stockholders’ Deficit              
     Infor, Inc.
Common Stock
     APIC     Stockholders’
Receivable
    Accumulated
Other
Comprehensive

Income (Loss)
    Accumulated
Deficit
    Total
Infor, Inc.
Stockholders’

Deficit
    Noncontrolling
Interests
    Total
Stockholders’

Deficit
 
     Shares      Amount  

Balance, April 30, 2019

     1,000    $ —        $ 1,677.8   $ (58.8   $ (271.9   $ (1,897.9   $ (550.8   $ 7.4   $ (543.4

Equity-based compensation expense

     —          —          2.5     —         —         —         2.5     —         2.5

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

     —          —          —         —         (26.4     —         (26.4     —         (26.4

Defined benefit plan funding status, net of tax

     —          —          —         —         1.1     —         1.1     —         1.1

Dividend paid/accrued

     —          —          (7.4     —         —         —         (7.4     (0.4     (7.8

Tax sharing arrangement activity, net

     —          —          —         7.4     —         —         7.4     —         7.4

Net income

     —          —          —         —         —         7.3     7.3     0.3     7.6
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, July 31, 2019

     1,000    $ —        $ 1,672.9   $ (51.4   $ (297.2   $ (1,890.6   $ (566.3   $ 7.3   $ (559.0
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

5


Table of Contents

INFOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(in millions, except share amounts which are actuals)

 

     Infor, Inc. Stockholders’ Deficit              
     Infor, Inc.
Common Stock
     APIC      Stockholders’
Receivable
    Accumulated
Other
Comprehensive

Income (Loss)
    Accumulated
Deficit
    Total
Infor, Inc.
Stockholders’

Deficit
    Noncontrolling
Interests
    Total
Stockholders’

Deficit
 
     Shares      Amount  

Balance, April 30, 2018

     1,000    $ —        $ 1,255.0    $ (58.5   $ (141.4   $ (2,073.7   $ (1,018.6   $ 8.8   $ (1,009.8

Equity-based compensation expense

     —          —          2.1      —         —         —         2.1     —         2.1

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

     —          —          —          —         (42.3     —         (42.3     (0.1     (42.4

Defined benefit plan funding status, net of tax

     —          —          —          —         0.9     —         0.9     —         0.9

Cumulative effect of accounting changes

     —          —          —          —         —         19.1     19.1     —         19.1

Net income

     —          —          —          —         —         77.3     77.3     0.3     77.6
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, July 31, 2018

     1,000    $ —        $ 1,257.1    $ (58.5   $ (182.8   $ (1,977.3   $ (961.5   $ 9.0   $ (952.5
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

6


Table of Contents

INFOR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

 

     Three Months Ended  
     July 31,  
     2019     2018  

Cash flows from operating activities

    

Net income

   $ 7.6     $ 77.6  

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

    

Depreciation and amortization

     56.6       51.6  

Provision for doubtful accounts, billing adjustments and sales allowances

     17.7       10.5  

Deferred income taxes

     (20.6     (3.0

Non-cash loss (gain) on foreign currency

     (12.0     (45.0

Non-cash interest

     18.1       5.7  

Equity-based compensation expense

     4.3       3.7  

Other

     (0.1     0.4  

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

    

Prepaid expenses and other assets

     (26.8     (27.1

Accounts receivable, net

     82.5       47.2  

Income tax receivable/payable, net

     7.2       (0.9

Deferred revenue

     (58.8     (11.1

Accounts payable, accrued expenses and other liabilities

     (102.4     (74.7
  

 

 

   

 

 

 

Net cash (used in) provided by operating activities

     (26.7     34.9  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Business and asset acquisitions, net of cash acquired

     —         2.5  

Purchases of property, equipment and software

     (23.5     (20.1
  

 

 

   

 

 

 

Net cash used in investing activities

     (23.5     (17.6
  

 

 

   

 

 

 

Cash flows from financing activities

    

Dividends paid

     (52.4     (50.0

Proceeds from repayment of stockholder loans

     7.4       —    

Payments on finance lease and other obligations

     (1.2     (0.6

Payments on long-term debt

     (2.9     (38.4

Deferred purchase price and contingent consideration

     (1.0     —    

Other

     (1.0     (0.4
  

 

 

   

 

 

 

Net cash used in financing activities

     (51.1     (89.4
  

 

 

   

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

     (2.3     (7.4
  

 

 

   

 

 

 

Net decrease in cash, cash equivalents and restricted cash

     (103.6     (79.5

Cash, cash equivalents and restricted cash at the beginning of the period

     370.9       429.7  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at the end of the period

   $ 267.3     $ 350.2  
  

 

 

   

 

 

 

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

 

7


Table of Contents

INFOR, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Nature of Business and Basis of Presentation

Infor is a global leader in business cloud software specialized by industry. We build complete industry suites in the cloud for large enterprises and small-to-midsize companies (SMB) in many industries, including manufacturing, distribution, healthcare, public sector, retail, and hospitality. We serve a large, diverse and sophisticated global customer base across three geographic regions: the Americas; Europe, Middle East and Africa (EMEA); and Asia-Pacific, including Australia and New Zealand (APAC).

We offer a broad range of software applications and industry-specific solutions. We specialize in and target specific Industries, or verticals, with integrated software suites of our industry-specific applications as well as horizontal (industry-nonspecific) applications. Our industry CloudSuites are each built around one of our industry-specific enterprise resource planning (ERP) applications. Our horizontal applications augment our ERP applications and enable digital transformation of general business processes, including customer relationship management (CRM), enterprise asset management (EAM), financial management, human capital management (HCM), and supply chain management (SCM). Our CloudSuites are also integrated with our Infor Nexus (formerly GT Nexus) commerce network, which helps manage flow of inventory, transactions, and information across a global supply chain between trading partners. Infor Birst is a cloud-based networked business intelligence (BI) and analytics software platform that helps organizations understand and optimize complex processes and delivers insights across the enterprise. Coleman is Infor’s enterprise-grade, industry-specific artificial intelligence (AI) platform for our CloudSuite applications, which mines data and uses powerful machine learning to improve processes such as inventory management, transportation routing, and predictive maintenance.

We generate revenue primarily from providing access to our software products through Software-as-a-Service (SaaS) subscription offerings, the sale of perpetual or term software licenses granting customers use of our software products, providing on-going product updates and support services for our customers through our subscription-based annual maintenance and support programs, and from providing consulting services which help our customers implement and use our applications more effectively.

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

Basis of Presentation

Our Condensed Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) and consider the various staff accounting bulletins and other applicable guidance issued by the SEC. Our Condensed Consolidated Financial Statements include the accounts of Infor, Inc. and our wholly-owned and majority-owned subsidiaries operating in the Americas, EMEA and APAC. Our investments in other non-consolidated entities are accounted for using the equity method or equity method investment measurement alternative depending upon the level of ownership and/or our ability to exercise significant influence over the operating and financial policies of the investee. All significant intercompany accounts and transactions have been eliminated.

The unaudited Condensed Consolidated Financial Statements and Notes are presented as permitted by FASB requirements for quarterly reports and do not contain all the information and disclosures included in our annual financial statements and related notes as required by GAAP. The Condensed Consolidated Balance Sheet data as of April 30, 2019, and other amounts presented herein as of April 30, 2019, or for the year then ended, were derived from our audited financial statements. The accompanying Condensed Consolidated Financial Statements reflect all adjustments, in the opinion of management, necessary to fairly state our financial position, results of operations and cash flows for the periods presented. These adjustments consist of normal and recurring items. The results of operations for our interim periods are not necessarily indicative of results to be achieved for any future interim period or for our full fiscal year.

Effective May 1, 2019, we adopted the FASB guidance related to accounting for leases included in ASC 842, Leases (ASC 842), using the optional modified retrospective transition method electing not to restate prior periods to reflect this change. See Note 2, Summary of Significant Accounting Policies – Adoption of New Accounting Pronouncements. As a result, we have changed our accounting policy for leases. Our financial statements for reporting periods beginning after April 30, 2019, are presented under ASC 842, while amounts for prior periods have not been adjusted and continue to reflect amounts as originally reported in accordance with our historic accounting for leases under ASC 840, Leases (ASC 840).

 

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The accompanying interim Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and related Notes, included in our Annual Report on Form 10-K.

Noncontrolling Interests

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

Business Segments

We view our operations and manage our business as three reportable segments: License, Maintenance, and Consulting. We determine our reportable operating segments in accordance with the provisions in the FASB guidance on segment reporting, which establish standards for, and require disclosure of, certain financial information related to reportable operating segments and geographic regions. See Note 18, Segment and Geographic Information.

Use of Estimates

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

Fiscal Year

Our fiscal year is from May 1 through April 30 and the first quarter of each fiscal year is from May 1 through July 31. Unless otherwise stated, references to fiscal 2020 and fiscal 2019 relate to our fiscal years ended April 30, 2020 and 2019, respectively. References to future years also relate to our fiscal years ending April 30.

Revision of Prior Period Financial Statements

During the first quarter of fiscal 2020, a misstatement was identified that caused an overstatement in the income tax provision presented within our Consolidated Statements of Operations for the three and nine months ended January 31, 2019, and the fiscal year ended April 30, 2019, and a corresponding overstatement in deferred tax liabilities presented within our Consolidated Balance Sheets as of January 31, 2019 and April 30, 2019. We had maintained a valuation allowance in the applicable periods of fiscal 2019 for the entire deferred tax asset related to disallowed interest expense deduction carryforwards under Internal Revenue Code Section 163(j), which was not appropriate in accordance with ASC 740, Income Taxes, as we have determined that a portion of the deferred tax asset was more likely than not realizable.

In accordance with accounting guidance found in ASC 250-10 (SEC Staff Accounting Bulletin No. 99, Materiality), we assessed the materiality of this misstatement, and another immaterial misstatement, and concluded that they were not material to any of our previously issued financial statements. However, we are revising the previously issued financial statements to correct for these misstatements.

 

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Correction of this tax misstatement resulted in a $14.5 million and $14.7 million reduction in deferred tax liabilities, and a $14.5 million and $14.7 million decrease in accumulated deficit on our Consolidated Balance Sheet and Consolidated Statement of Stockholders’ Deficit as of January 31, 2019 and April 30, 2019, respectively.

This tax misstatement also resulted in a $14.5 million and $14.7 million overstatement of our income tax provision in our Consolidated Statements of Operations for the three and nine months ended January 31, 2019, and for the fiscal year ended April 30, 2019, respectively. The correction did not impact our net cash provided by operating activities in our previously issued Consolidated Statements of Cash Flows.

In connection with this revision, we are also correcting for a previously identified immaterial misstatement that resulted in an overstatement of equity-based compensation expense of $1.5 million in the three and nine months ended January 31, 2019, which had been previously corrected for as an out-of-period adjustment in the fourth quarter of fiscal 2019.

Management has concluded that these misstatements were not material to any of our previously issued financial statements. The revisions for the three and nine months ended January 31, 2019, and the fiscal year ended April 30, 2019, will be effected in connection with the filing of our third quarter fiscal 2020 Form 10-Q and fiscal 2020 Form 10-K.

The following tables summarize the impact of the revisions discussed above to our Consolidated Balance Sheets as of January 31, 2019 and April 30, 2019:

 

     January 31, 2019  
     As Originally                
(in millions)    Reported      Adjustments      As Revised  

Liabilities and Stockholders’ Deficit

        

Deferred tax liabilities

   $ 35.3      $ (14.1    $ 21.2  

Other long-term liabilities

     229.6        (1.5      228.1  

Total liabilities

     7,693.0        (15.6      7,677.4  

Accumulated deficit

     (1,921.0      15.6        (1,905.4

Total Infor, Inc. stockholders’ deficit

     (962.6      15.6        (947.0

Total stockholders’ deficit

     (954.7      15.6        (939.1

Total liabilities and stockholders’ deficit

     6,738.3        —          6,738.3  

 

     April 30, 2019  
     As Originally                
(in millions)    Reported      Adjustments      As Revised  

Liabilities and Stockholders’ Deficit

        

Deferred tax liabilities

   $ 53.3      $ (14.7    $ 38.6  

Total liabilities

     7,310.8        (14.7      7,296.1  

Accumulated deficit

     (1,912.6      14.7        (1,897.9

Total Infor, Inc. stockholders’ deficit

     (565.5      14.7        (550.8

Total stockholders’ deficit

     (558.1      14.7        (543.4

Total liabilities and stockholders’ deficit

     6,752.7        —          6,752.7  

The following tables summarize the impact of the revisions discussed above to our Consolidated Statements of Operations for the three and nine months ended January 31, 2019 and the year ended April 30, 2019:

 

     Three Months Ended January 31, 2019  
     As Originally                
(in millions)    Reported      Adjustments      As Revised  

Cost of consulting services and other fees

   $ 174.1      $ (0.3    $ 173.8  

Sales and marketing

     122.2        (0.5      121.7  

Research and development

     123.9        (0.4      123.5  

General and administrative

     57.8        (0.3      57.5  

Total operating expenses

     685.2        (1.5      683.7  

Income from operations

     104.6        1.5        106.1  

Income tax provision

     28.1        (14.1      14.0  

Net income (loss)

     (22.2      15.6        (6.6

 

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     Nine Months Ended January 31, 2019  
     As Originally                
(in millions)    Reported      Adjustments      As Revised  

Cost of consulting services and other fees

   $ 519.3      $ (0.3    $ 519.0  

Sales and marketing

     370.3        (0.5      369.8  

Research and development

     372.2        (0.4      371.8  

General and administrative

     175.3        (0.3      175.0  

Total operating expenses

     2,042.1        (1.5      2,040.6  

Income from operations

     329.8        1.5        331.3  

Income tax provision

     39.8        (14.1      25.7  

Net income (loss)

     134.8        15.6        150.4  

 

     Year Ended April 30, 2019  
     As Originally                
(in millions)    Reported      Adjustments      As Revised  

Income tax provision

   $ 76.1      $ (14.7    $ 61.4  

Net income (loss)

     143.4        14.7        158.1  

In addition and as previously disclosed in our Annual Report on Form 10-K, during the preparation of the condensed consolidating financial information of Infor, Inc. and Subsidiaries as it relates to supplemental guarantor financial information for the year ended April 30, 2019, management identified errors in certain presentation matters. See Note 20, Supplemental Guarantor Financial Information, for additional information.

2. Summary of Significant Accounting Policies

A detailed description of our significant accounting policies can be found in our financial statements for our fiscal year ended April 30, 2019, which is included in our Annual Report on Form 10-K. Except for the accounting policy for leases related to adopting ASC 842, discussed below, there have been no changes to our significant accounting policies that have had a material impact on our Condensed Consolidated Financial Statements and Notes. The following Notes should be read in conjunction with such policies and other disclosures contained therein.

Leases

We account for leases in accordance with ASC 842, Leases, which we adopted at the beginning of fiscal 2020. Under ASC 842, we recognize right-of-use assets (ROU assets) and lease liabilities on our balance sheet relating to our leasing arrangements. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. For income statement purposes, this guidance retained a dual model, requiring leases to be classified as either operating or finance. See Note 7, Leases, for additional information.

We determine if an arrangement is or contains a lease at the inception of the contractual agreement. We present operating lease ROU assets in operating lease right-of-use assets, and the corresponding operating lease liabilities are presented in operating lease liabilities and operating lease liabilities, noncurrent, respectively, on our Condensed Consolidated Balance Sheets. Finance lease ROU assets are included in property and equipment, net, and the corresponding finance lease liabilities are included within accrued expenses and other long-term liabilities, respectively, on our Condensed Consolidated Balance Sheets.

ROU assets and lease liabilities are recognized at the commencement date. Lease liabilities are measured at the present value of the remaining lease payments over the lease term. ROU assets consist of the initial measurement of lease liabilities, increased by any initial direct costs incurred or lease payments made prior to the commencement date, and reduced by any lease incentives received. Many of our lease arrangements include options to extend or terminate the lease. When determining lease terms, we factor in extension options only if they are reasonably certain of being exercised, and we factor in termination options unless it is reasonably certain that we will not exercise the options.

As our lease agreements typically do not provide an implicit interest rate, we use our incremental borrowing rate as the discount rate to calculate the present value of the lease payments. We estimate our incremental borrowing rate based on the information available at the commencement date. The incremental borrowing rate represents an estimate of the interest rate that we would be required to pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We also take into consideration our historical borrowing activities and market data in this determination.

 

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We have lease arrangements with both lease and non-lease components. For our office space and IT equipment, we separate lease and non-lease components. For our vehicle and office equipment leases, we account for lease and non-lease components as a single lease component.

For all leases with an initial term of 12 months or less, we do not record lease assets and liabilities on the balance sheet. We recognize lease expense for these short-term leases on a straight-line basis over the lease term.

For operating leases, lease expense is recognized on a straight-line basis over the lease term and is recorded in cost of revenue and operating expense lines in our Condensed Consolidated Statement of Operations. Finance leases include both an operating expense and an interest expense component. Amortization expense of the finance lease ROU asset is recognized on a straight-line basis over the lease term and interest expense for finance leases is recognized using the effective interest method. These are recorded in amortization of intangible assets and depreciation, and interest expense, net, respectively, in our Condensed Consolidated Statement of Operations. Some of our leases contain variable lease costs, including payments tied to consumer price indexes, for taxes, maintenance, insurance and other operating costs. Variable lease costs, other than payments based on a rate or index, are not included in the measurement of the ROU asset or lease liability and are expensed as incurred.

In addition, we do not have any related party leases and our sublease transactions are not significant. We do not have lease agreements with residual value guarantees or restrictive covenants.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents are comprised primarily of unrestricted amounts in operating accounts, money market investments and other short-term, highly liquid investments with initial maturities of three months or less. Each is recorded at cost, which approximates fair market value given their short-term nature.

In addition, we have restricted cash balances which are classified as either other current assets or other assets on our Condensed Consolidated Balance Sheets depending on the nature of the restriction. Restricted cash is used to collateralize various operating guarantees such as leases, acquisition funding, or letters of credit and is recorded at cost, which approximates fair market value.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash within our Condensed Consolidated Balance Sheets to amounts presented within our Condensed Consolidated Cash Flow Statements:

 

     July 31,      April 30,  
(in millions)    2019      2019  

Current assets

     

Cash and cash equivalents

   $ 253.5      $ 356.4  

Restricted cash - Other current assets

     0.5        0.9  

Other assets

     

Restricted cash - Other assets

     13.3        13.6  
  

 

 

    

 

 

 

Total cash, cash equivalents and restricted cash

   $ 267.3      $ 370.9  
  

 

 

    

 

 

 

Foreign Currency

The functional currency of our foreign subsidiaries is typically the applicable local currency. The translation from the respective foreign currencies to United States Dollars (U.S. Dollar) is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date and for income statement accounts using a weighted average exchange rate during the applicable period. Gains or losses resulting from translation of balance sheet accounts are included as a separate component of accumulated other comprehensive income on our Condensed Consolidated Balance Sheets. Gains or losses resulting from foreign currency transactions are included in foreign currency gain or loss as a component of other (income) expense, net, in the accompanying Condensed Consolidated Statements of Operations. Foreign currency gains or losses related to intercompany transactions considered to be long-term investments are included in other comprehensive income (loss) as a net credit or charge.

Transaction gains and losses are recognized in our results of operations based on the difference between the foreign currency exchange rates on the transaction date and on the reporting date. We recognized a net foreign currency exchange gain of $12.0 million and a net foreign currency exchange gain of $45.0 million for the three months ended July 31, 2019 and 2018, respectively.

 

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Certain foreign currency transaction gains and losses are generated from our intercompany balances that are not considered to be long-term in nature and will be settled between subsidiaries. These intercompany balances are a result of normal transfer pricing transactions among our various operating subsidiaries, as well as certain loans initiated between subsidiaries. We also recognize transaction gains and losses from revaluing our debt denominated in Euros and held by subsidiaries whose functional currency is the U.S. Dollar. See Note 13, Debt.

Adoption of New Accounting Pronouncements

On May 1, 2019, we adopted the FASB guidance related to accounting for leases under ASC 842, Leases. This guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASC 842, lessees recognize a right-of-use asset and a lease liability on their consolidated balance sheets. Leases continue to be classified as either operating or finance for income statement purposes, which will affect the pattern of expense recognition in the consolidated statements of operations. We adopted the new standard using the modified retrospective transition method by recognizing the cumulative effect of initial application as an adjustment to our opening balance sheet. Accordingly, the comparative prior periods and disclosures presented in the financial statements have not been recasted and continue to be reported in accordance with previous guidance under ASC 840, Leases.

We elected the transition package of practical expedients, which permitted us to not reassess our prior conclusions pertaining to lease identification, lease classification, and initial direct costs on leases that commenced prior to our adoption of the new standard. We did not elect the use-of-hindsight practical expedient. Additionally, we elected ongoing practical expedients to not recognize ROU assets and lease liabilities related to leases with terms of twelve months or less, and to combine lease and non-lease components for certain asset classes. See Leases above for details on our lease accounting policy.

Our adoption of ASC 842 resulted in the recognition of operating lease ROU assets and operating lease liabilities of $202.2 million and $228.6 million, respectively, on our consolidated balance sheet as of May 1, 2019. In addition, upon adoption, prepaid rent, deferred rent, and applicable facilities restructuring reserves recorded as of April 30, 2019, were reclassified as a component of the operating lease ROU assets. Our accounting for finance leases (previously designated as capital leases) remains substantially unchanged. The adoption had no impact on our accumulated deficit, results of operations or cash flows.

The following table summarizes the cumulative effects of the changes made to our opening balance sheet as of May 1, 2019, for the adoption of ASC 842:

 

            Adjustments         
            Related to         
     April 30, 2019      Adoption of      May 1, 2019  
(in millions)    As Revised      ASC 842      As Adjusted  

Assets

        

Prepaid expenses

   $ 208.5      $ (5.5    $ 203.0  

Total current assets

     1,141.4        (5.5      1,135.9  

Property and equipment, net

     172.1        1.9        174.0  

Operating lease right-of-use assets

     —          202.2        202.2  

Other assets

     175.4        (1.4      174.0  

Total assets

     6,752.7        197.2        6,949.9  

Liabilities and Stockholders’ Deficit

        

Accrued expenses

     466.3        (5.9      460.4  

Operating lease liabilities

     —          46.7        46.7  

Total current liabilities

     1,855.8        40.8        1,896.6  

Operating lease liabilities, noncurrent

     —          181.9        181.9  

Other long-term liabilities

     247.5        (25.5      222.0  

Total liabilities

     7,296.1        197.2        7,493.3  

Total liabilities and stockholders’ deficit

     6,752.7        197.2        6,949.9  

Adoption of this guidance did not impact compliance with the debt covenants in our credit agreements. The adoption of the new guidance also resulted in additional disclosures regarding our lease agreements. See Note 7, Leases.

 

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We believe that no other new accounting guidance was adopted during the first three months of fiscal 2020 that would be relevant to the readers of our financial statements.

Recent Accounting Pronouncements – Not Yet Adopted

In August 2018, the FASB issued new guidance related to the disclosure requirements for fair value measurements. This guidance modifies the disclosure requirements for fair value measurements by removing, modifying, and/or adding certain disclosures and is effective for the first interim period within annual fiscal years beginning after December 15, 2019 (our fiscal 2021). Early adoption related to modifying existing disclosures is permitted while delaying adoption of the additional disclosures until the effective date. We are currently evaluating how this guidance will impact our disclosures related to fair value measurements. This guidance will not have a material impact on our financial position, results of operations or cash flows.

In August 2018, the FASB issued new guidance related to the disclosure requirements for defined benefit pension or other postretirement plans. This guidance modifies the disclosure requirements for defined benefit plans by removing, modifying, and/or adding certain disclosures and is effective for fiscal years beginning after December 15, 2020 (our fiscal 2022) with early adoption permitted. These amendments must be applied on a retrospective basis for all periods presented. We are currently evaluating how this guidance will impact the disclosures related to our defined benefit plans. This guidance will not have a material impact on our financial position, results of operations or cash flows.

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

3. Revenues

Revenue Recognition

Our revenues are generated primarily by providing access to our SaaS subscriptions, licensing our software, providing product updates and support related to our licensed products, and providing consulting services to our customers. Generally, revenue from software license sales is recognized upon delivery; revenues from SaaS subscriptions and product updates and support are recognized ratably over time; and revenues from consulting services are recognized as performed. Revenue is recorded net of applicable taxes.

We apply the provisions of ASC 606 to determine the measurement of revenue and the timing of when it is recognized. Under ASC 606, revenue is measured as the amount of consideration we expect to be entitled to, in exchange for transferring products or providing services to our customers, and is recognized when performance obligations under the terms of contracts with our customers are satisfied.

Contract Balances

The timing of our revenue recognition may differ from the timing of invoicing to our customers, and these timing differences result in receivables, contract assets, or contract liabilities which are reflected on our Consolidated Balance Sheets. We record contract assets when we have transferred software products or provided services but do not yet have the right to related consideration, or contract liabilities when we have received or have the right to receive consideration but have not yet transferred software products or provided services to our customers. Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period.

The following table summarizes our contract balances for the periods indicated:

 

     July 31,      April 30,  
(in millions)    2019      2019  

Contract assets - Other current assets

   $ 25.1      $ 26.5  
  

 

 

    

 

 

 

Contract liabilities

     

Current deferred revenue

   $ 1,138.2      $ 1,188.0  

Noncurrent deferred revenue - Other liabilities

     15.7        22.4  
  

 

 

    

 

 

 

Total contract liabilities

   $ 1,153.9      $ 1,210.4  
  

 

 

    

 

 

 

 

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The following table sets forth the components of deferred revenue for the periods indicated:

 

     July 31,      April 30,  
(in millions)    2019      2019  

SaaS subscriptions

   $ 364.5      $ 388.9  

Software license fees

     11.5        12.1  
  

 

 

    

 

 

 

Software subscriptions and license fees

     376.0        401.0  

Product updates and support fees

     724.3        740.7  

Consulting services and other fees

     71.3        76.7  

Contract asset offset

     (17.7      (8.0
  

 

 

    

 

 

 

Total deferred revenue

     1,153.9        1,210.4  

Less: current portion

     1,138.2        1,188.0  
  

 

 

    

 

 

 

Deferred revenue - noncurrent

   $ 15.7      $ 22.4  
  

 

 

    

 

 

 

The changes in our contract assets and contract liabilities from April 30, 2019 to July 31, 2019, were generally due to the normal timing differences that occur between our revenue recognition and the invoicing to our customers, which can vary significantly depending on the contractual payment terms. Within our fiscal year, changes in the balance of our deferred revenue are cyclical and primarily driven by the timing of our maintenance services renewal cycles. Our peak renewal activity levels occur in December and May with revenues being recognized ratably over the applicable service periods. We had no significant impairments of contract assets during the first quarter of fiscal 2020.

We recognized revenues of $461.0 million during the three months ended July 31, 2019, that were included in the deferred revenue balances at the beginning of the period, primarily related to product updates and support fees and SaaS subscriptions. The amount of revenue recognized during the first quarter of fiscal 2020, from performance obligations satisfied (or partially satisfied) in previous periods was immaterial.

Costs to Obtain or Fulfill a Contract – Deferred Costs

Commissions payable to our direct sales force and independent affiliates who resell our software products are considered incremental and recoverable costs of obtaining or fulfilling contracts with our customers. Sales commissions are recorded when a sale is completed or when our SaaS subscription is provisioned, which generally coincides with the timing of revenue recognition in most cases. Certain of these costs are capitalized and amortized ratably over the expected customer relationship period during which we expect to recover those costs. In estimating the expected customer relationship period, we evaluated both quantitative and qualitative factors including the nature of our product/service offerings, expected renewals, and the estimated economic life of the applicable software. The deferred costs are amortized over various periods; generally, five years for maintenance contracts, and three to six years for SaaS subscriptions. Amortization expense related to deferred commissions was $17.7 million and $13.4 million for the three months ended July 31, 2019 and 2018, respectively, and is included in cost of SaaS subscriptions, cost of product updates and support fees, and sales and marketing expenses in our Condensed Consolidated Statements of Operations. We periodically evaluate the expected customer relationship period and whether there have been any changes in our business or market conditions which would indicate that these amortization periods should be adjusted or if there may be potential impairment related to the deferred costs. We have not recorded any impairment loss in relation to these deferred costs.

The following table sets forth the components of deferred commissions for the periods indicated:

 

     July 31,      April 30,  
(in millions)    2019      2019  

Current deferred commissions - Prepaid expenses

   $ 55.0      $ 53.6  

Noncurrent deferred commissions - Other assets

     79.7        72.5  
  

 

 

    

 

 

 

Deferred commissions

   $ 134.7      $ 126.1  
  

 

 

    

 

 

 

Remaining Performance Obligations

Remaining performance obligations represent the aggregate transaction price allocated to performance obligations that are unsatisfied, or partially unsatisfied, at the end of a reporting period. As of July 31, 2019, the aggregate amount of the transaction price allocated to our remaining performance obligations, or backlog, was approximately $2.9 billion. We expect to recognize 76% of the remaining performance obligations as revenue over the remainder of fiscal 2020 and 2021, with the remaining 24% recognized thereafter.

 

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Sales Allowances

We do not generally provide a contractual right of return. However, in the course of arriving at practical business solutions to various claims arising from the sale of our products and delivery of our solutions, we may agree to terms that impact the transaction price allocated to performance obligations for the purposes of revenue recognition. We adjust the transaction price for these estimated variable consideration amounts specific to license and consulting revenues at the inception of each agreement using the expected value method, which results in an associated sales allowance being recorded. We also periodically reassess the associated estimated transaction price and related variable consideration throughout the course of each agreement. The balance of our sales allowance is reflected in deferred revenue on our Condensed Consolidated Balance Sheets.

The following is a rollforward of our sales allowance reserve:

 

(in millions)       

Balance, April 30, 2019

   $ 20.2  

Provision

     10.0  

Write-offs

     (7.9

Currency translation effect

     (0.5
  

 

 

 

Balance, July 31, 2019

   $ 21.8  
  

 

 

 

4. Acquisitions

Fiscal 2020

None

Fiscal 2019

ReServe Interactive

On April 4, 2019, we acquired Efficient Frontiers, Inc. dba ReServe Interactive (the ReServe Interactive Acquisition). Based in Livermore, California, ReServe Interactive is a provider of cloud-based sales and catering, restaurant reservations, and floor management software that serves the restaurant, sports and entertainment, event center, golf and country club, and hotel markets in the U.S. and Canada. The ReServe Interactive Acquisition will enable Infor to offer more functionality through Infor CloudSuite Hospitality, and increase Infor’s presence in non-hotel hospitality venues such as entertainment centers, stadiums, wineries and conference and convention centers.

We recorded approximately $7.1 million of identifiable intangible assets and $10.5 million of goodwill related to the ReServe Interactive Acquisition. The acquired intangible assets relating to ReServe Interactive’s existing technology and customer relationships are being amortized over their weighted average estimated useful lives of approximately five and eight years, respectively. The goodwill arising from the ReServe Interactive Acquisition, related to expected synergies of our combined operations, is not deductible for tax purposes.

Alfa-Beta

On December 3, 2018, we acquired Alfa-Beta Solutions B.V. and Alfa-Beta Solutions GmbH (together, Alfa-Beta) (the Alfa-Beta Acquisition). Based in Arnhem, Netherlands, Alfa-Beta is a consulting firm specializing in Infor M3 and business intelligence in the food & beverage industry across Benelux and Germany. The Alfa-Beta Acquisition expands Infor’s services capabilities to support our growing food & beverage customer base in Europe.

We have recorded approximately $2.8 million of identifiable intangible assets and $9.5 million of goodwill related to the Alfa-Beta Acquisition. The acquired intangible assets relating to Alfa-Beta’s customer relationships are being amortized over their weighted average estimated useful lives of four years. We have determined that a portion of the goodwill arising from the Alfa-Beta Acquisition, related to expected synergies of our combined operations, will be deductible for tax purposes.

Vivonet

On September 13, 2018, we acquired Vivonet Inc. and Vivonet Acquisition Ltd. (together, Vivonet) for $25.2 million, net of cash acquired and including contingent consideration of $1.3 million recorded at the time of the acquisition (the Vivonet Acquisition). The total purchase price may also include up to an additional $13.7 million if certain future performance conditions are met. Based in Vancouver, Canada, Vivonet is a provider of consumer, operational and enterprise level cloud-based technology solutions for the hospitality industry. Vivonet offers solutions for point-of-sale (POS), kiosks, kitchen systems, payments, labor scheduling, and food and labor cost management to businesses in the hospitality industry across Canada and the United States. The Vivonet Acquisition complements and further expands our hospitality and CloudSuite offerings by adding POS and other functionality and extending our reach to companies in the food service management, full and quick service establishment, and hotel food and beverage outlet micro-verticals.

 

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We have recorded approximately $10.8 million of identifiable intangible assets and $17.5 million of goodwill related to the Vivonet Acquisition. The acquired intangible assets relating to Vivonet’s existing technology and customer relationships are being amortized over their weighted average estimated useful lives of approximately four and eight years, respectively. The goodwill arising from the Vivonet Acquisition, related to expected synergies of our combined operations, is not deductible for tax purposes.

Bankruptcy-Remote Special Purpose Entity

Platform Settlement Services, LLC (PSS), a wholly-owned subsidiary of Infor, is a bankruptcy-remote special purpose entity. PSS was established for the purpose of facilitating the settlement of transactions between our GT Nexus Platform customers and their supply chain providers. PSS acts as a collection and paying agent, receiving funds from customers and forwarding to appropriate credit parties. PSS is a custodian of the cash received from its customers and has no legal ownership rights to the funds held in such custodial accounts. Therefore, we do not report any cash in transit in the bank accounts of PSS at period end, nor any cash movements during a reporting period, in our Condensed Consolidated Financial Statements. The balance of cash in transit in custodial accounts held by PSS was $98.1 million and $74.9 million at July 31, 2019 and April 30, 2019, respectively.

Contingent Consideration

The agreements related to certain of our acquisitions include contingent consideration provisions. For business acquisitions, the change in the estimated fair value of the contingent consideration, during the contingency period through settlement, is recorded in our results of operations in the period of such change and is included in acquisition-related and other costs in our Condensed Consolidated Statements of Operations. For asset acquisitions, any such changes are recorded against the cost basis of the asset or assets acquired. Contingent consideration liabilities are included in accrued expenses and other long-term liabilities on our Condensed Consolidated Balance Sheets.

During the first three months of fiscal 2020, we paid $2.2 million of contingent consideration under these contingent consideration arrangements, and the potential undiscounted amount of future payments that we may be required to make related to these arrangements is between $0.0 and $50.0 million. As of July 31, 2019 and April 30, 2019, we had recorded liabilities for the estimated fair value of these contingent consideration arrangements totaling approximately $8.4 million and $10.6 million, respectively. See Note 6, Fair Value.

5. Goodwill

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

 

(in millions)    License      Maintenance      Consulting     Total  

Balance, April 30, 2019

   $ 1,462.8      $ 2,780.3      $ 339.3     $ 4,582.4  

Currency translation effect

     (7.9      (23.1      (2.6     (33.6
  

 

 

    

 

 

    

 

 

   

 

 

 

Balance, July 31, 2019

   $ 1,454.9      $ 2,757.2      $ 336.7     $ 4,548.8  
  

 

 

    

 

 

    

 

 

   

 

 

 

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

We conducted our most recent annual impairment assessment in the second quarter of fiscal 2019, as of September 30, 2018. This assessment did not indicate impairment for any of our reporting units. We believe there was no impairment of our goodwill and no indication of potential impairment existed as of July 31, 2019. We have no accumulated impairment charges related to our goodwill.

 

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6. Fair Value

Fair Value Hierarchy

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

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

 

Level 1       Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2       Inputs other than the quoted prices in active markets that are observable either directly or indirectly including: quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3       Unobservable inputs that are supported by little or no market data, are significant to the fair values of the assets or liabilities, and require the reporting entity to develop its own assumptions.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. In addition, the fair value of liabilities should include consideration of non-performance risk including the Company’s own credit risk.

We measure certain of our financial assets and liabilities at fair value. The following table summarizes the fair value of our financial assets and liabilities that were accounted for at fair value on a recurring basis, by level within the fair value hierarchy, as of July 31, 2019 and April 30, 2019:

 

     July 31, 2019  
     Fair Value Measurements
Using Inputs Considered as
        
(in millions)    Level 1      Level 2      Level 3      Fair
Value
 

Assets

           

Cash equivalents

   $ 13.0      $ —        $ —        $ 13.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 13.0      $ —        $ —        $ 13.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Contingent consideration

   $ —        $ —        $ 8.4      $ 8.4  

Derivative instruments

     —          —          17.3        17.3  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —        $ —        $ 25.7      $ 25.7  
  

 

 

    

 

 

    

 

 

    

 

 

 
     April 30, 2019  
     Fair Value Measurements
Using Inputs Considered as
        
(in millions)    Level 1      Level 2      Level 3      Fair
Value
 

Assets

           

Cash equivalents

   $ 46.0      $ —        $ —        $ 46.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 46.0      $ —        $ —        $ 46.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Contingent consideration

   $ —        $ —        $ 10.6      $ 10.6  

Derivative instruments

     —          —          4.0        4.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —        $ —        $ 14.6      $ 14.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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

Contingent consideration liabilities relate to certain of our acquisitions. The estimated fair value of the contingent consideration was based primarily on our estimates of meeting the applicable contingency conditions as per the terms of the applicable agreements. These include estimates of various operating performance and other measures and our assessment of the probability of meeting such results, with the probability-weighted earn-out then discounted to estimate fair value. The various operating performance measures included in these contingent consideration agreements primarily relate to SaaS subscription bookings and revenue growth rates. As these are unobservable inputs, the contingent consideration liabilities are included in Level 3 inputs. See Note 4, Acquisitions – Contingent Consideration.

Derivative instruments consist of interest rate swaps entered into to hedge our market risk relating to possible adverse changes in interest rates. The fair value of the interest rate swaps is estimated as the net present value of projected cash flows based upon forward interest rates at the balance sheet date. The models used to value the interest rate swaps are based on certain readily observable market data, such as LIBOR forward rates, for all substantial terms of the interest rate swap contracts, as well as certain unobservable inputs including estimated interest rate volatility and the credit risk of the counterparties. Given the consideration of unobservable inputs in determining the valuation of these derivatives, these instruments are included in Level 3 inputs. See Note 17, Derivative Financial Instruments.

We have had no transfers of assets/liabilities into or out of Levels 1, 2 or 3 during fiscal 2020 or fiscal 2019. The following table reconciles the change in our Level 3 assets/liabilities for the periods indicated:

 

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

Balance, April 30, 2019

   $ 14.6  

Settlements

     (2.2

Total (gain) loss recorded in earnings

     13.3  
  

 

 

 

Balance, July 31, 2019

   $ 25.7  
  

 

 

 

In addition to the financial assets and liabilities included in the above table, certain nonfinancial assets and liabilities are to be measured at fair value on a nonrecurring basis in accordance with applicable GAAP. This includes items such as non-financial assets and liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods) and non-financial long-lived asset groups measured at fair value for an impairment assessment. In general, nonfinancial assets including goodwill, other intangible assets and property and equipment are measured at fair value when there is an indication of impairment and are recorded at fair value only when any impairment is recognized. During the first three months of fiscal 2020 and during fiscal 2019, we did not record any impairment related to such assets and had no other material nonfinancial assets or liabilities requiring adjustments or write-downs to their current fair value.

As allowed by applicable FASB guidance, we have elected not to apply the fair value option for financial assets and liabilities to any of our currently eligible financial assets or liabilities. As of July 31, 2019 and April 30, 2019, our material financial assets and liabilities not carried at fair value included our cash equivalents, accounts receivable, accounts payable and accrued expenses. These financial instruments are recorded at their carrying values which are deemed to approximate fair value, generally due to their short periods to maturity.

Fair Value of Long-Term Debt

To estimate fair value of our long-term debt for disclosure purposes, we used recent market transactions and related market quotes of the bid and ask pricing of our long-term debt (Level 2 on the fair value hierarchy). As of July 31, 2019 and April 30, 2019, the total carrying value of our long-term debt was approximately $5.2 billion and $5.2 billion, respectively, and the estimated fair value of our long-term debt was approximately $5.2 billion and $5.2 billion, respectively.

 

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7. Leases

We have entered into operating leases for the rental of office space and certain office and IT equipment. We have also entered into finance lease commitments for vehicles and certain other office and IT equipment.

The following table summarizes lease related balances within our Condensed Consolidated Balance Sheets for the period indicated:

 

     Balance Sheet    July 31,  
(in millions)   

Classification

   2019  

Assets

     

Operating leases

   Operating lease right-of-use assets    $ 197.1  

Finance leases

   Property and equipment, net      12.6  
     

 

 

 

Total leased assets

      $ 209.7  
     

 

 

 

Liabilities

     

Current:

     

Operating lease liabilities

   Operating lease liabilities    $ 45.4  

Finance lease liabilities

   Accrued expenses      4.0  

Noncurrent:

     

Operating lease liabilities

   Operating lease liabilities, noncurrent      178.3  

Finance lease liabilities

   Other long-term liabilities      5.1  
     

 

 

 

Total lease liabilities

      $ 232.8  
     

 

 

 

Prior to our adoption of ASC 842 on May 1, 2019, we did not recognize ROU assets and lease liabilities for operating leases on our Consolidated Balance Sheets, and we have elected the practical expedient to not provide a comparable presentation in our Consolidated Balance Sheets for periods prior to adoption.

The following table sets forth the components of our lease expense for the period indicated:

 

     Three Months Ended  
(in millions)    July 31, 2019  

Operating lease cost (1)

   $ 13.9  
  

 

 

 

Finance lease cost

  

Amortization of right-of-use assets

   $ 1.7  

Interest on finance lease liabilities

     0.1  
  

 

 

 

Finance lease cost

     1.8  
  

 

 

 

Total lease cost

   $ 15.7  
  

 

 

 

 

(1)

Includes an immaterial amount of short-term lease costs, variable lease costs, and sublease income.

The following table reconciles the undiscounted remaining lease payments under our operating and finance leases to the lease liabilities recorded on our Condensed Consolidated Balance Sheet as of July 31, 2019:

 

     Operating      Finance         
     Leases      Leases      Total  
(in millions)                     

Fiscal 2020 (remaining 9 months)

   $ 43.2      $ 3.4      $ 46.6  

Fiscal 2021

     51.4        3.2        54.6  

Fiscal 2022

     47.2        2.3        49.5  

Fiscal 2023

     37.0        0.7        37.7  

Fiscal 2024

     32.9        —          32.9  

Thereafter

     50.3        —          50.3  
  

 

 

    

 

 

    

 

 

 

Total future minimum lease payments

     262.0        9.6        271.6  

Less: amounts representing interest

     (38.3      (0.5      (38.8
  

 

 

    

 

 

    

 

 

 

Present value of lease liabilities

     223.7        9.1        232.8  

Less: current portion

     (45.4      (4.0      (49.4
  

 

 

    

 

 

    

 

 

 

Noncurrent lease liabilities

   $ 178.3      $ 5.1      $ 183.4  
  

 

 

    

 

 

    

 

 

 

 

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As of July 31, 2019, we have operating leases that have been signed but have not yet commenced with minimum lease payments of approximately $16.3 million. These leases relate to office space primarily in our APAC and EMEA regions. These leases are expected to commence in the second quarter of fiscal 2020 with lease terms of approximately five years. Accordingly, we have not recorded these leases on our Condensed Consolidated Balance Sheet as of July 31, 2019.

As previously disclosed in our Annual Report on Form 10-K, as of April 30, 2019, the future minimum lease payments related to our lease agreements under Topic 840, the predecessor of Topic 842, were as follows:    

 

     Operating      Capital  
     Leases      Leases  
(in millions)              

Fiscal 2020

   $ 56.9      $ 2.7  

Fiscal 2021

     49.8        1.6  

Fiscal 2022

     44.9        1.0  

Fiscal 2023

     32.9        0.3  

Fiscal 2024

     27.9        —    

Thereafter

     41.9        —    
  

 

 

    

 

 

 

Total future minimum lease payments

   $ 254.3        5.6  
  

 

 

    

Less: amounts representing interest

        (0.3
     

 

 

 

Present value of lease liabilities

      $ 5.3  
     

 

 

 

The following tables summarize supplemental cash flow and other information related to our leases as of and for the periods indicated:

Supplemental Cash Flow Information

 

     Three Months Ended  
(in millions)    July 31, 2019  

Cash paid for amounts included in the measurement of lease  liabilities

  

Operating cash flows from operating leases

   $ 13.7  

Operating cash flows from finance leases

     0.1  

Financing cash flows from finance leases

     1.1  

Right-of-use assets obtained in exchange for new lease obligations

  

Operating leases

     7.8  

Finance leases

     3.4  

Other Information

 

     July 31,  
     2019  

Weighted-average remaining lease term (years)

  

Operating leases

     5.5  

Finance leases

     2.6  

Weighted-average discount rates

  

Operating leases

     6.02

Finance leases

     4.75

 

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For periods ended before May 1, 2019, the effective date of our adoption of ASC 842, we accounted for leases under ASC 840. Disclosures under ASC 840 for the applicable prior periods are as follows:

For the three months ended July 31, 2018, total rent expense for operating leases was $15.1 million and is included in cost of revenue and operating expense lines in our Condensed Consolidated Statements of Operations. As of April 30, 2019, we had total deferred rent liabilities relating to operating leases of $25.1 million. The current and noncurrent portions of our deferred rent liabilities were included in accrued expenses and other long-term liabilities, respectively, on our Condensed Consolidated Balance Sheets.

We had recorded assets under capital leases of $14.7 million as of April 30, 2019, which are included in property and equipment on our Condensed Consolidated Balance Sheets. These assets were recorded net of accumulated amortization of $7.1 million. Amortization expense for assets under capital leases was $0.4 million for the three months ended July 31, 2018. We had recorded capital lease liabilities of $5.3 million as of April 30, 2019. The current portion of our capital lease obligations was included in accrued expenses, and the long-term portion of capital lease obligations was included in other long-term liabilities on our Condensed Consolidated Balance Sheets.

8. Accounts Receivable, Net

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

 

     July 31,      April 30,  
(in millions)    2019      2019  

Accounts receivable

   $ 410.5      $ 491.4  

Unbilled accounts receivable

     39.7        49.8  

Less: allowance for doubtful accounts

     (27.2      (24.4
  

 

 

    

 

 

 

Accounts receivable, net

   $ 423.0      $ 516.8  
  

 

 

    

 

 

 

The accounts receivable and unbilled accounts receivable balances as of July 31, 2019 and April 30, 2019, are comprised of amounts for which we have an unconditional right to collect.

We have established an allowance for estimated amounts that will not be collected and have adjusted transaction prices used in revenue recognition for estimated billing adjustments. We record provisions for doubtful accounts as a component of general and administrative expense, and we record estimated billing adjustments as a form of variable consideration impacting revenue recognized in our Condensed Consolidated Statements of Operations.    

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

 

(in millions)       

Balance, April 30, 2019

   $ 24.4  

Provision

     7.7  

Write-offs and recoveries

     (4.6

Currency translation effect

     (0.3
  

 

 

 

Balance, July 31, 2019

   $ 27.2  
  

 

 

 

9. Intangible Assets, Net

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

 

     July 31, 2019      April 30, 2019         
     Gross                    Gross                    Estimated  
     Carrying      Accumulated             Carrying      Accumulated             Useful Lives  
(in millions)    Amounts      Amortization      Net (1)      Amounts      Amortization      Net      (in years)  

Customer contracts and relationships

   $ 2,016.6      $ 1,590.0      $ 426.6      $ 2,032.1      $ 1,580.0      $ 452.1        2 - 15  

Acquired and developed technology

     1,183.6        1,081.9        101.7        1,191.9        1,081.0        110.9        1 - 11  

Tradenames

     138.9        137.0        1.9        139.4        137.4        2.0        1 - 20  

Acquired favorable leases

     —          —          —          2.2        2.2        —          2  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

   $ 3,339.1      $ 2,808.9      $ 530.2      $ 3,365.6      $ 2,800.6      $ 565.0     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

(1)

Net intangible assets decreased from April 30, 2019 to July 31, 2019 by approximately $2.0 million due to cumulative foreign currency translation adjustments, reflecting changes in the exchange rates of the currencies of the applicable underlying entities.

 

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

 

     Three Months Ended  
     July 31,  
(in millions)    2019      2018  

Customer contracts and relationships

   $ 24.7      $ 24.8  

Acquired and developed technology

     9.9        10.3  

Tradenames

     0.1        0.8  

Acquired favorable leases

     —          0.1  
  

 

 

    

 

 

 

Total

   $ 34.7      $ 36.0  
  

 

 

    

 

 

 

The estimated future annual amortization expense related to these intangible assets as of July 31, 2019, was as follows:

 

(in millions)       

Fiscal 2020 (remaining 9 months)

   $ 98.8  

Fiscal 2021

     123.6  

Fiscal 2022

     79.0  

Fiscal 2023

     56.7  

Fiscal 2024

     50.2  

Fiscal 2025

     42.9  

Thereafter

     79.0  
  

 

 

 

Total

   $ 530.2  
  

 

 

 

10. Accrued Expenses

Accrued expenses consisted of the following for the periods indicated:

 

     July 31,      April 30,  
(in millions)    2019      2019  

Compensation and employee benefits

   $ 145.2      $ 185.0  

Taxes other than income

     23.0        30.8  

Royalties and partner commissions

     31.9        37.8  

Litigation

     47.4        5.3  

Professional fees

     14.3        12.0  

Subcontractor expense

     6.4        7.5  

Interest

     41.5        63.5  

Restructuring

     10.6        15.8  

Asset retirement obligations

     0.6        1.0  

Deferred rent

     —          4.3  

Deferred acquisition payments

     0.5        2.7  

Other

     50.0        100.6  
  

 

 

    

 

 

 

Accrued expenses

   $ 371.4      $ 466.3  
  

 

 

    

 

 

 

 

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Included above in other accrued expenses as of April 30, 2019, was approximately $45.0 million pertaining to dividends accrued related to our funding of interest on our affiliate company’s debt and the redemption of such debt (see Note 13, Debt - Affiliate Company Borrowings). These dividends were settled in the first quarter of fiscal 2020. See Note 19, Related Party Transactions – Dividends Paid to Affiliates.

11. Equity-Based Compensation

We account for equity-based payments, including grants of employee stock options, restricted stock and other equity-based awards, in accordance with ASC 718, Compensation—Stock Compensation, which requires that equity-based payments (to the extent they are compensatory) be recognized in our results of operations based on their fair values. We utilize the Option-Pricing Method to estimate the fair value of our equity awards. We recognize the effect of forfeitures when they occur. All equity-based payments are based upon equity issued by Infor Enterprise Applications, LP (Infor Enterprise) and IGS Holding LP (IGS Holding), affiliates of the parent company of Infor. Pursuant to applicable FASB guidance related to equity-based awards, we have reflected equity-based compensation expense related to our parent company’s equity grants within our results of operations with an offset to additional paid-in capital for equity-classified awards and to accrued expenses and other long-term liabilities for liability-classified awards on our Condensed Consolidated Balance Sheets.

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

 

     Three Months Ended  
     July 31,  
(in millions)    2019      2018  

Cost of SaaS subscriptions

   $ 0.1      $ 0.1  

Cost of consulting services and other fees

     0.4        0.3  

Sales and marketing

     1.4        1.3  

Research and development

     1.0        0.7  

General and administrative

     1.4        1.3  
  

 

 

    

 

 

 

Total

   $ 4.3      $ 3.7  
  

 

 

    

 

 

 

IGS Holding Class D Management Incentive Units

Beginning in fiscal 2018, IGS Holding granted management incentive units (MIUs) to certain executive officers and non-executive employees of Infor, pursuant to the IGS Holding LP Agreement of Limited Partnership (IGS LP Agreement) and certain MIU agreements. These MIUs are for Class D non-voting units (Class D Units) and vest over four years. We have recorded equity compensation expense of $4.1 million in the three months ended July 31, 2019, related to these grants and $3.4 million in the comparable three-month period ended July 31, 2018. From time to time, we continue to grant additional Class D MIUs.

12. Restructuring Charges

We have recorded restructuring charges related to our acquisitions and on occasion to eliminate redundancies, improve our operational efficiency and reduce our operating costs. These cost reduction measures included workforce reductions relating to restructuring our workforce, the exiting of certain leased facilities and the consolidation of space in certain other facilities. In accordance with applicable FASB guidance, our restructuring charges are broken down into acquisition-related and other restructuring costs. These restructuring charges include employee severance costs and costs related to the reduction of office space. No business activities of the companies that we have acquired were discontinued. The workforce reductions were typically from all functional areas of our operations. In addition, we have recorded the impairment of operating lease ROU assets related to certain of our facility leases within restructuring costs on our Condensed Consolidated Statements of Operations.

Fiscal 2020 Restructuring Charges

During the first three months of fiscal 2020, we incurred restructuring costs of $6.0 million related to employee severance costs for personnel actions taken across all functions of our organization primarily in our Americas and EMEA regions and facilities charges related to exiting or consolidating space in facilities. During the first three months of fiscal 2020, we made cash payments of approximately $1.4 million related to these actions. We expect to complete these actions during the remainder of fiscal 2020.

 

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Fiscal 2019 Restructuring Charges

During fiscal 2019, we incurred restructuring costs related to employee severance costs for personnel actions taken across all functions of our organization primarily in our Americas and EMEA regions and facilities charges related to exiting or consolidating space in facilities primarily in the Americas region. We recorded restructuring cost reversals of $0.8 million and we made cash payments of $6.5 million during the first three months of fiscal 2020 related to these actions. Actions related to these restructuring activities have been completed.

Fiscal 2019 Acquisition-Related Charges

During fiscal 2019, we incurred acquisition-related restructuring costs related to the operations of our fiscal 2019 acquisitions. These restructuring charges included employee severance costs related to redundant positions. We made cash payments of $0.1 million during the first three months of fiscal 2020 related to these actions. Actions related to these restructuring activities have been completed.

Previous Restructuring and Acquisition-Related Charges

Prior to fiscal 2019, we had completed certain restructuring activities related to our ongoing operations as well as a series of acquisition-related restructuring actions. The remaining accruals associated with these prior restructuring charges relate primarily to leases associated with the closure of redundant offices acquired in prior business combinations, as well as contractual payment obligations of severed employees. Actions related to these restructuring activities have been completed.

The following table sets forth the reserve activity related to our restructuring plans for the three-month period ended July 31, 2019. The adjustments to costs in the tables below consist of adjustments to the accrual that were accounted for as adjustments to current period earnings (Expense) or adjustments to the accrual that were related to the impact of fluctuations in foreign currency exchange rates (Foreign Currency Effect):

 

                   Adjustment to Costs                         Total  
     Balance                         Foreign           Balance      Total Costs      Expected  
     April 30,      Initial            ASC 842     Currency     Cash     July 31,      Recognized      Program  
(in millions)    2019      Costs      Expense     Reclasses (1)     Effect     Payments     2019      to Date      Costs  

Fiscal 2020 restructuring

                      

Severance

   $ —        $ 5.8    $ —       $ —       $ (0.1   $ (1.4   $ 4.3    $ 5.8    $ 5.8

Facilities and other

     —          0.2      —         —         —         —         0.2      0.2      0.2
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total fiscal 2020 restructuring

     —          6.0      —         —         (0.1     (1.4     4.5      6.0      6.0
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Fiscal 2019 restructuring

                      

Severance

     12.4      —          (0.9     —         —         (6.4     5.1      24.5      24.5

Facilities and other

     2.1      —          0.1     (1.3     —         (0.1     0.8      2.5      2.5
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total fiscal 2019 restructuring

     14.5      —          (0.8     (1.3     —         (6.5     5.9      27.0      27.0
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Fiscal 2019 acquisition-related

                      

Severance

     0.1      —          —         —         —         (0.1     —          0.3      0.3
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total fiscal 2019 acquisition-related

     0.1      —          —         —         —         (0.1     —          0.3      0.3
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Previous restructuring

                      

Severance

     0.4      —          —         —         —         —         0.4      17.4      17.4

Facilities and other

     2.2      —          —         (1.9     —         —         0.3      9.4      9.4
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total previous restructuring

     2.6      —          —         (1.9     —         —         0.7      26.8      26.8
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Previous acquisition-related

                      

Facilities and other

     5.8      —          —         (5.0     —         —         0.8      10.4      10.4
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total previous acquisition-related

     5.8      —          —         (5.0     —         —         0.8      10.4      10.4
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total restructuring

   $ 23.0    $ 6.0    $ (0.8   $ (8.2   $ (0.1   $ (8.0   $ 11.9    $ 70.5    $ 70.5
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

 

(1)

Reflects amounts reclassified out of the opening balance of restructuring reserve accruals as of May 1, 2019, to operating lease ROU assets that we recorded with the adoption of ASC 842. Remaining facilities-related reserves relate to non-lease component charges from restructured office space.

 

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

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

 

     Three Months Ended  
     July 31,  
(in millions)    2019      2018  

License

   $ 2.4      $ 1.5  

Maintenance

     0.1        0.5  

Consulting

     1.1        0.3  

General and administrative and other functions

     1.6        2.8  
  

 

 

    

 

 

 

Total restructuring costs

   $ 5.2      $ 5.1  
  

 

 

    

 

 

 

In addition to these restructuring charges, we recorded the impairment of certain operating lease ROU assets of $1.3 million in the first quarter of fiscal 2020 in restructuring costs on our Condensed Consolidated Statements of Operations.

13. Debt

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

 

     July 31, 2019     April 30, 2019  
     Principal     Net     Contractual     Principal     Net     Contractual  
(in millions)    Amount     Amount (1)     Rate     Amount     Amount (1)     Rate  

First lien Term B-6 due February 1, 2022

   $ 2,098.8     $ 2,065.0       5.08   $ 2,100.6     $ 2,063.6       5.23

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

     1,092.5       1,088.8       3.25     1,108.2       1,104.1       3.25

6.5% senior notes due May 15, 2022

     1,630.0       1,624.6       6.50     1,630.0       1,624.2       6.50

5.75% senior notes due May 15, 2022

     387.5       384.9       5.75     392.6       389.8       5.75

Deferred financing fees, debt discounts and premiums, net

     (45.5     —           (49.7     —      
  

 

 

   

 

 

     

 

 

   

 

 

   

Total long-term debt

     5,163.3       5,163.3         5,181.7       5,181.7    

Less: current portion

     (32.6     (32.6       (27.5     (27.5  
  

 

 

   

 

 

     

 

 

   

 

 

   

Total long-term debt - noncurrent

   $ 5,130.7     $ 5,130.7       $ 5,154.2     $ 5,154.2    
  

 

 

   

 

 

     

 

 

   

 

 

   

 

(1)

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

The weighted average contractual interest rate at July 31, 2019 and April 30, 2019 was 5.19% and 5.25%, respectively. The effective interest rate of each of our debt obligations is not materially different from the contractual interest rate.

The following table summarizes our future repayment obligations related to the principal debt balances for all of our borrowings as of July 31, 2019:

 

Fiscal 2020 (remaining 9 months)

   $ 24.4  

Fiscal 2021

     32.6  

Fiscal 2022

     3,134.4  

Fiscal 2023

     2,017.4  
  

 

 

 

Total

   $ 5,208.8  
  

 

 

 

 

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Credit Facilities

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

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

Revolver

The secured revolving credit facility (the Revolver) has a maximum availability of $120.0 million. We have made no draws against the Revolver and no amounts are currently outstanding. However, $8.8 million of letters of credit have reduced the amount available under the Revolver to $111.2 million as of July 31, 2019. Pursuant to the Credit Agreement, there is an undrawn line fee of 0.50% and the Revolver matures on February 1, 2022. Amounts under the Revolver may be borrowed (and reborrowed) to finance working capital needs and for general corporate purposes. While we have made no draws against the Revolver, interest on any future Revolver borrowings will be based on a fluctuating rate of interest determined by reference to either, at our option, an Adjusted LIBOR rate, plus a margin of 2.75% per annum, or an alternate base rate, plus a margin of 1.75% per annum.

Term Loans

Under the term loan facility, we currently have term loans outstanding with an aggregate principal amount of $3,191.3 million as of July 31, 2019, including the Tranche B-6 Term Loan of $2,098.8 million and the Euro Tranche B-2 Term Loan of €986.9 million ($1,092.5 million).

On February 6, 2017, we entered into the $2,147.1 million Tranche B-6 Term Loan. Interest on the Tranche B-6 Term Loan is based on a fluctuating rate of interest determined by reference to either, at our option, an Adjusted LIBOR rate, plus a margin of 2.75% per annum, with an Adjusted LIBOR floor of 1.0%, or an alternate base rate, plus a margin of 1.75% per annum, with a minimum alternative base rate floor of 2.0%. The Tranche B-6 Term Loan matures on February 1, 2022.

On November 22, 2017, we entered into the €1,002.0 million Euro Tranche B-2 Term Loan. Interest on the Euro Tranche B-2 Term Loan is based on a fluctuating rate of interest determined by reference to an Adjusted LIBOR rate, plus a margin of 2.25% per annum, with an Adjusted LIBOR floor of 1.0%. The Euro Tranche B-2 Term Loan matures on February 1, 2022.

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

Senior Notes

Our 6.5% and 5.75% senior notes (the Senior Notes) include $1,630.0 million in aggregate principal amount of our 6.5% Senior Notes and €350.0 million in aggregate principal amount of our 5.75% Senior Notes. The Senior Notes bear interest at the applicable rates per annum, which is payable semi-annually in cash in arrears, on May 15 and November 15 each year. The Senior Notes mature on May 15, 2022. The Senior Notes are general unsecured obligations of Infor (US), Inc. and are guaranteed by Infor, Inc. and certain of our existing and future wholly-owned domestic subsidiaries. Under the indenture governing the Senior Notes, we are subject to certain customary affirmative and negative covenants.

Deferred Financing Fees, Debt Discounts and Premiums

As of July 31, 2019 and April 30, 2019, deferred financing fees, net of amortization, related to our Term Loans and Senior Notes of $37.9 million and $41.3 million, respectively, were reflected on our Condensed Consolidated Balance Sheets as a direct reduction in the carrying amount of our long-term debt. In addition, we had deferred financing fees, net of amortization, related to the Revolver of $0.9 million and $0.9 million as of July 31, 2019 and April 30, 2019, respectively, which were reflected on our Condensed Consolidated Balance Sheets in other assets. These deferred financing fees are being amortized over the applicable life of the Term Loans and the Senior Notes under the effective interest method.

 

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In addition, we have recorded debt discounts, net of premiums and accumulated amortization, of $7.6 million and $8.4 million as of July 31, 2019 and April 30, 2019, respectively, as a direct reduction of the carrying amount of our long-term debt.

Interest Expense, Net

The following table sets forth the components of interest expense, net recognized in our Condensed Consolidated Statements of Operations for the periods indicated:

 

     July 31,  
(in millions)    2019      2018  

Interest expense on credit facilities

   $ 69.1      $ 75.0  

Amortization of deferred financing fees and debt discounts

     4.8        5.7  

Interest on interest rate swaps

     14.3        —    

Other interest expense

     0.3        0.2  

Interest income

     (0.3      (0.1

Amortization of debt premiums

     (0.5      (0.5
  

 

 

    

 

 

 

Interest expense, net

   $ 87.7      $ 80.3  
  

 

 

    

 

 

 

Affiliate Company Borrowings

In addition to the debt held by Infor and its subsidiaries discussed above, certain affiliates of the Company have other borrowings which are not reflected in our Condensed Consolidated Financial Statements for any of the periods presented. These affiliate company borrowings are described below.

Holding Company PIK Notes

On April 8, 2014, Infor Software Parent, LLC (HoldCo), an indirect holding company of Infor, Inc., and its direct subsidiary Infor Software Parent, Inc., issued $750.0 million in aggregate principal amount of 7.125%/7.875% Senior Contingent Cash Pay Notes (the HoldCo Notes). The HoldCo Notes were to mature on May 1, 2021, and bore interest at the applicable rates per annum set forth below that was payable semi-annually in arrears, on May 1 and November 1 each year.

Interest was payable entirely in cash, unless certain conditions are satisfied, in which case interest on the HoldCo Notes could be paid by increasing the principal amount of the HoldCo Notes or by issuing new notes (PIK interest), or through a combination of cash and PIK interest. Interest on the HoldCo Notes, if paid in cash, accrued at a rate of 7.125% per annum. PIK interest on the HoldCo Notes accrued at a rate of 7.875% per annum. As of April 30, 2019, the total balance outstanding related to the HoldCo Notes was $750.0 million. Since inception, HoldCo has elected to pay interest due related to the HoldCo notes in cash and we have funded, or accrued for the funding of, the interest payments primarily through dividend distributions from Infor to HoldCo. See Note 19, Related Party Transactions – Dividends Paid to Affiliates.

The HoldCo Notes were HoldCo’s general unsecured senior obligations and were not guaranteed by any of HoldCo’s subsidiaries including Infor. The HoldCo Notes ranked equally in right of payment with any future unsecured indebtedness of HoldCo, were effectively subordinated to any future secured indebtedness of HoldCo to the extent of the value of the collateral securing such indebtedness, and were structurally subordinated to all of the existing and future indebtedness and other liabilities of HoldCo’s subsidiaries, including Infor’s borrowings under its senior secured credit facilities and Infor’s existing notes.

On April 24, 2019, HoldCo provided a notice of conditional full redemption to the holders of the HoldCo Notes at a redemption price of 100.0% of the HoldCo Notes’ principal plus accrued and unpaid interest. On May 24, 2019, our affiliates received additional investments from our sponsors of $742.5 million and the proceeds of these investments were used by HoldCo to redeem the Holdco Notes for approximately $753.4 million, including accrued and unpaid interest, in accordance with the terms of the indenture governing the HoldCo Notes, and applicable fees. This redemption was part of our announcement related to the additional equity investments from our sponsors made in the third quarter of fiscal 2019, when we indicated the potential redemption of the HoldCo Notes by HoldCo and Infor Software Parent, Inc. See Note 19, Related Party Transactions.

 

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14. Income Taxes

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

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

 

     Three Months Ended  
     July 31,  
(in millions, except percentages)    2019     2018  

Income tax provision

   $ 8.8     $ 2.2  

Effective income tax rate

     53.7     2.8

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

The change in our effective tax rate for the first quarter of fiscal 2020 compared to the first quarter of fiscal 2019 was primarily driven by an increase in U.S. tax losses subject to a full valuation allowance, an increase in the amount of our BEAT tax liability, a decrease in the valuation allowance release for foreign earnings, a decrease in our foreign earnings and related foreign tax, and a decrease in the amount of unrecognized tax benefits.

During the upcoming twelve months ending July 31, 2020, we expect a net reduction of approximately $2.9 million of unrecognized tax benefits, primarily due to the expiration of statutes of limitation in various jurisdictions.

Our deferred tax assets were $112.9 million and $116.4 million as of July 31, 2019 and April 30, 2019, respectively. We believe it is more likely than not that the net deferred tax assets will be realized in the foreseeable future. Realization of our net deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credit carryforwards. The amount of net deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.

We continue to examine various tax structuring alternatives that may be executed during the remainder of fiscal 2020, which could provide additional positive evidence in our valuation allowance considerations that may result in further foreign valuation releases. This includes actions that we may take in response to the enactment of the 2017 Tax Act. In particular, we continue to closely monitor on a quarterly basis the valuation allowances established for the deferred tax assets associated with our U.S., Sweden, and Japan operations. The release of the valuation allowance associated with these deferred assets would generally be based on the removal of negative evidence related to the entities’ most recent three years of operating results.

As of July 31, 2019, we continue to consider available cash balances that existed at the end of fiscal 2019 related to undistributed earnings and profits of certain U.S.-owned foreign subsidiaries to be indefinitely reinvested with certain limited exceptions. Should we decide to no longer indefinitely reinvest such earnings outside the U.S., we would adjust the income tax provision in the period such determination is made.

15. Comprehensive Income (Loss)

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

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

 

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

 

     Foreign      Funded Status      Accumulated  
     Currency      of Defined      Other  
     Translation      Benefit      Comprehensive  
(in millions)    Adjustment      Pension Plans (1)      Income (Loss)  

Balance, April 30, 2019

   $ (251.8    $ (20.1    $ (271.9
  

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss)

     (26.4      1.1        (25.3

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

     —          —          —    
  

 

 

    

 

 

    

 

 

 

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

     (26.4      1.1        (25.3
  

 

 

    

 

 

    

 

 

 

Balance, July 31, 2019

   $ (278.2    $ (19.0    $ (297.2
  

 

 

    

 

 

    

 

 

 

 

(1)

Funded status of defined benefit pension plans is presented net of tax benefit of $4.4 million and $4.4 million as of July 31, 2019 and April 30, 2019, respectively.

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

 

(in millions)           Income Tax         

Three Months Ended

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

July 31, 2019

        

Foreign currency translation adjustment

   $ (26.4    $ —        $ (26.4

Change in funded status of defined benefit plans

     1.1        —          1.1  
  

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss)

   $ (25.3    $ —        $ (25.3
  

 

 

    

 

 

    

 

 

 

July 31, 2018

        

Foreign currency translation adjustment

   $ (42.4    $ —        $ (42.4

Change in funded status of defined benefit plans

     0.9        —          0.9  
  

 

 

    

 

 

    

 

 

 

Other comprehensive income (loss)

   $ (41.5    $ —        $ (41.5
  

 

 

    

 

 

    

 

 

 

16. Commitments and Contingencies

Litigation

From time to time, we are subject to litigation in the normal course of business. In accordance with applicable FASB guidance, we accrue for litigation exposure when a loss is probable and estimable, and we provide disclosures of matters for which the likelihood of material loss is at least reasonably possible. As of July 31, 2019 and April 30, 2019, we had accrued $47.4 million and $47.4 million, respectively, related to current litigation matters, which are included in accrued expenses and other long-term liabilities on our Condensed Consolidated Balance Sheets. We expense all legal costs to resolve regulatory, legal, tax or other matters in the period incurred and include such costs in general and administrative expenses in our Condensed Consolidated Statements of Operations.

Felleskjøpet Agri SA (FKA) initiated legal proceedings against Infor (Steinhausen) II GmbH (Infor Steinhausen), a wholly-owned subsidiary of the Company, in Norway claiming damages of up to $53.1 million (NOK 420.0 million) related to the suspension and delay of an ERP implementation project. Infor Steinhausen denied FKA’s claims and asserted counterclaims. A trial was conducted in November-December 2017. On February 9, 2018, the court rendered its judgment finding Infor responsible for breach of contract and gross negligence, denying Infor’s counterclaims and awarding FKA certain damages plus applicable interest and legal costs. In addition, on February 23, 2018, FKA filed a motion seeking to amend the judgment to increase the damages awarded by $5.3 million (approximately NOK 42.0 million). On March 19, 2018, the trial court denied FKA’s motion to amend the judgment. We recorded litigation costs of $42.9 million (approximately NOK 338.0 million) in fiscal 2018 in relation to these actions. As of July 31, 2019, we had $41.7 million accrued related to these actions. Infor disputes the judgment and has filed an appeal where we will vigorously contest the lower court’s findings through a re-presentation of all witness testimony and evidence in a de novo proceeding before the appeals court. Infor secured a wide-ranging disclosure order for the production of certain documents and information

 

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against FKA, which FKA appealed to the Supreme Court. On May 27, 2019, the Supreme Court issued its ruling setting aside the Appeals Court’s document production order and remanded the matter to the Appeal Court to reconsider its prior document ruling with direction provided by the Supreme Court’s ruling. The main hearing before the Court of Appeals previously scheduled to occur in March-April 2019 has been rescheduled to commence on May 5, 2020. We continue to believe we have meritorious defenses to FKA’s claims, however, given the inherent unpredictability of litigation, we cannot at this time estimate the final outcome of the appeal of this lawsuit.

We are subject to various other legal proceedings and the risk of litigation by employees, customers, patent owners, suppliers, stockholders or others through private actions, class actions, administrative proceedings or other litigation. While the outcome of these claims cannot be predicted with certainty, we believe that, based on information presently available, the resolution of any such legal matters existing as of July 31, 2019, will not have a material adverse effect on our financial position, results of operations or cash flows.

Guarantees

We typically grant our customers a warranty that guarantees that our product will substantially conform to Infor’s current specifications for 90 days from the delivery date. We also indemnify our customers from third-party claims of intellectual property infringement relating to the use of our products. Infor’s standard software license agreements contain liability clauses that are limited in amount. We account for these clauses under ASC 460, Guarantees. We do not have a history of incurring costs to settle claims or paying awards under these indemnification obligations. Accordingly, we have not recorded any liabilities related to these agreements as of July 31, 2019 and April 30, 2019.

17. Derivatives

In the fourth quarter of fiscal 2019, we entered into certain callable interest rate swaps with notional amounts totaling $1,500.0 million to mitigate our exposure to the variability of the three-month LIBOR for our floating rate debt. These callable interest rate swaps had an effective date of April 5, 2019, with a 60-month term expiring on March 31, 2024, and no interest rate floor. These swaps are callable by Infor beginning on March 31, 2021, and quarterly thereafter through December 31, 2023, under which we can terminate the contracts early at no cost. The callable interest rate swaps have not been designated as hedging instruments for accounting purposes.

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

 

                       Fair Value at  
     Notional      Derivative     Balance Sheet    July 31,      April 30,  
(in millions, except percentages)    Amount      Base    

Classification

   2019      2019  

Derivatives not designated as hedging instruments:

             

Callable interest rate swap

   $ 600.0        2.7440   Accrued expenses    $ 3.6      $ 1.0  
        Other long-term liabilities      3.3        0.6  

Callable interest rate swap

     450.0        2.7375   Accrued expenses      2.6        0.7  
        Other long-term liabilities      2.5        0.4  

Callable interest rate swap

     300.0        2.7440   Accrued expenses      1.8        0.5  
        Other long-term liabilities      1.7        0.3  

Callable interest rate swap

     150.0        2.7600   Accrued expenses      0.9        0.2  
        Other long-term liabilities      0.9        0.3  
  

 

 

         

 

 

    

 

 

 

Total

   $ 1,500.0                Total liabilities    $ 17.3      $ 4.0  
  

 

 

         

 

 

    

 

 

 

Changes in the fair value of the derivative not designated as hedging instruments are recognized in our results of operations in interest expense, net in our Condensed Consolidated Statements of Operations.

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

As of July 31, 2019, there were no amounts included in accumulated other comprehensive income (loss) related to our derivative instruments to be reclassified into earnings during the next twelve months.

 

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18. Segment and Geographic Information

We are a global provider of enterprise business applications software and services focused primarily on large enterprises and SMBs. We provide industry-specific and other enterprise software products and related services to companies in many industries including manufacturing, distribution, healthcare, public sector, retail, and hospitality. We serve customers in the Americas, EMEA and APAC geographic regions. The following disclosures relate to our reportable segments and geographic regions.

Segment Information

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

LicenseOur License segment develops, markets and distributes enterprise business software applications including the following types of software: ERP, HCM, CRM, financial management, business intelligence, enterprise asset management, enterprise performance management, SCM, service management, manufacturing operations, business project management and property management for hospitality companies. License revenues include subscription revenues related to granting customers access to software products through our SaaS subscription offerings and license fees resulting from products licensed to our customers on a perpetual or term basis. Product license fees result from a customer’s licensing of a given software product for the first time or with a customer’s licensing of additional users for previously licensed products.

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

ConsultingOur Consulting segment provides software implementation, customization, integration, training and other consulting services related to Infor’s software products. Services in this segment are generally provided under time and materials contracts, and in certain situations, under fixed-fee or maximum-fee contracts. Infor’s consulting offerings range from initial assessment and planning of a project to the actual implementation and post-implementation of a project, including optimizing a customer’s use of our software, as well as training and learning tools designed to help customers become proficient in using Infor’s software quickly and effectively. Consulting services and other revenue include consulting services and other fees revenues from services provided to customers who have licensed Infor’s products.

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

We do not have any intercompany revenue recorded between reportable segments. The accounting policies for our reportable segments are the same as those used in our consolidated financial statements. We do not assess or report assets or capital expenditures by reportable segment. For disclosure of goodwill by reportable segment see Note 5, Goodwill.

 

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

 

(in millions, except percentages)    Reportable Segment  

Three Months Ended

   License     Maintenance     Consulting     Total  

July 31, 2019

        

Revenues

   $ 227.8     $ 340.6     $ 212.7     $ 781.1  

Cost of revenues

     86.1       56.5       172.5       315.1  

Direct sales and other costs

     105.0       —         —         105.0  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin

   $ 36.7     $ 284.1     $ 40.2     $ 361.0  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin %

     16.1     83.4     18.9     46.2

July 31, 2018

        

Revenues

   $ 222.2     $ 351.0     $ 209.6     $ 782.8  

Cost of revenues

     77.6       56.0       171.0       304.6  

Direct sales and other costs

     103.0       —         —         103.0  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin

   $ 41.6     $ 295.0     $ 38.6     $ 375.2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales margin %

     18.7     84.0     18.4     47.9

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

 

     Three Months Ended  
     July 31,  
(in millions)    2019      2018  

Reportable segment revenues

   $ 781.1      $ 782.8  

Purchase accounting revenue adjustments (1)

     (1.1      (0.1
  

 

 

    

 

 

 

Total revenues

   $ 780.0      $ 782.7  
  

 

 

    

 

 

 

Reportable segment sales margin

   $ 361.0      $ 375.2  

Other unallocated costs and operating expenses (2)

     205.7        203.6  

Amortization of intangible assets and depreciation

     56.6        51.6  

Restructuring costs

     6.5        5.1  
  

 

 

    

 

 

 

Income from operations

     92.2        114.9  

Total other expense, net

     75.8        35.1  
  

 

 

    

 

 

 

Income before income tax

   $ 16.4      $ 79.8  
  

 

 

    

 

 

 

 

(1)

Adjustments to decrease reportable segment revenue for revenue that we would have recognized had we not adjusted acquired deferred revenue as required by GAAP.

(2)

Other unallocated costs and operating expenses include certain sales and marketing expenses, research and development, general and administrative, acquisition-related and other costs, equity-based compensation, as well as adjustments for deferred costs recognized related to acquired deferred revenue.

 

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Geographic Information

The following table presents our revenues from contracts with customers disaggregated by revenue type, which we believe are the categories that best depict how economic factors affect the nature, amount, timing, and uncertainty of applicable revenue and cash flows and summarized by geographic region, based on the location at which each sale originates, for the periods indicated:

 

(in millions)    Geographic Region  

Three Months Ended

   Americas      EMEA      APAC      Total  

July 31, 2019

           

SaaS subscriptions

   $ 128.9      $ 22.7      $ 20.2      $ 171.8  

Software license fees

     27.9        20.6        6.4        54.9  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software subscriptions and license fees

     156.8        43.3        26.6        226.7  

Product updates and support fees

     214.4        98.8        27.4        340.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software revenues

     371.2        142.1        54.0        567.3  

Consulting services and other fees

     110.3        80.4        22.0        212.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 481.5      $ 222.5      $ 76.0      $ 780.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

July 31, 2018

           

SaaS subscriptions

   $ 110.8      $ 26.6      $ 18.8      $ 156.2  

Software license fees

     31.3        23.1        11.5        65.9  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software subscriptions and license fees

     142.1        49.7        30.3        222.1  

Product updates and support fees

     221.5        101.7        27.8        351.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

Software revenues

     363.6        151.4        58.1        573.1  

Consulting services and other fees

     108.9        82.9        17.8        209.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 472.5      $ 234.3      $ 75.9      $ 782.7  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

 

     Geographic Region  
(in millions)    Americas      EMEA      APAC      Total  

July 31, 2019

   $ 128.7      $ 26.5      $ 18.5      $ 173.7  

April 30, 2019

   $ 127.5      $ 25.5      $ 19.1      $ 172.1  

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

 

     Three Months Ended  
     July 31,  
(in millions)    2019      2018  

United States

   $ 441.0      $ 431.0  

All other countries

     339.0        351.7  
  

 

 

    

 

 

 

Total revenues

   $ 780.0      $ 782.7  
  

 

 

    

 

 

 

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

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

 

     July 31,      April 30,  
(in millions)    2019      2019  

United States

   $ 127.2      $ 125.9  

All other countries

     46.5        46.2  
  

 

 

    

 

 

 

Total long-lived tangible assets

   $ 173.7      $ 172.1  
  

 

 

    

 

 

 

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

19. Related Party Transactions

Our largest investors are our sponsors, Koch Equity Development (KED), the investment and acquisition subsidiary of Koch Industries, Golden Gate Capital, and until December 2018, Summit Partners.

 

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On January 16, 2019, we announced that KED and Golden Gate Capital had agreed to make additional investments of $1.5 billion in Infor. A portion of the proceeds related to these investments was used to acquire Summit Partners’ interest in Infor and the affiliates of Infor’s parent company in December 2018, and approximately $500.0 million was received to repay our then outstanding Senior Secured Notes in February 2019. In the first quarter of fiscal 2020, our affiliates received $742.5 million in conjunction with the redemption of the HoldCo Notes. See Equity Contributions below, and Note 13, Debt - Affiliate Company Borrowings.

The following is a summary of our transactions with our sponsors and other related parties.

Sponsor Management and Other Fees

We have entered into an advisory agreement with Golden Gate Capital and Summit Partners pursuant to which we have retained them to provide advisory services relating to financing and strategic business planning, acquisitions and investments, analysis and oversight, executive recruiting, certain other services and the reimbursement of reasonable out-of-pocket expenses. These advisory agreements are for an initial term of ten years with the annual management fees payable to Golden Gate Capital and Summit Partners on a quarterly basis. In addition, Infor Enterprise, Golden Gate Capital and Summit Partners have entered into a similar advisory agreement with KED. Under these advisory agreements, the total contractual annual management fee due is approximately $8.0 million which is payable to our sponsors based on the provisions in the applicable agreements. We recognized these management fees as a component of general and administrative expenses in our Condensed Consolidated Statement of Operations. We operated under these agreements through December 2018. With the change in our sponsors discussed above, Summit Partners is no longer party to these agreements. Going forward, the total contractual annual management fee is payable to our remaining sponsors. The following table sets forth management fees and applicable expenses rendered under the advisory agreements for the periods indicated:

 

     Three Months Ended  
     July 31,  
(in millions)    2019      2018  

Koch Industries

   $ 1.0      $ 1.0  

Golden Gate Capital

     1.0        0.8  

Summit Partners

     —          0.2  
  

 

 

    

 

 

 

Total management fees and expenses

   $ 2.0      $ 2.0  
  

 

 

    

 

 

 

As of July 31, 2019, approximately $0.8 million and $0.8 million of the sponsor management fees remained unpaid related to Koch Industries and Golden Gate Capital, respectively.

In addition, under the advisory agreements the sponsors may be entitled to receive transaction fees in relation to certain consummated transactions including among others, acquisitions and financing transactions. We generally recognize these transaction fees in acquisition-related and other costs in our Condensed Consolidated Statement of Operations in the period when incurred.

Related Party Operating Activity

Revenues and Expenses

In the normal course of business, we may sell products and services to companies owned by our sponsors. Revenues from companies affiliated with Koch Industries and Golden Gate Capital, are recognized according to our revenue recognition policy. All of these agreements were entered into at our customary rates. Revenues from companies affiliated with Koch Industries were approximately $10.0 million in the three months ended July 31, 2019, and $7.5 million in the comparable period of fiscal 2019. Revenues from Golden Gate Capital-owned companies were approximately $0.8 million in the three months ended July 31, 2019, and $0.5 million in the comparable period of fiscal 2019.

In addition, we have made an insignificant amount of payments for products and services to companies owned by Golden Gate Capital and to Koch Industries affiliated companies in the first quarter of fiscal 2020 and in the comparable period of fiscal 2019.

Koch SaaS Agreements

During the past three years, we have entered into various SaaS subscription agreements with affiliates of Koch Industries for various Infor software products including our CloudSuite HCM, CloudSuite Financials, EAM, and other software (the Koch SaaS Agreements). The Koch SaaS Agreements total approximately $102.6 million with average SaaS subscription revenues of approximately $15.0 million per year. All of the Koch SaaS Agreements were entered into at our customary rates and have terms of one to ten years.

 

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Golden Gate Capital SaaS Agreement

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

Equity Contributions

In the fourth quarter of fiscal 2019, our sponsors made capital contributions to IGS Holding of $500.0 million, of which $485.0 million was contributed as equity to Infor, Inc. Infor’s proceeds from the new equity contribution were used to redeem our Senior Secured Notes, which were then outstanding. See Note 12, Debt, in notes to the consolidated financial statements, included in our Annual Report on Form 10-K.

Due to/from Affiliates

Infor, through certain of our subsidiaries, had net receivables from our affiliates, HoldCo and GGC Software Parent, LLC, of $51.4 million and $58.8 million as of July 31, 2019, and April 30, 2019, respectively. These receivables arose primarily due to our payment of deferred financing fees and interest related to certain acquired debt of HoldCo and activity related to the Tax Allocation Agreement, discussed below. These receivables are included in receivable from stockholders in the equity section on our Condensed Consolidated Balance Sheets.

We have entered into a Tax Allocation Agreement with GGC Software Parent, LLC, and HoldCo. Infor is included in the GGC Software Parent, LLC consolidated federal income tax return and the Tax Allocation Agreement sets forth the obligation of Infor and our domestic subsidiaries with regard to preparing and filing tax returns and allocating tax payments under the consolidated reporting rules of the Internal Revenue Code and similar state and local tax laws governing combined or consolidated filings. The Tax Allocation Agreement provides that each domestic subsidiary that is a member of the consolidated, unitary or combined tax group will pay its share of the taxes of the group. In the first three months of fiscal 2020, we estimated we owed $7.4 million under the Tax Allocation Agreement which was recorded as a dividend and reduction in our receivable from stockholders. In the first three months of fiscal 2019, we did not make any payments under the Tax Allocation Agreement and we had no amounts payable under the Tax Allocation Agreement as of July 31, 2019.

Dividends Paid to Affiliates

Fiscal 2020

In the first three months of fiscal 2020, we paid dividends to our affiliate companies totaling $52.4 million. We paid dividends to HoldCo of $26.7 million related to the funding of semi-annual interest on our affiliate’s debt and $18.3 million related to the redemption of the HoldCo Notes. See Note 13, Debt - Affiliate Company Borrowings. These dividends were accrued as of April 30, 2019. In addition, in the first quarter of fiscal 2020 we paid dividends to HoldCo of $7.4 million due under our Tax Allocation Agreement, as discussed above.

Fiscal 2019

In fiscal 2019, we paid dividends to our affiliate companies totaling $76.8.

In the third quarter of fiscal 2019, we paid dividends to HoldCo totaling $26.8 million related primarily to the funding of semi-annual interest due related to the HoldCo Notes.

In the first quarter of fiscal 2019, we paid dividends to HoldCo of $27.0 million primarily to pay the semi-annual interest due related to the HoldCo Notes. In addition, we paid dividend of approximately $23.0 million to Infor Enterprise primarily to fund equity distributions to members of our executive management team under certain of their equity awards. Both of these dividends were accrued as of April 30, 2018.

In future periods we may from time-to-time service additional interest payments related to our affiliate companies’ debt or other obligations through further dividend distributions.

 

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20. Supplemental Guarantor Financial Information

The Senior Notes issued by Infor (US), Inc. are fully and unconditionally guaranteed, except for certain customary automatic release provisions, jointly and severally, by Infor, Inc., its parent company, and substantially all of its existing and future wholly-owned domestic subsidiaries (collectively the Guarantor Subsidiaries). See Note 13, Debt. Its other subsidiaries (collectively, the Non-Guarantor Subsidiaries) are not guarantors of our borrowings. The indentures governing the Senior Notes limit, among other things, the ability of Infor, Inc. and the Guarantor Subsidiaries to incur additional indebtedness; declare or pay dividends; redeem stock or make other distributions to stockholders; make investments; create liens or use assets as security in other transactions; merge or consolidate, or sell, transfer, lease or dispose of substantially all of our assets; enter into transactions with affiliates; and sell or transfer certain assets.

The following tables set forth requisite financial information of Infor, Inc., Infor (US), Inc., the Guarantor Subsidiaries and Non-Guarantor Subsidiaries including our Condensed Consolidating Balance Sheets as of July 31, 2019 and April 30, 2019, our Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) for our fiscal quarters ended July 31, 2019 and 2018, and our Condensed Consolidating Statements of Cash Flows for the three months ended July 31, 2019 and 2018.

During the preparation of the condensed consolidating financial information of Infor, Inc. and Subsidiaries in the fourth quarter of fiscal 2019, management identified errors in (i) the presentation of equity in (earnings) loss of subsidiaries, net income (loss), net income (loss) attributable to noncontrolling interests and net income (loss) attributable to Infor, Inc. in the Parent, Issuer and Eliminations columns of our Consolidating Statements of Operations and Comprehensive Income (Loss), (ii) the presentation of comprehensive income (loss) and comprehensive income (loss) attributable to Infor, Inc. in the Parent, Issuer and Eliminations columns of the Consolidating Statements of Operations and Comprehensive Income (Loss), and (iii) the manner in which certain intercompany transactions were classified and presented that occurred between the Parent, Issuer and Non-Guarantor Subsidiaries which impacted the related columns in addition to the Eliminations column in the Consolidating Statements of Cash Flows and the Parent, Issuer and Eliminations columns in the Consolidating Balance Sheets. The cash flow errors were due to the following issues: (i) we presented all dividends, contributions, and intercompany loan activity in the financing section, as opposed to reflecting the activity as either financing or investing with a corresponding elimination amount; and (ii) we did not include constructive receipt of cash in the Parent column for cash that moved directly between the Issuer and affiliate companies of the parent of Infor, Inc. These errors impacted the disclosures as previously presented in our Quarterly Reports on Form 10-Q in fiscal 2019.

The Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) have been revised for error (i) and (ii) identified above, resulting in impacts to net income (loss) and net income (loss) attributable to Infor, Inc. in the Parent column of $0.3 million for the quarter ended July 31, 2018, and the Issuer column of $0.3 million for the quarter ended July 31, 2018. The Consolidating Statements of Operations and Comprehensive Income (Loss) have been revised resulting in impacts to comprehensive income (loss) and comprehensive income (loss) attributable to Infor, Inc. in the Parent column of $41.7 million for the quarter ended July 31, 2018, and in the Issuer column of $41.5 million for the quarter ended July 31, 2018. The Consolidating Statements of Cash Flows have been revised resulting in impacts to cash flows provided by (used in) investing activities and financing activities for error (iii) identified above. The impact to cash flows provided by (used in) investing activities in the Parent column was $50.0 million for the quarter ended July 31, 2018. The impact to cash flows provided by (used in) investing activities in the Non-Guarantor Subsidiaries column was $2.2 million for the quarter ended July 31, 2018. The impact to cash flows provided by (used in) financing activities in the Parent column was $50.0 million for the quarter ended July 31, 2018. The impact to cash flows provided by (used in) financing activities in the Non-Guarantor Subsidiaries column was $2.2 million for the quarter ended July 31, 2018. The errors, which we have determined are not material to this disclosure, are eliminated upon consolidation and therefore have no impact on our Guarantor subsidiaries or consolidated financial statements.

During the first quarter of fiscal 2020, a misstatement was identified that caused an overstatement in the income tax provision presented within our Consolidated Statements of Operations for the three and nine months ended January 31, 2019 and the fiscal year ended April 30, 2019, and a corresponding overstatement in deferred tax liabilities presented within our Consolidated Balance Sheets as of January 31, 2019 and April 30, 2019. Correction of this misstatement resulted in a $14.7 million reduction in deferred tax liabilities and a $14.7 million decrease in accumulated deficit on our Consolidated Balance Sheet and Consolidated Statement of Stockholders’ Deficit as of April 30, 2019, and impacted, for the full amount of the misstatement, in each of the Parent, Issuer and Eliminations columns. See Note 1, Nature of Business and Basis of Presentation – Revision of Prior Period Financial Statements, for additional discussion of the nature of the identified misstatement related to this matter.

We have revised the condensed Consolidating Balance Sheets, Consolidating Statements of Operations and Comprehensive Income (Loss) and Consolidating Statements of Cash Flows for the applicable periods presented below, to correct for these errors and misstatements. We will correct the errors and misstatements associated with other applicable prior period interim disclosures in future quarterly Form 10-Q filings.

 

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We periodically consolidate our operating subsidiaries, primarily Guarantor Subsidiaries, into Infor (US), Inc. When such consolidations occur, we retrospectively adjust the Subsidiary Issuer and Guarantor Subsidiary columns accordingly for all periods presented below.

Condensed Consolidating Balance Sheets

 

     July 31, 2019  
(in millions)    Infor, Inc.
(Parent)
    Infor (US), Inc.
(Subsidiary Issuer)
    Guarantor
Subsidiaries
     Non-Guarantor
Subsidiaries
     Eliminations     Total
Consolidated
 

ASSETS

              

Current assets:

              

Cash and cash equivalents

   $ —       $ 50.4   $ —        $ 203.1    $ —       $ 253.5

Accounts receivable, net

     —         206.3     15.9      200.8      —         423.0

Prepaid expenses

     —         155.3     3.7      44.9      —         203.9

Income tax receivable

     —         —         1.3      4.4      (1.3     4.4

Other current assets

     —         14.7     1.2      27.8      —         43.7

Affiliate receivable

     —         131.5     171.1      210.0      (512.6     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current assets

     —         558.2     193.2      691.0      (513.9     928.5

Property and equipment, net

     —         127.2     —          46.5      —         173.7

Operating lease right-of-use assets

     —         90.0     0.2      106.9      —         197.1

Intangible assets, net

     —         447.3     —          82.9      —         530.2

Goodwill

     —         2,974.7     62.6      1,511.5      —         4,548.8

Deferred tax assets

     —         0.3     0.1      112.6      (0.1     112.9

Other assets

     —         108.3     3.7      50.4      —         162.4

Affiliate receivable

     —         112.8     —          154.8      (267.6     —    

Investment in subsidiaries

     —         1,960.9     —          —          (1,960.9     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ —       $ 6,379.7   $ 259.8    $ 2,756.6    $ (2,742.5   $ 6,653.6
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

              

Current liabilities:

              

Accounts payable

   $ —       $ 60.6   $ —        $ 19.3    $ —       $ 79.9

Income tax payable

     —         17.7     —          36.7      (1.3     53.1

Accrued expenses

     —         168.8     3.9      198.7      —         371.4

Deferred revenue

     —         742.1     30.5      365.6      —         1,138.2

Affiliate payable

     29.4     379.4     1.4      102.4      (512.6     —    

Current portion of long-term obligations

     —         32.6     —          —          —         32.6

Operating lease liabilities

     —         22.3     0.1      23.0      —         45.4
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current liabilities

     29.4     1,423.5     35.9      745.7      (513.9     1,720.6

Long-term debt

     —         5,130.7     —          —          —         5,130.7

Operating lease liabilities, noncurrent

     —         92.0     0.1      86.2      —         178.3

Deferred tax liabilities

     —         8.5     —          3.7      (0.1     12.1

Affiliate payable

     58.2     154.8     —          54.6      (267.6     —    

Other long-term liabilities

     —         48.9     0.5      121.5      —         170.9

Losses in excess of investment in subsidiaries

     478.7     —         —          —          (478.7     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     566.3     6,858.4     36.5      1,011.7      (1,260.3     7,212.6

Total Infor, Inc. stockholders’ equity (deficit)

     (566.3     (478.7     223.3      1,737.6      (1,482.2     (566.3

Noncontrolling interests

     —         —         —          7.3      —         7.3
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total stockholders’ equity (deficit)

     (566.3     (478.7     223.3      1,744.9      (1,482.2     (559.0
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities and stockholders’ equity (deficit)

   $ —       $ 6,379.7   $ 259.8    $ 2,756.6    $ (2,742.5   $ 6,653.6
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

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Table of Contents
     April 30, 2019  
(in millions)    Infor, Inc.
(Parent)
    Infor (US), Inc.
(Subsidiary Issuer)
    Guarantor
Subsidiaries
     Non-Guarantor
Subsidiaries
     Eliminations     Total
Consolidated
 

ASSETS

              

Current assets:

              

Cash and cash equivalents

   $ —       $ 105.3   $ —        $ 251.1    $ —       $ 356.4

Accounts receivable, net

     —         254.9     12.6      249.3      —         516.8

Prepaid expenses

     —         156.5     3.7      48.3      —         208.5

Income tax receivable

     —         10.4     0.1      4.4      —         14.9

Other current assets

     —         11.5     1.4      31.9      —         44.8

Affiliate receivable

     45.0     143.2     163.9      167.3      (519.4     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current assets

     45.0     681.8     181.7      752.3      (519.4     1,141.4

Property and equipment, net

     —         125.9     —          46.2      —         172.1

Intangible assets, net

     —         472.7     0.1      92.2      —         565.0

Goodwill

     —         2,974.6     62.6      1,545.2      —         4,582.4

Deferred tax assets

     —         0.3     0.1      116.1      (0.1     116.4

Other assets

     —         121.0     3.4      51.0      —         175.4

Affiliate receivable

     —         124.2     —          157.6      (281.8     —    

Investment in subsidiaries

     —         1,937.8     —          —          (1,937.8     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 45.0   $ 6,438.3   $ 247.9    $ 2,760.6    $ (2,739.1   $ 6,752.7
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

              

Current liabilities:

              

Accounts payable

   $ —       $ 99.2   $ —        $ 23.4    $ —       $ 122.6

Income tax payable

     —         0.3     —          51.1      —         51.4

Accrued expenses

     45.0     230.6     1.9      188.8      —         466.3

Deferred revenue

     —         747.6     28.1      412.3      —         1,188.0

Affiliate payable

     29.4     374.5     1.1      114.4      (519.4     —    

Current portion of long-term obligations

     —         27.5     —          —          —         27.5
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total current liabilities

     74.4     1,479.7     31.1      790.0      (519.4     1,855.8

Long-term debt

     —         5,154.2     —          —          —         5,154.2

Deferred tax liabilities

     —         29.7     —          9.0      (0.1     38.6

Affiliate payable

     58.2     157.6     —          66.0      (281.8     —    

Other long-term liabilities

     —         80.3     0.5      166.7      —         247.5

Losses in excess of investment in subsidiaries

     463.2     —         —          —          (463.2     —    
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     595.8     6,901.5     31.6      1,031.7      (1,264.5     7,296.1

Total Infor, Inc. stockholders’ equity (deficit)

     (550.8     (463.2     216.3      1,721.5      (1,474.6     (550.8

Noncontrolling interests

     —         —         —          7.4      —         7.4
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total stockholders’ equity (deficit)

     (550.8     (463.2     216.3      1,728.9      (1,474.6     (543.4
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities and stockholders’ equity (deficit)

   $ 45.0   $ 6,438.3   $ 247.9    $ 2,760.6    $ (2,739.1   $ 6,752.7
  

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

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Table of Contents

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)

 

     Three Months Ended July 31, 2019  
(in millions)    Infor, Inc.
(Parent)
    Infor (US), Inc.
(Subsidiary Issuer)
    Guarantor
Subsidiaries
    Non-Guarantor
Subsidiaries
    Eliminations     Total
Consolidated
 

Revenues:

            

SaaS subscriptions

   $ —       $ 139.1   $ 4.9   $ 27.8   $ —       $ 171.8

Software license fees

     —         22.5     3.7     28.7     —         54.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software subscriptions and license fees

     —         161.6     8.6     56.5     —         226.7

Product updates and support fees

     —         192.5     8.4     139.7     —         340.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software revenues

     —         354.1     17.0     196.2     —         567.3

Consulting services and other fees

     —         97.2     5.8     109.7     —         212.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —         451.3     22.8     305.9     —         780.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

            

Cost of SaaS subscriptions

     —         62.5     0.6     12.5     —         75.6

Cost of software license fees

     —         5.3     0.8     4.5     —         10.6

Cost of product updates and support fees

     —         30.5     0.7     25.3     —         56.5

Cost of consulting services and other fees

     —         82.3     3.8     86.8     —         172.9

Sales and marketing

     —         69.3     5.5     46.4     —         121.2

Research and development

     —         76.4     1.4     49.0     —         126.8

General and administrative

     —         38.1     —         22.0     —         60.1

Amortization of intangible assets and depreciation

     —         44.7     0.1     11.8     —         56.6

Restructuring costs

     —         2.3     —         4.2     —         6.5

Acquisition-related and other costs

     —         0.8     —         0.2     —         1.0

Affiliate (income) expense, net

     —         5.9     4.1     (10.0     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     —         418.1     17.0     252.7     —         687.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     —         33.2     5.8     53.2     —         92.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other expense, net:

            

Interest expense, net

     —         87.7     —         —         —         87.7

Affiliate interest (income) expense, net

     —         1.5     —         (1.5     —         —    

Other (income) expense, net

     —         (21.5     —         9.6     —         (11.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     —         67.7     —         8.1     —         75.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax

     —         (34.5     5.8     45.1     —         16.4

Income tax provision (benefit)

     —         7.2     (1.2     2.8     —         8.8

Equity in (earnings) loss of subsidiaries

     (7.3     (49.0     —         —         56.3     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     7.3     7.3     7.0     42.3     (56.3     7.6

Net income (loss) attributable to noncontrolling interests

     —         —         —         0.3     —         0.3

Net income (loss) attributable to Infor, Inc.

   $ 7.3   $ 7.3   $ 7.0   $ 42.0   $ (56.3   $ 7.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

     (18.0     (18.0     7.0     17.0     (5.7     (17.7

Noncontrolling interests comprehensive income (loss)

     —         —         —         0.3     —         0.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss) attributable to Infor, Inc.

   $ (18.0   $ (18.0   $ 7.0   $ 16.7   $ (5.7   $ (18.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

Revenues:

            

SaaS subscriptions

   $ —       $ 124.4   $ 3.0   $ 28.8   $ —       $ 156.2

Software license fees

     —         28.2     0.8     36.9     —         65.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software subscriptions and license fees

     —         152.6     3.8     65.7     —         222.1

Product updates and support fees

     —         199.6     8.9     142.5     —         351.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Software revenues

     —         352.2     12.7     208.2     —         573.1

Consulting services and other fees

     —         94.6     6.2     108.8     —         209.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     —         446.8     18.9     317.0     —         782.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

            

Cost of SaaS subscriptions

     —         57.2     0.3     10.7     —         68.2

Cost of software license fees

     —         5.8     —         3.7     —         9.5

Cost of product updates and support fees

     —         29.2     0.7     26.1     —         56.0

Cost of consulting services and other fees

     —         80.8     4.2     86.3     —         171.3

Sales and marketing

     —         67.7     4.8     45.3     —         117.8

Research and development

     —         74.9     1.4     47.2     —         123.5

General and administrative

     —         37.9     —         22.2     —         60.1

Amortization of intangible assets and depreciation

     —         40.9     0.1     10.6     —         51.6

Restructuring costs

     —         3.4     —         1.7     —         5.1

Acquisition-related and other costs

     —         3.7     —         1.0     —         4.7

Affiliate (income) expense, net

     —         0.9     0.9     (1.8     —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     —         402.4     12.4     253.0     —