News Column

INFOR, INC. - 10-K - Management's Discussion and Analysis of Financial Condition and Results of Operations

July 28, 2014

The following discussion should be read in conjunction with the Selected Historical Consolidated Financial Data presented above, our Consolidated Financial Statements, the notes to those statements and other financial information appearing elsewhere in this Annual Report on Form 10-K.

The discussion and analysis of our financial condition and results of operations are based upon our audited financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of our financial statements, the reported amounts of revenues and expenses during the reporting periods presented, as well as our disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions, including, but not limited to, those related to revenue recognition, allowance for doubtful accounts and sales returns, fair value of equity-based compensation, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, income taxes, restructuring obligations and contingencies and litigation. We base our estimates and assumptions on our historical experience and on other information available to us at the time that these estimates and assumptions are made. We believe that these estimates and assumptions are reasonable under the circumstances and form the basis for making judgments about the carrying values of our assets and liabilities that are not readily apparent from other sources. Actual results and outcomes could differ from our estimates.



Basis of Financial Statement Presentation

On April 5, 2012, we completed the Infor Combination, the combination of Infor and its subsidiaries with the operating subsidiaries of IGS Intermediate Holdings. These entities were under common control of Golden Gate Capital, and accordingly the financial statements contained herein and related financial information for all periods are presented on a consolidated basis as if they were combined from the date of inception of common control.



Hereafter, any reference to we, our, us, Infor or the Company refers to the combined company and the consolidated financial statements thereof presented under common control.

Management Overview General Infor is a global provider of enterprise business applications software and services focused primarily on medium and large enterprises. We develop, market, distribute and service enterprise software applications that help organizations manage their businesses. We deliver integrated enterprise business solutions including customer relationship management (CRM), enterprise asset management (EAM), enterprise resource planning (ERP), financial management, human capital management (HCM), performance management, product lifecycle management, property management systems, central reservations systems, supplier relationship management and supply chain management (SCM), including business-specific inventory management, transportation logistics, manufacturing and warehouse management software. Infor also offers software license updates and product support as well as other services including consulting, advanced product services, hosting and education. We offer a broad range of software applications and industry-specific solutions that we believe help our customers improve their business processes and reduce costs, resulting in better business or operational performance. Our solutions help automate and integrate critical business processes which enable our customers to better manage their suppliers, partners, customers and employees. We specialize in and target specific industries (or verticals), and have industry-specific business units that leverage our industry-oriented products and teams. We provide industry-specific ERP software products to companies in the manufacturing, distribution, healthcare, public sector, automotive, service industries, equipment services, management and rental (ESM&R), consumer products & retail and hospitality industries. Our industry-specific approach distinguishes us from larger competing ERP vendors, whose primary focus is on less specialized software programs that take more time and cost to tailor to our target customers' specific needs. Augmenting our vertical-specific applications, we have leading horizontal software applications, including our CRM, EAM, HCM, SCM and financial application suites, which, through our proprietary light-weight middleware solution ION, are integrated with our enterprise software applications and sold across verticals. 25



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We generate revenue primarily by licensing software, providing product updates and support and providing consulting services to our customers. We operate in three segments: License, Maintenance and Consulting. We market and sell our software and services primarily through a direct sales force, which is augmented by systems integrators and resellers. In addition to providing software products, we generate substantial recurring revenue by providing on-going software support services to our customers through our maintenance and support programs. The product updates and support we provide are valued by our customers as evidenced by our high annual maintenance retention rates. We also help our customers implement and use our applications effectively through our consulting services offerings, including training, implementation and consulting services. We serve customers across three geographic regions-the Americas, EMEA and APAC. We have approximately 12,920 employees worldwide and have offices in 40 countries. We have established a worldwide infrastructure for distribution, development and support of our enterprise software. This worldwide coverage provides us with both economies of scale and the ability to leverage our geographical expertise to effectively enter new markets and segments. In fiscal 2014, our Americas, EMEA and APAC regions generated approximately 57.3%, 34.2% and 8.5% of our revenues, respectively. Though we have a considerable presence outside of the U.S. today, we believe we have significant opportunities to expand internationally and capture market share, especially in the EMEA and APAC regions. Fiscal 2014 Overview Fiscal 2014 was a year of continued investment, innovation and growth for Infor. Over the past twelve months, we continued to make significant investments in our products to meet the specific needs of customers in targeted microvertical industries, in our user interface to unify and beautify the user experience, and in cloud deployment options with Infor UpgradeX and Infor CloudSuite. Flexibility, agility, collaboration, mobility and ease of use were again our key design principles focused on helping our customers become faster and more efficient. To that end, following the announcement of Infor 10X in the fourth quarter of fiscal 2013, we released 13 Infor 10X-certified product lines in fiscal 2014. These included major deliveries of Infor Syteline, Infor SX.e, Infor LN, and Infor M3. Infor 10X features Infor ION, our purpose-built middleware, Infor Ming.le, a comprehensive social collaboration platform, and the Infor SoHo user interface, whose beautiful design not only improves the user experience but also helps increase productivity. Beyond our core enterprise software applications, additional major Infor 10X product releases in fiscal 2014 included Infor Enterprise Asset Management, Infor Rhythm for e-Commerce, Infor Dynamic Enterprise Performance Management and Infor Human Capital Management. In January 2014, we significantly augmented Infor HCM by acquiring Dallas-based PeopleAnswers, a privately held leader in predictive talent analytics and talent science software delivered via the cloud. PeopleAnswers helps companies improve employee selection, development, and succession planning; reduce turnover; improve performance; and optimize the HR processes associated with these activities. We expanded our cloud offerings in two significant ways in fiscal 2014, giving our existing and new customers greater choice in deployment options. In our second quarter, we announced Infor UpgradeX, which we designed to help our customers get to our latest releases faster by automating the upgrade process. UpgradeX provides data migration tools, implementation accelerator tools and prepackaged solutions to move on-premises applications to Infor 10X cloud versions. UpgradeX helps our customers reduce costs and minimize disruptions related to on-premises upgrades but more importantly, enjoy all the benefits of Infor10X faster than ever before. In addition, once a customer is live on the cloud, Infor manages the applications, provides ongoing and predictive support, education, and additional upgrade services. In the third quarter fiscal 2014, we announced Infor CloudSuite in partnership with Amazon Web Services (AWS), a leader in global cloud infrastructure and services. Infor CloudSuite features industry-specific application suites available on the AWS cloud via a subscription-based pricing model to reduce upfront IT costs. Infor CloudSuite customers can take advantage of Infor's expertise in the application layer. Infor leverages Amazon's expertise and economies of scale to access infrastructure when we need it, on demand and with auto-scaling, to deliver these applications to our customers. AWS provides services in 10 regions, 25 availability zones and 51 Amazon CloudFront Edge locations globally. By the end of fiscal 2014, we had delivered more than 5 Infor CloudSuite products, including specific industry suites for Automotive, Aerospace & Defense, Hospitality, Corporate-Enterprise, Healthcare; technology (Infor ION, Infor Ming.le), core ERP, extension applications and analytics. These significant investments helped drive our results in fiscal 2014 and received strong, positive reactions from our customers. In total, we signed over 15,200 deals with existing customers and over 3,200 deals with new customers during the year and our customer retention rate continues to exceed 93%. Our total revenues for fiscal 2014 increased 1.4% compared to fiscal 2013, excluding the favorable foreign currency impact of 0.2%. We continued to expand our development capabilities during fiscal 2014, allowing us to offer a significant number of new and innovative solutions to our customers. Our fiscal 2014 refinancing activities resulted in a significant reduction in the cost of servicing our debt. In addition, favorable foreign currency translation fluctuations also contributed to a significant increase in our net income in fiscal 2014 compared to last year. 26



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During fiscal 2014, the global economic environment continued to show signs of improvement. However, there remain concerns and uncertainty about the strength of the recovery, future domestic and global economic growth, the global financial system including the ongoing European debt crisis, fiscal uncertainty in the U.S., and the numerous ongoing geopolitical issues around the globe. This economic uncertainty may negatively affect the overall demand environment in fiscal 2015, particularly in our EMEA region. We continue to believe that there will be a focus on IT products and services that can reduce cost and deliver rapid return on investment (ROI). We believe that our expanded offerings of industry-specific solutions, flexible distribution, and implementation model and innovative technology that allows for increased business flexibility and rapid ROI, will enable us to stay competitive in a challenging economic environment and outperform the broader market as IT managers continue to focus on projects that quickly deliver value. Acquisitions An active acquisition program is another important element of our corporate strategy. In recent years, we have invested billions of dollars to acquire a number of complementary companies, products, services and technologies. We believe our acquisition program strengthens our competitive position, enhances the products and services that we can offer to customers, expands our customer base, provides greater scale to accelerate innovation, grow our revenues and earnings, and increases our overall value. We expect to continue to acquire companies, products, services and technologies in furtherance of our corporate strategy. See Note 3, Acquisitions, in Notes to Consolidated Financial Statements of this Form 10-K for additional information related to our recent acquisitions. Operating results relating to these acquisitions have been included in our results of operations as of the applicable acquisition dates. We believe we can fund our pending and future acquisitions with our internally available cash, cash equivalents and marketable securities, cash generated from operations or additional borrowings. We estimate the financial impact of any potential acquisition with regard to earnings, operating margin, cash flow and return on invested capital targets before deciding to move forward with an acquisition.



Fiscal 2014 Acquisitions

On January 7, 2014, we acquired PeopleAnswers, a privately held company based in Dallas, Texas, for approximately $200.0 million. PeopleAnswers is a provider of predictive talent analytics which complements and further expands our Infor HCM suite. This acquisition was not material to our results of operations in fiscal 2014.



During the fourth quarter of fiscal 2014 we completed an additional acquisition for a purchase price of approximately $1.8 million.

Fiscal 2013 Acquisitions

During fiscal 2013 we completed five acquisitions for an aggregate purchase price of $119.7 million, net of cash acquired. These acquisitions were not significant, either individually or in the aggregate.

Fiscal 2012 Acquisitions

On July 5, 2011, GGC Holdings (now known as Infor, Inc.) purchased 100% of the outstanding voting shares of Lawson Software, Inc., a publicly traded company located in St. Paul, MN, for approximately $1,482.2 million, net of cash acquired. During fiscal 2012 we completed four additional acquisitions for an aggregate purchase price of $29.3 million, net of cash acquired. These acquisitions were not significant, either individually or in the aggregate.



Financing Activities

Over the past few fiscal years, we have undertaken significant financing activities in conjunction with our acquisitions and the recapitalization and refinancing of our debt structure. Most recently in fiscal 2014 we amended our Credit Agreement to refinance certain of our credit facilities at favorable interest rates and affiliates of Infor issued senior notes to finance the repayment of their existing debt and fund distributions to our equity inventors. In the first quarter of fiscal 2014, on June 3, 2013, we entered into an amendment to our Credit Agreement pursuant to which we refinanced the outstanding balance of our Tranche B-1 Term Loan and our Euro Term Loan with a new $483.0 million Tranche B-3 Term Loan and a new 350.0 million Euro Tranche B Term Loan. Under this amendment we reduced the applicable interest rate margins and base interest rate floors and extended the maturity dates related to the refinanced term loans. Under this amendment, the Credit Agreement was also amended to, among other things, limit the applicability of the financial maintenance covenants related to our leverage ratio to the Revolver and only for those fiscal quarters in which we have significant borrowings under our Revolver as of the last day of such quarter. Proceeds from the Tranche B-3 Term Loan and Euro Tranche B Term Loan were used to refinance the outstanding principal of our Tranche B-1 Term Loan and our Euro Term Loan, together with accrued and unpaid interest and applicable fees. In addition, certain of the proceeds were used to repay a portion of the outstanding balance of our Tranche B-2 Term Loan. 27



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On January 2, 2014, we entered into an amendment to our Credit Agreement pursuant to which we refinanced all of the outstanding balance of our Tranche B-2 Term Loan with a new $2,550.0 million Tranche B-5 Term Loan. Under this amendment we reduced the applicable interest rate margins and base interest rate floors related to the refinanced term loan and extended the maturity date related to the Tranche B-5 Term Loan. Proceeds from the Tranche B-5 Term Loan were used to refinance the outstanding principal of our Tranche B-2 Term Loan, together with accrued and unpaid interest and applicable fees.



On January 31, 2014, we entered into an amendment to our Credit Agreement pursuant to which we reduced the interest rate margins applicable to borrowings made in respect of our $150.0 million Revolving Credit Facility.

In addition, on April 8, 2014, Infor Software Parent, LLC (HoldCo), an indirect holding company for Infor, and its direct subsidiary Infor Software Parent, Inc., issued $750.0 million in aggregate principal amount of their 7.125%/7.875% Senior Contingent Cash Pay Notes. Proceeds from the sale of these notes were used to repay the outstanding balance of HoldCo's affiliate's existing debt of $166.8 million, to make a $565.5 distribution to HoldCo equityholders, to pay a call premium and accrued interest related to their existing debt, and to pay related transaction fees and expenses. We may from time-to-time service interest payments related to these notes. Any payment of interest that we may pay will be funded primarily through dividend distributions from Infor to HoldCo. We have not reflected these notes in our consolidated financial statements for any of the periods presented based on applicable SEC guidance relating to inclusion of a parent's debt in a subsidiaries financial statements. See Note12, Debt, in Notes to Consolidated Financial Statements of this Form 10-K for additional information related to our affiliate company borrowings.



See, Liquidity and Capital Resources-Long-Term Debt, below for further discussion of our financing activities.

Restructuring Activities

During recent years, the global economy has been weakened by a world-wide economic downturn, the ongoing Eurozone debt crisis, uncertainty regarding U.S. fiscal policy and federal deficit issues, and persistent high unemployment, which has led to low economic growth. There continues to be uncertainty about future domestic and global economic conditions and the timing and strength of the on-going recovery. In response to these economic conditions we have undertaken certain restructuring actions to reduce our headcount and streamline our operations. We have also taken certain actions to better focus our efforts on our targeted industry-specific solutions. In addition, as a result of our active acquisition program, we have taken certain actions related to acquired entities over the past few years to streamline back-office functions and eliminate redundancies incurred through acquisitions. We also restructured and consolidated office lease arrangements to eliminate redundant locations worldwide. Our results for fiscal 2014, fiscal 2013 and fiscal 2012 include restructuring charges of $18.6 million, $10.2 million and $67.8 million, respectively, relating to these actions. We continue to closely monitor our discretionary spending while preserving targeted investments that we believe will facilitate our long-term growth and increase our operational efficiencies. We may consider possible future actions to reduce our operating costs if circumstances warrant.



Foreign Currency

A significant portion of our business is conducted in currencies other than the U.S. Dollar, particularly the Euro and British Pound. Our revenues and operating expenses are affected by fluctuations in applicable foreign currency exchange rates. Downward fluctuations in the value of the U.S. Dollar compared to a foreign currency generally have the effect of increasing our revenues but also increasing our operating expenses denominated in currencies other than the U.S. Dollar. Similarly, strengthening in the U.S. Dollar compared to foreign currency exchange rates generally has the effect of reducing our revenues but also reducing our operating expenses denominated in currencies other than the U.S. Dollar. In addition, we have certain intercompany transfer pricing transactions, intercompany loans and other intercompany transactions that are not considered permanent in nature. Fluctuations in applicable foreign currency exchange rates on these intercompany balances may impact our results of operations. For fiscal 2014, the average exchange rates for the U.S. Dollar against the Euro and British Pound weakened by approximately 5.0% and 2.8%, respectively, as compared to the average exchange rates for fiscal 2013. For fiscal 2013, the average exchange rates for the U.S. Dollar against the Euro and British Pound strengthened by approximately 4.9% and 1.3%, respectively, as compared to the average exchange rates for fiscal 2012. Our international operations have provided and will continue to provide a significant portion of our total revenues and expenses. As a result, total revenues and expenses will continue to be affected by changes in the U.S. Dollar against major international currencies. In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we compare the percent change in the results from one period to another period using constant currency disclosure. To present this information, the most current period results for our entities reporting in currencies other than U.S. Dollars are converted into U.S. Dollars at constant exchange rates (i.e. the average rates in effect in the prior comparable period) rather than the actual exchange rates in effect during the respective periods. In each of the tables below, we present the percent change based on actual results in reported currency and in constant currency. 28



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The following tables summarize the period-over-period change, both in U.S. Dollars and percentages, in revenues and costs and expenses, isolating the fluctuations in exchange rates from changes in activity and pricing on a constant currency basis for the periods presented:

Change Due Change in Change Due Change in (in millions, except percentages) to Currency Constant Total Change to Currency Constant Total Change Year Ended May 31, 2014 vs. 2013 Fluctuations Currency as Reported Fluctuations Currency as Reported



Revenues:

Software license fees and subscriptions $ (0.1 ) $

30.3 $ 30.2 0.0 % 5.8 % 5.8 % Product updates and support fees 3.1 21.6 24.7 0.2 1.5 1.7 Software revenues 3.0 51.9 54.9 0.2 2.6 2.8 Consulting services and other fees 3.3 (14.4 ) (11.1 ) 0.4 (1.9 ) (1.5 ) Total revenues $ 6.3 $ 37.5 $ 43.8 0.2 % 1.4 % 1.6 % Total operating expenses $ 3.6 $ 51.0 $ 54.6 0.1 % 2.3 % 2.4 % Change Due Change in Change Due Change in (in millions, except percentages) to Currency Constant Total Change to Currency Constant Total Change Year Ended May 31, 2013 vs. 2012 Fluctuations Currency as Reported Fluctuations Currency as Reported



Revenues:

Software license fees and subscriptions $ (5.8 ) $

18.6 $ 12.8 (1.2 )% 3.7 % 2.5 % Product updates and support fees (18.2 ) 175.0 156.8 (1.4 ) 13.6 12.2 Software revenues (24.0 ) 193.6 169.6 (1.3 ) 10.8 9.5 Consulting services and other fees (15.3 ) 23.0 7.7 (2.1 ) 3.1 1.0 Total revenues $ (39.3 )$ 216.6$ 177.3 (1.5 )% 8.5 % 7.0 % Total operating expenses $ (36.9 )$ (114.8 )$ (151.7 ) (1.5 )% (4.8 )% (6.3 )%



Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our audited Consolidated Financial Statements, which have been prepared in conformity with accounting principles generally accepted in the U.S. (GAAP) as set forth in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). GAAP requires us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. The accounting policies that reflect management's significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following areas: Revenue Recognition; Business Combinations; Restructuring; Valuation of Accounts Receivable; Valuation of Goodwill and Intangible Assets; Income Taxes and Valuation of Deferred Tax Assets; Contingencies-Litigation Reserves; and Equity-Based Compensation. 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. Our senior management has reviewed the below critical accounting policies and related disclosures with the Audit Committee of our Board of Directors. 29



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Revenue Recognition

Revenue is a key component of our results of operations and is a key metric used by management and investors to evaluate our performance. Revenue recognition for software businesses is very complex. We follow specific guidelines in determining the proper amount of revenue to be recorded. However, certain judgments affect the application of our revenue recognition policy. Revenue results are difficult to predict, and any shortfall in revenue or delay in recognizing revenue could cause our operating results to vary significantly from year to year. The significant judgments for revenue recognition typically involve whether collectability can be considered probable and whether fees are fixed or determinable. In addition, our transactions often consist of multiple-element arrangements, which typically include software license fees, maintenance and support fees and consulting service fees. The amounts of revenue reported in our Consolidated Statements of Operations may vary, due to the amount of judgment required to address significant assumptions, risks and uncertainties in applying the guidelines under GAAP. We generate revenues primarily by licensing software and SaaS subscriptions, providing software support and product updates, and providing consulting services to our customers. We record all revenues in accordance with the guidance provided by ASC 985-605, Software-Revenue Recognition, ASC 605, Revenue Recognition, as well as Technical Practice Aids issued from time to time by the American Institute of Certified Public Accountants. Revenue is recorded net of applicable taxes. Our specific revenue recognition policies are as follows:



Software license fees and subscriptions

Software license fees and subscriptions revenues are primarily from sales of perpetual software licenses granting customers use of our software products and access to software products through our SaaS subscription offerings. Software license fees are recognized when the following criteria are met: 1) there is persuasive evidence of an arrangement, 2) the software product has been delivered, 3) the fees are fixed or determinable, and 4) collectability is reasonably assured. SaaS subscription revenues are recognized over the contract term once the software is made available through our SaaS offerings. We do not generally offer rights of return or acceptance clauses. If a software license contains rights of return or customer acceptance criteria, recognition of the software license fee revenue is deferred until the earlier of customer acceptance or the expiration of the acceptance period or cancellation of the right of return. We record revenues from sales of third-party products on a "gross" basis pursuant to ASC 605-45 Revenue Recognition, Principal Agent Considerations when we 1) have obtained persuasive evidence of an arrangement, 2) have taken title to the products being sold and 3) have the risks and rewards of ownership such as retaining the risk for collection. If these criteria have not been met, revenue is recognized net of related direct costs. Revenue arrangements through our resellers that involve Infor contracting directly with an end user follow the same revenue recognition rules as our direct sales business. Revenue arrangements which involve Infor contracting directly with a reseller are generally recognized when the reseller purchases a product for resale to an identified end user provided that all other revenue recognition criteria have been met. We enter into multiple element arrangements for software and software related products and services, which may include software licenses, product updates and support and/or implementation and consulting services agreements. Revenue is allocated to undelivered elements based upon their fair value as determined by vendor-specific objective evidence (VSOE). VSOE of fair value for the elements in an arrangement reflects the price charged when the undelivered element is sold separately. We generally do not have VSOE of fair value for software license fees as software licenses are typically not sold separately from product updates and support. Since the fair value of a delivered element (license) has not been established, the residual method is used to record license revenue when VSOE of fair value of all undelivered elements is determinable. Under the residual method, the VSOE of fair value of an undelivered element (product updates and support and/or services) is deferred and the remaining portion of the fee is allocated to the delivered element (license) and is recognized as revenue in accordance with the provisions of ASC 985-605. In instances where VSOE of fair value of one or more of the undelivered elements is not established, license revenue is recognized ratably over the term of the arrangement once all other services have been delivered and one undelivered element remains. Certain software products are offered as term based license arrangements where the customer has the right to use the software for a specified period of time. Under these arrangements, license fees for multi-year term licenses can either be recognized up front when product updates and support obligations are charged separately and the product updates and support renewal rate and term are considered substantive, or are recognized ratably over the term of the underlying arrangement if the product updates and support renewal rate and term are not considered to be substantive. For customer arrangements that include software license fees, implementation and/or other consulting services, the portion of the fees related to software licenses is generally recognized when delivered, as the implementation and consulting services typically qualify for separate recognition. The significant factors considered in determining whether the elements constitute multiple units of accounting for revenue recognition purposes include: 1) the nature of the services and consideration of whether the services are essential to the functionality of the licensed product, 2) degree of risk related to delivering the services, 3) availability of comparable services from other vendors, 4) timing of payments and 5) impact of milestones or acceptance criteria on the recognition of the software license fee. The portion of the fees related to 30



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implementation and other consulting services is recognized as such services are performed. If there is a significant uncertainty about the project completion or receipt of payment for the services, revenues are deferred until the uncertainty is sufficiently resolved. If it is determined that the services are not separable from the arrangement for revenue recognition purposes, the license fees and services are recognized using contract accounting either on a percentage of completion basis, measured by the percentage of labor hours incurred to date to estimated total labor hours for each contract, or on a completed contract basis when dependable estimates are not available. Contract accounting is applied to any arrangements: 1) that include milestones or customer-specific acceptance criteria that may affect collection of the software license fees; 2) where services include significant modification or customization of the software; or 3) where the software license payment is tied to the performance of consulting services. We also enter into multiple element arrangements that may include a combination of our various software-related and non-software related products and services offerings including software licenses, SaaS subscriptions, product updates and support, consulting services, education and hosting services. Each element within a non-software multiple element arrangement is accounted for as a separate unit of accounting provided the following criteria are met: 1) the delivered item or items have value to the customer on a standalone basis, and 2) if the arrangement includes a general right to return relative to the delivered item, delivery or performance of the undelivered items is considered probable and substantially in our control. We consider a deliverable to have standalone value if the product or service is sold separately by Infor or another vendor or could be resold by the customer. In such arrangements, we first allocate the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and to the non-software elements. We then further allocate consideration within the software group to the respective elements within that group following the guidance in ASC 985-605 and our policies as described above. For the non-software group, revenue is then allocated to each element using a selling price hierarchy; VSOE if available, third-party evidence (TPE) if VSOE is not available, or best estimate of selling price (BESP) if neither VSOE nor TPE are available. To determine the selling price in non-software multiple-element arrangements, we establish VSOE of selling price, as described earlier, to the extent possible. We establish TPE by evaluating similar and interchangeable competitor products or service in standalone arrangements with similarly situated customers. If we are unable to determine the selling price because VSOE or TPE is unavailable, BESP is determined for the purposes of allocating the arrangement. The objective of BESP is to determine the price at which the vendor would transact if the deliverable were sold by the vendor regularly on a standalone basis. Infor determines BESP for its offerings by considering many factors, including, but not limited to, geographies, market conditions, competitive landscape, internal costs, gross margin objectives and pricing practices.



Product Updates and Support Fees

Product updates and support fees entitle the customer to receive, for an agreed upon period, unspecified product upgrades (when and if available), release updates, regulatory updates and patches, as well as support services including access to technical information and technical support staff. The term of product updates and support services is typically twelve months. The product updates and support fees are recorded as product updates and support fees revenue and recognized ratably over the term of the agreement. Revenues for maintenance and support that are bundled with license fees are deferred based on the VSOE of fair value of the bundled maintenance and support and recognized over the term of the agreement.



Consulting Services and Other Fees

We also provide software-related services, including systems implementation and integration services, consulting, training, custom modification and application managed services. Consulting services are usually separately priced and are generally not essential to the functionality of our software products. Consulting services are generally provided under time and materials contracts and revenues are recognized as the services are provided. However, when we enter into arrangements with a fixed-fee or a maximum-fee basis where services are not considered essential to the functionality of the software, revenue is recognized based upon a proportionate performance method. When we enter into arrangements where services are considered essential to the functionality of the software, revenue is recognized based upon a percentage of completion method. Under this method, revenue is recognized based upon labor hours incurred as a percentage of total estimated labor hours to complete the project. Provisions for estimated losses on incomplete contracts are made in the period in which such losses are determined. Revenues for consulting services that are bundled with license fees are deferred based on the VSOE of fair value of the bundled services and recognized when the services are performed. Consulting services and other fees also include education and hosting services. Hosted customers with perpetual licenses have the contractual right to take possession of the software at any time during the hosted period. The customer has the right to choose not to renew its hosting arrangement upon its expiration and can deploy the software internally or contract with another party unrelated to Infor to host the software. Customers can self-host and any penalties to do so are not significant. Accordingly, the portion of an arrangement allocated to the hosting element is recognized once the service begins and then ratably over the term of the hosting arrangement.



In accordance with the provisions set forth in ASC 605, we recognize amounts associated with reimbursements from customers for out-of-pocket expenses as revenue on a gross basis. Such amounts have been classified as consulting services and other fees.

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Deferred Revenues

Deferred revenues represent amounts billed or payments received from customers for software licenses, SaaS subscriptions, product updates and support and/or services in advance of recognizing revenue or performing services. We defer revenues for any undelivered elements, and recognize revenues when the product is delivered or over the period in which the service is performed, in accordance with its revenue recognition policy for such elements. Product updates and support is normally billed quarterly or annually in advance of performing the service. Deferred Expenses Commissions payable to our direct sales force and independent affiliates who resell our software products, as well as royalties payable to third-party software vendors, are recorded when a sale is completed or cash received, which coincides with the timing of revenue recognition in most cases. When revenue is recognized ratably over time, related commissions and royalties are deferred and amortized over the same period as the recognition of the revenue.



Collectability

We assess the probability of collection based upon several factors including 1) third-party credit agency information, 2) customer financial statements and/or 3) customer payment history. We typically do not provide for payment terms in excess of six months. Certain customer arrangements are recognized upon collection due to their specific collection history.



Business Combinations

We account for acquisitions in accordance with ASC 805, Business Combinations. ASC 805 requires recognition of the assets acquired and the liabilities assumed separately from goodwill, generally at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While best estimates and assumptions are used as a part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, adjustments are recorded to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in our results of operations. Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets, support obligations assumed, estimated restructuring liabilities, contingent consideration and pre-acquisition contingencies. Although we believe the assumptions and estimates made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain.



Examples of critical estimates in valuing certain of the intangible assets we have acquired include, but are not limited to:

future expected cash flows from software license fees and subscriptions,

product updates and support fees, consulting contracts, other customer

contracts and acquired developed technologies and patents;



expected costs to develop the in-process research and development into

commercially viable products and estimated cash flows from the projects

when completed; the acquired company's brand and competitive position, as well as



assumptions about the period of time the acquired brand will continue to

be used in the combined company's product portfolio; and discount rates.



Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.

In connection with the purchase price allocations for our acquisitions, we estimate the fair value of product updates and support, SaaS subscription and service contract obligations assumed. The acquired deferred revenue is recognized at fair value to the extent it represents a legal obligation assumed by Infor. We consider post-contract support (PCS) obligations/services in their entirety, SaaS subscription contracts and service contracts to be legal obligations of the acquired entity. PCS arrangements of acquired entities typically include unspecified product upgrades (when and if available), release updates, regulatory updates and patches, as well as support including access to technical information and technical support staff. SaaS subscription arrangements of acquired entities provide access to product functionality through a hosted environment and other services. We consider PCS and SaaS subscription arrangements to be separate elements when determining the legal obligations assumed from the acquired entity. We expect to fulfill each underlying obligation element of these arrangements. The estimated fair values of these PCS arrangements, SaaS subscription contracts and service contracts are determined utilizing a top-down approach. The top-down approach relies on market indicators of expected revenue for any obligation yet to be delivered with appropriate adjustments. Conceptually, we start with the amount we would expect to receive in a transaction, less the estimated selling effort, which has already been performed, including an estimated profit margin on that selling effort. 32



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The purchase agreements related to certain of our acquisitions may include provisions for the payment of additional cash consideration if certain future performance conditions are met. These contingent consideration arrangements are to be recognized at their acquisition date fair value and included as part of the purchase price at the acquisition date. The estimated fair value of these contingent consideration arrangements are classified as accrued liabilities or other long-term liabilities on our Consolidated Balance Sheets. As such, their fair value is remeasured each reporting period with any change in fair value being recognized in the applicable period's results of operations and included in acquisition-related and other costs in our Consolidated Statements of Operations. Measuring the fair value of contingent consideration at the acquisition date, and for all subsequent remeasurement periods, requires a careful examination of the facts and circumstances to determine the probable resolution of the contingency(ies). In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date and we reevaluate these items periodically with any adjustments to our preliminary estimates being recorded to goodwill provided that we are within the measurement period and we continue to collect information in order to determine their estimated values. Subsequent to the measurement period or our final determination of the uncertain tax positions estimated value or tax related valuation allowances, changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our Consolidated Statements of Operations and could have a material impact on our results of operations and financial position.



Restructuring

Costs to exit or restructure certain activities of an acquired company, or our internal operations, are accounted for as one-time termination and exit costs pursuant to ASC 420, Exit or Disposal Cost Obligations. If acquisition related, they are accounted for separately from the business combination. Liabilities for costs associated with an exit or disposal activity are measured at fair value on our Consolidated Balance Sheet and recognized in our Consolidated Statement of Operations in the period in which the liability is incurred. In the normal course of business, Infor may incur restructuring charges related to personnel which are accounted for in accordance with ASC 712, Compensation-Nonretirement Postemployment Benefits. These restructuring charges represent severance associated with redundant positions. When estimating the fair value of facility restructuring activities, assumptions are applied regarding estimated sub-lease payments to be received, which can differ materially from actual results. This may require revision of initial estimates which may materially affect our results of operations and financial position in the period the change in estimate occurs. We estimate the amounts of these costs based on our expectations at the time the charges are taken and we reevaluate the remaining accruals at each reporting date based on current facts and circumstances. If our estimates or expectations change because we are subjected to contractual obligations or negotiations we did not anticipate, we choose to further restructure our operations, or there are other costs or changes we did not foresee, we adjust the restructuring accruals in the period that our estimates change. Such changes are recorded as increases or decreases to the restructuring related charges in our results of operations.



Valuation of Accounts Receivable

We have established an allowance for estimated billing adjustments and an allowance for estimated amounts that will not be collected. We record provisions for billing adjustments as a reduction of revenue and provisions for doubtful accounts as a component of general and administrative expense in our Consolidated Statements of Operations. We review specific accounts, including significant accounts with balances past due over 90 days, for collectability based on circumstances known at the date of the financial statements. In judging the adequacy of the allowance for doubtful accounts, we consider multiple factors including historical bad debt experience, the general economic environment, the need for specific customer reserves and the aging of our receivables. To assess the need for specific customer reserves, we evaluate the probability of collection based upon several factors including: 1) third-party credit agency information, 2) customer financial statements and/or 3) customer payment history. A considerable amount of judgment is required in assessing these factors. If the factors used in determining the allowance do not reflect future events, then a change in the allowance for doubtful accounts would be necessary at the time of determination. Such a change may have a significant impact on our future results of operations. Accounts receivable are charged off against the allowance when we determine it is probable the receivable will not be recovered.



Valuation of Goodwill and Intangible Assets

Our goodwill and intangible assets resulted primarily from our acquisitions. We account for intangible assets and goodwill pursuant to ASC 350, Intangibles-Goodwill and Other. Whenever events or changes in circumstances indicate the carrying amount may not be recoverable we review these assets for impairment or disposal. Events or changes in circumstances that indicate the carrying amount of the assets may not be recoverable include, but are not limited to, a significant decrease in the market value of the business or asset acquired, a significant adverse change in the extent or manner in which the business or asset acquired is used or a significant adverse change in the business climate in which we operate. In order to perform these reviews we must first determine our reporting units in accordance with ASC 280, Segment Reporting. ASC 280 requires a public enterprise to report financial and descriptive information about its reportable operating segments, and thus its reporting units. We have determined that we operate as three reporting units: License, Maintenance and Consulting. We review goodwill for impairment annually and whenever events or changes in circumstances indicate its carrying value may not be recoverable in accordance with ASC 350, Intangibles-Goodwill and Other. We have adopted the FASB guidance that allows for an initial qualitative analysis to assess potential goodwill impairment prior to performing the two-step impairment test. Our annual testing for goodwill 33



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impairment begins with a qualitative comparison of a reporting unit's fair value to its carrying value to determine if it is more-likely-than-not (i.e. a likelihood of more than 50 percent) that the fair value is less than the carrying value and thus whether any further two-step impairment tests are necessary. If further two-step impairment testing is necessary, the first step is used to identify potential impairment and compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired and we are not required to perform further testing. If our carrying amount exceeds fair value, the second step of the goodwill impairment test would be performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test is used to measure the amount of impairment loss and compares the implied fair value of the goodwill with its carrying amount. If the carrying amount of the goodwill exceeds the implied fair value, an impairment loss would be recognized in an amount equal to the excess. Any loss recognized cannot exceed the carrying amount of goodwill. After a goodwill impairment loss is recognized, the adjusted carrying amount of goodwill is the new accounting basis. A subsequent reversal of a previously recognized goodwill impairment loss is prohibited once the measurement of that loss is completed and the loss has been recognized. The estimate of the total fair value of our reporting units requires the use of significant estimates and assumptions including projections of future cash flows and discount rates. The discount rate utilized is based on management's best estimate of the related risks and return at the time the impairment assessment is made. We perform our annual goodwill impairment test as of September 30. The results of our most recent annual tests performed in fiscal 2014, 2013 and 2012 did not indicate any potential impairment of our goodwill and we have no accumulated impairment charges related to our goodwill. The carrying amount of our intangible assets, other than acquired technology, are reviewed whenever circumstances arise that indicate the carrying amount of an asset may not be recoverable. The carrying amount of our acquired technology is reviewed for recoverability on at least an annual basis. The carrying value of our intangible assets is compared to the undiscounted future cash flows the assets are expected to generate. An asset is considered to be impaired if the carrying value of that asset exceeds its estimated fair value and this difference is recognized as an impairment loss. The estimated fair value of these intangible assets requires the use of significant estimates and assumptions including projections of future cash flows and remaining useful lives of the intangible assets. We have not recognized any losses from impairment of our intangible assets during fiscal 2014, 2013 and 2012.



Income Taxes and Valuation of Deferred Tax Assets

Our provision for income taxes consists of provisions for federal, state, and foreign income taxes. We operate in an international environment with significant operations in various locations outside of the U.S. Accordingly, our combined income tax rate is a composite rate reflecting our operating results in various locations and the applicable rates. Significant judgment is required in determining our worldwide income tax provision. In the ordinary course of a global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Our judgments, assumptions, and estimates relative to the provision for income taxes take into account current tax laws, our interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Although we believe that our estimates are reasonable, the final tax outcome of matters could be different from that which is reflected in our historical income tax provision and accruals. Such differences, if identified in future periods, could have a material effect on the amounts recorded in our consolidated financial statements. We utilize the asset and liability method of accounting for income taxes as set forth in ASC 740 Income Taxes. Under this method, we recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates that are applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized to the differences between the financial statements carrying amount and the tax bases of existing assets and liabilities. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in net loss (or net income) in the period in which the tax rate change is enacted. The statement also requires a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets may not be realized. Our worldwide net deferred tax assets consist primarily of net operating loss carryforwards, tax credit carryforwards, disallowed interest expense carryforwards and temporary differences between taxable income (loss) on our tax returns and income (loss) before income taxes under GAAP, primarily related to goodwill and intangible assets. A deferred tax asset generally represents future tax benefits to be received when these carryforwards can be applied against future taxable income or when expenses previously reported in our financial statements become deductible for income tax purposes. We maintain certain strategic management and operational activities in overseas subsidiaries and our foreign earnings are taxed at rates that are generally lower than in the U.S. As of May 31, 2014, we did not provide for U.S. federal income taxes or foreign withholding taxes on the undistributed earnings of our foreign subsidiaries as such earnings are expected to be reinvested indefinitely. A valuation allowance is recognized for a portion of our net deferred tax assets in the U.S. as well as certain foreign tax jurisdictions. This valuation allowance is based on our assessment of the realizability of these assets. The determination as to whether a deferred tax asset will be realized is made on a jurisdictional basis and is based on the evaluation of positive and negative evidence. This evidence includes historical taxable income, projected future taxable income, the expected timing of the reversal of existing temporary differences and the implementation of tax planning strategies. Projected future taxable income is based on our expected results and assumptions as to the jurisdiction in which the income will be earned. We expect to continue to provide a valuation allowance against these assets until, or unless, we can sustain a level of profitability in the respective tax jurisdictions that demonstrates our ability to utilize these assets. At that time, the valuation allowance could be reduced in part or in total. 34



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We are subject to the provisions of ASC 740-10, which defines the accounting for uncertainty in income taxes by prescribing thresholds and attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, and disclosure. The amount of income tax we pay is subject to ongoing audits by federal, state and foreign tax authorities, which may result in proposed assessments. Our estimate of the potential outcome for any uncertain tax issue is highly judgmental. Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given with respect to the final outcome of these matters. We adjust reserves for our uncertain tax positions due to changing facts and circumstances, such as the closing of a tax audit, judicial rulings and refinement of estimates or realization of earnings or deductions that differ from our estimates. To the extent that the final outcome of these matters is different than the amounts recorded, such differences generally will impact our provision for income taxes in the period in which such a determination is made. The provisions of ASC 740-10 contain a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We recognize interest and penalties related to uncertain tax positions in the provision for income taxes line of our Consolidated Statements of Operations. The Company is included in the GGC Software Parent, Inc. consolidated federal income tax return. The Company and its subsidiaries provide for income taxes under the separate return method, by which Infor, Inc. and its subsidiaries compute tax expense as though they file a separate company tax return.



Contingencies-Litigation Reserves

We may, from time to time, have unresolved regulatory, legal, tax or other matters. We provide for contingent liabilities in accordance with ASC 450, Contingencies. Pursuant to this guidance, a loss contingency is charged to income when it is probable that an asset has been impaired or a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Disclosure in the notes to the financial statements is required for loss contingencies that do not meet both conditions if there is a reasonable possibility that a loss may have been incurred. Gain contingencies are not recorded until realized. We expense all legal costs to resolve regulatory, legal, tax, or other matters in the period incurred. Periodically, at a minimum at each reporting date, we review the status of each significant matter to assess our potential financial exposure. If a potential loss is considered probable and the amount can be reasonably estimated as defined by the guidance related to accounting for contingencies, we reflect the estimated loss in our results of operations. Significant judgment is required to determine the probability that a liability has been incurred and whether such liability can be reasonably estimated. Because of uncertainties related to these matters, accruals are based on the best information available to us at that time. Further, estimates of this nature are highly subjective, and the final outcome of these matters could vary significantly from the amounts that have been included in the accompanying consolidated financial statements. As additional information becomes available, we reassess the potential liability related to any pending claims and litigation and may revise our estimates accordingly. Such revisions in the estimates of the potential liabilities could have a material impact on our future results of operations, financial position and cash flows. Litigation by its nature is uncertain and the determination of whether any particular case involves a probable loss and quantifying the amount of loss for purposes of establishing or adjusting applicable reserves requires us to exercise considerable judgment, which is applied as of a certain date. The required reserves may change in the future due to new matters, developments in existing matters or if we determine to change our strategy with respect to the resolution of any particular matter.



Equity-Based Compensation

We account for equity-based payments, including grants of employee stock options, restricted stock and other equity-based awards, in accordance with ASC 718, Compensation-Stock Compensation, which requires that equity-based payments (to the extent they are compensatory) be recognized in our results of operations based on their fair values and the estimated number of securities we ultimately expect will vest. We utilize the Option-Pricing Method to estimate the fair value of our equity awards. This approach models the various classes of equity securities as a series of call options on our total equity. The exercise prices of the call options are derived based on the distribution waterfall of the issuing entity. Assumptions utilized under the Option-Pricing Method include: (a) stock price, derived from the estimated fair value of our total equity, (b) time to expiration, derived from the expected time to a potential liquidity event, (c) risk-free interest rate, derived from the U.S. Treasury rate over the expected time to expiration, (d) expected dividend yield and (e) expected volatility of the total equity value. 35



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Circumstances may change and additional data may become available over time which could result in changes to these input assumptions and our estimates of the number of securities we expect will vest. Such changes could materially impact our fair value estimates and how much we recognize as equity-based compensation.

As more fully described in Note 16, Share Purchase and Option Plans, certain stock options, restricted stock and other equity-based awards outstanding under our Share Purchase and Option Plans are subject to vesting and repurchase features that function as in-substance forfeiture provisions. The repurchase features are removed only following the Company's election not to exercise such repurchase rights within a certain period of time following the termination of the recipient's employment. If the exercise of the Company's repurchase rights is not considered probable as of given reporting date, no compensation costs are recognized for securities subject to these repurchase features in that period.



Results of Operations

The following tables set forth certain line items in our Consolidated Statements of Operations as reported in conformity with GAAP, the period-over-period actual percentage change (Actual) and the period-over-period constant currency percentage change (Constant Currency), for the periods indicated: Year Ended May 31, Fiscal 2014 vs. 2013 Fiscal 2013 vs. 2012 Constant Constant (in millions, except percentages) 2014 2013 2012 Actual Currency Actual



Currency

Revenues:

Software license fees and subscriptions $ 548.3$ 518.1$ 505.3 5.8 % 5.8 % 2.5 % 3.7 % Product updates and support fees 1,465.9 1,441.2 1,284.4 1.7 1.5 12.2 13.6 Software revenues 2,014.2 1,959.3 1,789.7 2.8 2.6 9.5 10.8 Consulting services and other fees 747.6 758.7 751.0 (1.5 ) (1.9 ) 1.0 3.1 Total revenues 2,761.8 2,718.0 2,540.7 1.6 1.4 7.0 8.5 Operating expenses: Cost of software license fees and subscriptions 99.8 86.4 90.1 15.5 15.6 (4.1 ) (3.0 ) Cost of product updates and support fees 261.9 254.2 258.5 3.0 3.1 (1.7 )



0.1

Cost of consulting services and other fees 593.2 588.5 593.9 0.8 0.4 (0.9 ) 1.3 Sales and marketing 457.1 460.2 438.7 (0.7 ) (0.4 ) 4.9 6.7 Research and development 391.8 351.9 322.3 11.3 11.1 9.2 10.5 General and administrative 192.8 210.4 233.4 (8.4 ) (8.2 ) (9.9 ) (8.8 ) Amortization of intangible assets and depreciation 264.3 275.7 323.6 (4.1 ) (4.6 ) (14.8 ) (13.9 ) Restructuring costs 18.6 10.2 67.8 82.4 77.5 (85.0 ) (83.6 ) Acquisition-related and other costs 27.6 15.0 75.9 84.0 82.7 (80.2 ) (80.2 ) Total operating expenses 2,307.1 2,252.5 2,404.2 2.4 2.3 (6.3 ) (4.8 ) Income from operations 454.7 465.5 136.5 (2.3 ) (2.9 ) 241.0 242.8 Interest expense, net 378.0 418.1 467.4 (9.6 ) (9.6 ) (10.5 ) (10.5 ) Loss on extinguishment of debt 5.2 1.8 107.1 188.9 188.9 (98.3 ) (98.3 ) Other (income) expense, net (62.8 ) 99.2 (111.7 ) NM NM NM NM Income (loss) before income tax 134.3 (53.6 ) (326.3 ) NM NM (83.6 ) (85.4 ) Income tax provision (benefit) 12.6 22.6 (16.3 ) (44.2 ) (37.6 ) NM NM Net income (loss) $ 121.7$ (76.2 )$ (310.0 ) NM % NM % (75.4 )% (77.4 )%



* NM Percentage not meaningful

The discussion that follows relating to our results of operations for the comparable fiscal years ended May 31, 2014, 2013 and 2012, should be read in conjunction with the accompanying audited Consolidated Financial Statements and related notes and with the information presented in the above table. This analysis addresses the actual changes in our results of operations for the comparable fiscal years as presented in accordance with GAAP as well as changes excluding the impact of foreign currency fluctuations, as reflected in the constant currency percentages in the above table and the tables that follow. See the Foreign Currency discussion, above, for further explanation of the impact on our results of operations. 36



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Revenues Year Ended May 31, Fiscal 2014 vs. 2013 Fiscal 2013 vs. 2012 Constant Constant (in millions, except percentages) 2014 2013 2012 Actual Currency Actual



Currency

Revenues:

Software license fees and subscriptions $ 548.3$ 518.1$ 505.3

5.8 % 5.8 % 2.5 % 3.7 % Product updates and support fees 1,465.9 1,441.2 1,284.4 1.7 1.5 12.2 13.6 Software revenues 2,014.2 1,959.3 1,789.7 2.8 2.6 9.5 10.8 Consulting services and other fees 747.6 758.7 751.0 (1.5 ) (1.9 ) 1.0 3.1 Total revenues $ 2,761.8$ 2,718.0$ 2,540.7 1.6 % 1.4 % 7.0 % 8.5 % Total Revenues. We generate revenues from licensing our software, providing access to our software through SaaS subscriptions, providing product updates and support related to our licensed products and providing consulting services. We utilize written contracts as the means to establish the terms and conditions by which our products, product updates and support and consulting services are sold to our customers. As our product updates and support and consulting services are primarily attributable to our licensed products, growth in our product updates and support and consulting services is generally tied to the level of our license contracting activity. Total revenues increased by 1.4% in fiscal 2014 compared to fiscal 2013, excluding the favorable foreign currency impact of 0.2%. On a constant currency basis, the increase was due to growth in our software license fees and subscriptions, primarily our SaaS revenues, as well as growth in our product updates and support fees. These increases more than offset a decrease in the volume of our consulting services and other fees. Our fiscal 2014 results were positively impacted by our recent acquisitions. Total revenues increased by 8.5% in fiscal 2013 compared to fiscal 2012, excluding the unfavorable foreign currency impact of 1.5%. On a constant currency basis, the increase was due to growth in our software license fees and subscriptions primarily our SaaS subscription revenues, significant growth in our product updates and support fees and growth in the volume of our consulting services and other fees. Our fiscal 2013 results were positively impacted by our acquisitions, including the impact of Lawson, the results of which were included in our results for the full year in fiscal 2013 compared to approximately eleven months in fiscal 2012. Software License Fees and Subscriptions. Our software license fees and subscriptions primarily consist of fees resulting from products licensed to customers on a perpetual basis. Product license fees result from a customer's licensing of a given software product for the first time or with a customer's licensing of additional users for previously licensed products. Software license fees and subscriptions also include subscription revenues related to our SaaS offerings. Fiscal 2014 software license fees and subscriptions revenues increased by 5.8%, compared to fiscal 2013, excluding an insignificant favorable foreign currency rate impact of less than 0.1%. At constant currency, 5.2 points of the increase was due to higher volume of SaaS subscription revenues including the positive impact of our recent acquisitions. Our license fee revenues were also up slightly, accounting for an increase of less than 1.0 point. Fiscal 2013 software license fees and subscriptions revenues increased by 3.7% compared to fiscal 2012, excluding a 1.2% unfavorable foreign currency rate impact. At constant currency, the increase was primarily due to a 5.7 point increase related to increased SaaS subscription revenues which offset a 2.0 point decrease in license fees revenues as a result of a decrease in software licensing transactions in fiscal 2013 compared to fiscal 2012. We experienced a decrease in the volume of small and mid-size transactions, those under $250,000. These decreases were offset by an increase in the volume of large transactions, those greater than $250,000. In addition, strong fourth quarter license fees revenues related to our release of Infor 10X contributed to lessening the year-over-year decrease. Product Updates and Support Fees. Our product updates and support fees revenues 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. Product updates and support revenues can fluctuate based on the number and timing of new license contracts, renewal rates and price increases. Fiscal 2014 product updates and support fees increased by 1.5%, excluding the favorable foreign currency impact of 0.2%, compared to fiscal 2013. At constant currency, the increase was primarily the result of revenues related to new maintenance pull-through from new license transactions and price increases offsetting customer attrition. We continue to experience maintenance retention rates of over 93%. Product updates and support fees increased by 13.6%, excluding the unfavorable foreign currency impact of 1.4%, in fiscal 2013 compared to fiscal 2012. At constant currency, the increase was primarily the result of our acquisition of Lawson the results of which were included in our results for the full year in fiscal 2013 compared to approximately eleven months in fiscal 2012 which accounted for an increase of 2.9 points. In addition, the impact on our results of the purchase accounting revenue adjustments primarily related to Lawson product 37



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updates and support fees decreased in fiscal 2013 compared to the prior year accounting for an increase of 9.4 points. The remaining increase was attributable to increases in revenues related to new maintenance pull-through from new license sales and price increases offsetting customer attrition.



Consulting Services and Other Fees. Our consulting services and other fees revenues consist primarily of software-related services, including systems implementation and integration services, consulting, custom modification, hosting services, application managed services and education and training services for customers who have licensed our products. Consulting services and other fees revenues also includes revenues related to hardware systems products.

Consulting services and other fees decreased by 1.9%, excluding the favorable foreign currency impact of 0.4%, in fiscal 2014 compared to fiscal 2013. At constant currency, consulting services and other fees were down less than 1.0 point as a result of our focus on expanding our system integrator channel which impacted demand for our consulting services. Additionally, consulting services and other fees were down less than 1.0 point as a result of the timing of Inforum, our annual customer event. It was held in April of fiscal 2013, while we had no such event during fiscal 2014 as it is scheduled to be held in September 2014 of our fiscal 2015. Consulting services and other fees increased by 3.1%, excluding the unfavorable foreign currency impact of 2.1%, in fiscal 2013 compared to fiscal 2012. At constant currency, consulting services and other fees increased primarily as a result of our acquisition of Lawson the results of which were included in our results for the full year in fiscal 2013 compared to approximately eleven months in fiscal 2012. Deferred Revenue. Certain of our revenues are deferred when all conditions of revenue recognition have not been met. Deferred revenue represents revenue that is to be recognized in future periods when such conditions have been satisfied related to certain license agreements (including SaaS), maintenance contracts and certain consulting arrangements, as discussed above. We had total deferred revenues of $994.8 million at May 31, 2014, compared to $949.0 million at May 31, 2013.



The following table sets forth the components of deferred revenue:

May 31, (in millions) 2014 2013 Software license fees and subscriptions $ 51.1$ 40.0 Product updates and support fees 869.4 837.4 Consulting services and other fees 74.3 71.6 Total deferred revenue 994.8 949.0 Less: current portion 975.3 927.7 Deferred revenue-non-current $ 19.5$ 21.3 In general, changes in the balance of our deferred revenue are cyclical and primarily driven by the timing of our maintenance services renewal cycles. Our renewal dates primarily occur in the third and fourth quarters of our fiscal year with revenues being recognized ratably over the applicable service periods. We generate substantial recurring product update and support fees revenue from our customer support programs and other software maintenance services. Maintaining our current level of product update and support fees revenue is dependent upon our ability to enroll our customers in our maintenance programs and having our customer's renew their maintenance agreements, primarily on an annual basis. 38



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Operating Expenses Year Ended May 31, Fiscal 2014 vs. 2013 Fiscal 2013 vs. 2012 Constant Constant (in millions, except percentages) 2014 2013 2012 Actual Currency Actual Currency Operating expenses: Cost of software license fees and subscriptions $ 99.8$ 86.4$ 90.1 15.5 % 15.6 % (4.1 )% (3.0 )% Cost of product updates and support fees 261.9 254.2 258.5 3.0 3.1 (1.7 )



0.1

Cost of consulting services and other fees 593.2 588.5 593.9 0.8 0.4 (0.9 ) 1.3 Sales and marketing 457.1 460.2 438.7 (0.7 ) (0.4 ) 4.9 6.7 Research and development 391.8 351.9 322.3 11.3 11.1 9.2 10.5 General and administrative 192.8 210.4 233.4 (8.4 ) (8.2 ) (9.9 ) (8.8 ) Amortization of intangible assets and depreciation 264.3 275.7 323.6 (4.1 ) (4.6 ) (14.8 ) (13.9 ) Restructuring costs 18.6 10.2 67.8 82.4 77.5 (85.0 ) (83.6 ) Acquisition-related and other costs 27.6 15.0 75.9 84.0 82.7 (80.2 ) (80.2 ) Total operating expenses $ 2,307.1$ 2,252.5$ 2,404.2 2.4 % 2.3 % (6.3 )% (4.8 )% Cost of Software License Fees and Subscriptions. Cost of software license fees and subscriptions includes royalties to third-parties, channel partner commissions and other software delivery expenses. Our software solutions may include embedded components of third-party vendors for which a fee is paid to the vendor upon the sale of our products. In addition, we resell third-party products in conjunction with the license of our software solutions, which also results in a fee. We also resell our software solutions through our third-party channel relationships which require us to pay applicable commissions to our channel partners. The cost of software license fees and subscriptions is generally higher, as a percentage of revenues, when we resell products of third-party vendors. As a result, software license fees and subscriptions gross margins will vary depending on the proportion of third-party product sales in our revenue mix. In addition, cost of software license fees and subscriptions reflects costs related to our SaaS offerings.



Cost of license fees and subscriptions for fiscal 2014 increased by 15.6%, excluding the favorable foreign currency impact of 0.1%, compared to fiscal 2013. At constant currency, this increase was primarily due to a 12.9 point increase related to higher SaaS costs in-line with our higher subscriptions revenues in fiscal 2014. In addition, we had a 3.3 point increase related to higher channel partner commissions due to the mix of sales in the current year.

Cost of software license fees and subscriptions for fiscal 2013 decreased by 3.0%, excluding the favorable foreign currency impact of 1.1%, compared to fiscal 2012. At constant currency, this decrease was primarily due to lower third-party royalties which accounted for a decrease of 11.4 points. This decrease was somewhat offset by a 6.4 point increase related to higher SaaS costs in-line with our higher SaaS revenues in fiscal 2013 and a 1.2 point increase related to higher channel partner commissions.

Cost of Product Updates and Support Fees. Cost of product updates and support fees includes salaries, employee benefits, related travel, third-party maintenance costs associated with embedded and non-embedded third-party products, related channel partner commissions, and the overhead costs of providing our customers product updates and support.

For fiscal 2014, cost of product updates and support fees increased by 3.1%, excluding the favorable foreign currency impact of 0.1%, compared to fiscal 2013. At constant currency, higher channel partner commissions, primarily in our Americas and EMEA regions, and higher third-party royalties, primarily in our Americas region, accounted for an increase of 2.2 points. In addition, an increase of 1.4 points related to increased employee-related support costs due to higher headcount in our customer support organization in fiscal 2014 compared to last year. These increases were somewhat offset by a decrease in other support costs. Fiscal 2013 cost of product updates and support fees increased by 0.1%, excluding the favorable foreign currency impact of 1.8%, compared to fiscal 2012. At constant currency, product updates and support fees were relatively flat with an increase in our channel partner commissions and third-party royalties being mostly offset by a decrease in employee-related support costs and third-party support.



Cost of Consulting Services and Other Fees. Cost of consulting services and other fees includes salaries, employee benefits, third-party consulting costs, related travel, and the overhead costs of providing our customers systems implementation and integration services, consulting, custom modification, hosting services, application managed services and education and training services. Cost of consulting services and other fees also includes costs associated with our hardware business.

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For fiscal 2014, cost of consulting services and other fees increased by 0.4%, excluding the unfavorable foreign currency impact of 0.4%, compared to the fiscal 2013. At constant currency, the increase was primarily due to higher equity -based compensation costs.

For fiscal 2013, cost of consulting services and other fees increased by 1.3%, excluding the favorable foreign currency impact of 2.2%, compared to the corresponding prior period. At constant currency, cost of consulting services and other fees increased primarily as a result of a an increase in billable employee costs, in-line with increased consulting revenues in fiscal 2013 compared to fiscal 2012, which contributed a 1.0 point increase, as well as an increase in our hardware systems costs and costs related to our education and training services. These increases were somewhat offset by a decrease in our hosting services costs. Sales and Marketing. Sales and marketing expenses consist primarily of salaries, commissions, employee benefits, travel, trade show activities, advertising and branding costs and overhead costs related to our sales and marketing personnel. Sales and marketing expenses decreased by 0.4%, excluding the favorable foreign currency impact of 0.3%, in fiscal 2014 compared to fiscal 2013. On a constant currency basis, sales and marketing expenses decreased as a result of lower marketing program costs primarily due to the timing of Inforum, our annual customer event, which will be held in the second quarter of fiscal 2015 compared to the fourth quarter last year. In addition, our employee-related costs decreased primarily due to lower headcount in our marketing organization. The decrease in employee-related costs included a decrease in salaries and travel costs which were somewhat offset by an increase in equity-based compensation and commission costs. Sales and marketing expenses increased by 6.7%, excluding the favorable foreign currency impact of 1.8%, in fiscal 2013 compared to fiscal 2012. On a constant currency basis, sales and marketing expenses increased 6.2 points primarily as a result of increased employee-related sales costs due to an increase in headcount in our sales and marketing organizations in fiscal 2013 of approximately 107, or 5.3%, compared to the prior year as we invested in our sales organization to better focus on our targeted verticals. The increase in employee-related administrative costs includes an increase in travel costs and an increase in equity-based compensation. In addition, marketing costs related to trade shows accounted for an increase of 0.8 points. The inclusion of Lawson for the full year-to-date period of fiscal 2013 also contributed to the increase. These increases were somewhat offset by a decrease in certain sales incentive costs and professional services.



Research and Development. Research and development expenses consist primarily of personnel-related expenditures.

Research and development expenses increased by 11.1%, excluding the unfavorable foreign currency impact of 0.2%, in fiscal 2014 compared to fiscal 2013. On a constant currency basis, research and development expenses increased 9.3 points as a result of higher employee-related costs due to a net increase of 235, or 6.6%, in our developer headcount in the fiscal 2014 compared to last year. During fiscal 2014, we made significant investments in our development capacity as we continued to bring a number of new products to market. Research and development expense increased by 10.5%, excluding the favorable foreign currency impact of 1.3%, in fiscal 2013 compared to fiscal 2012. On a constant currency basis, research and development expenses increased 8.1 points primarily as a result of higher employee-related costs due to a net increase of 157, or 4.6%, in our developer headcount in fiscal 2013 as compared to the prior year as we made significant investments in our development capacity in fiscal 2013. The increase in employee-related research and development costs included an increase in equity-based compensation. In addition, professional fees increased year-over-year which accounted for an increase of 1.8 points. The inclusion of Lawson for the full year-to-date period of fiscal 2013 also contributed to the increase.



General and Administrative. General and administrative expenses consist primarily of personnel related expenditures for information technology, finance, legal and human resources support functions.

Fiscal 2014 general and administrative expenses decreased by 8.2%, excluding the favorable foreign currency impact of 0.2%, compared to fiscal 2013. On a constant currency basis, this decrease was primarily due to a 6.1 point decrease related to a change in estimate of the accrual we had recorded related to certain patent litigation matters (See Note 14, Commitments and Contingencies- Litigation). We also had a 1.9 point decrease related to lower professional fees including fees related to certain patent litigation matters. Fiscal 2013 general and administrative expenses decreased by 8.8%, excluding the favorable foreign currency impact of 1.1%, compared to fiscal 2012. On a constant currency basis, general and administrative expenses decreased 6.0 points due to a decrease in employee-related costs as a result of a net decrease of 144, or 8.8%, in our administrative functions' headcount in fiscal 2013 as compared to the prior year primarily due to our restructuring activities. The decrease in employee-related administrative costs included a decrease in equity-based compensation and a decrease in incentive compensation costs. Professional fees accounted for a year-over-year decrease of 2.1 points primarily due to lower legal costs related to certain patent litigation matters. In addition, we had a decrease in management fees paid to our equity sponsors as well as a decrease in other general and administrative expenses. These decreases were somewhat offset by the inclusion of Lawson for the full year-to-date period of fiscal 2013 as well as a 0.9 point increase related to certain patent litigation settlement costs. Amortization of Intangible Assets and Depreciation. Amortization of intangibles assets primarily relates to the on-going amortization of intangible assets acquired in acquisitions. Depreciation expense relates primarily to our computer equipment and purchased software, furniture and fixtures as well as amortization of leasehold improvements. 40



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Fiscal 2014 amortization of intangible assets and depreciation decreased by 4.6%, excluding the unfavorable impact of foreign currency of 0.5%, compared to fiscal 2013. The decrease resulted primarily from certain assets being fully amortized /depreciated in fiscal 2013 with no corresponding expense recorded in fiscal 2014. This decrease was somewhat offset by additional amortization expense related to intangible assets recorded as part of our recent acquisitions. Fiscal 2013 amortization of intangible assets and depreciation decreased by 13.9%, excluding the favorable impact of foreign currency of 0.9%, compared to fiscal 2012. This decrease resulted primarily from certain assets being fully amortized /depreciated in fiscal 2012 with no corresponding expense recorded in fiscal 2013. The decrease was somewhat offset by the increase in amortization of intangible assets related to our acquisitions and the inclusion of amortization related to Lawson for the full year of fiscal 2013. Restructuring. We have recorded restructuring charges related to our acquisitions and in the ordinary course of business to eliminate redundancies, improve our operational efficiency and reduce our operating costs. These cost reduction measures included workforce reductions relating to restructuring our workforce, the exiting of certain leased facilities and the consolidation of space in certain other facilities. These restructuring charges represent severance associated with redundant positions and costs related to redundant office locations. See Note 11, Restructuring Charges. In fiscal 2014, we incurred restructuring charges of $18.6 million compared to $10.2 in fiscal 2013 and $67.8 million in fiscal 2012. The fiscal 2014 restructuring charges were primarily for employee severance costs related to actions taken in our professional services and sales organizations in our EMEA region. The restructuring charges recorded in fiscal 2013 were primarily for employee severance costs related to actions taken in connection with the combination of certain of our operations including GGC Holdings and Infor Global Solutions. Fiscal 2012 restructuring charges were primarily for employee severance costs related to our Lawson acquisition. Our management approved, committed to and initiated these actions in order to eliminate redundancies and better align our cost structure. Acquisition-Related and Other Costs. Acquisition-related and other costs include transaction costs related to our acquisitions, primarily professional services fees, and integration costs, primarily employee-related costs of transitional and certain other employees. Acquisition-related and other costs also include certain costs incurred in financing our acquisitions, reorganizing our operations and other debt financing activities. Fiscal 2014 acquisition-related and other costs of $27.6 million increased by approximately $12.6 million compared to $15.0 million in fiscal 2013. For fiscal 2014, acquisition-related and other costs related primarily to our refinancing activities during the year as well as costs incurred related to our acquisition of PeopleAnswers. Fiscal 2013 acquisition-related and other costs of $15.0 million decreased by approximately $60.9 million compared to $75.9 million in fiscal 2012. For fiscal 2013, acquisition-related and other costs included costs related primarily to our refinancing activities, integration costs related to the combination of our operating entities, as well as costs related to our acquisitions during the year. Fiscal 2012 costs related to our acquisition of Lawson, the integration of Lawson's operations into Infor, cost incurred for related financing activities, as well as costs incurred related to the combination of Infor's operating entities.



Non-Operating Income and Expenses

Year Ended May 31, Fiscal 2014 vs. 2013 Fiscal 2013 vs. 2012 Constant Constant



(in millions, except percentages) 2014 2013 2012

Actual Currency Actual Currency Interest expense, net $ 378.0$ 418.1$ 467.4 (9.6 )% (9.6 )% (10.5 )% (10.5 )% Loss on extinguishment of debt 5.2 1.8 107.1 188.9 188.9 (98.3 ) (98.3 ) Other (income) expense, net (62.8 ) 99.2 (111.7 ) NM NM NM NM



Total non-operating expenses $ 320.4$ 519.1$ 462.8

(38.3 )% (37.5 )% 12.2 % 11.4 %



* NM Percentage not meaningful

Interest Expense, Net. Interest expense, net consists of the interest expense related to our debt less the interest income on cash and marketable securities.

Interest expense, net decreased by $40.1 million, or 9.6% to $378.0 million in fiscal 2014, compared to $418.1 million in fiscal 2013. The decrease in interest expense was primarily due to the refinancing of our Tranche B Term Loan in the second quarter of fiscal 2013, our Tranche B-1 Term Loan and our Euro Term Loan in the first quarter of fiscal 2014, and most recently, the refinancing of our Tranche B-2 Term Loan in the third quarter of fiscal 2014, at favorable interest rates. See Liquidity and Capital Resources - Long-Term Debt, below. As a result of these refinancing transactions our interest expense decreased by approximately $42.2 million year-over-year. This decrease was somewhat offset by an increase in amortization of deferred financing fees and an increase in amortization of debt discounts in fiscal 2014 compared to fiscal 2013. 41



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Fiscal 2013 interest expense, net decreased by $49.3 million, or 10.5%, to $418.1 million compared to $467.4 million in fiscal 2012. The decrease in interest expense was primarily due to a decrease in outstanding debt balances as a result of the recapitalization of our debt structure in the fourth quarter of fiscal 2012 and the refinancing of our Tranche B Term Loan at favorable interest rates in the second quarter of fiscal 2013. As a result of these refinancing transactions, interest expense decreased by approximately $11.0 million due to lower interest rates and $20.1 million due to lower amortization of deferred financing fees and debt discounts. In addition, we had a $17.6 million decrease in interest expense related to affiliate loans as the outstanding balance on these loans was contributed as equity as part of the recapitalization of our debt structure in fiscal 2012. Loss on Extinguishment of Debt. The $5.2 million loss on extinguishment of debt recorded in fiscal 2014 related to the refinancing of certain portions of our long-term debt. This amount represent the net book value of deferred financing fees written off and other costs incurred in connection with our refinancing transactions during the first and third quarters of fiscal 2014 for those lenders treated as an extinguishment rather than a modification of the related debt. See Note 12, Debt. The $1.8 million loss on extinguishment of debt recorded in fiscal 2013 represented the net book value of deferred financing fees written off in second quarter of fiscal 2013 and other costs incurred in connection with our refinancing transactions during the second quarter for those lenders treated as an extinguishment rather than a modification of debt.



The $107.1 million loss on extinguishment of debt recorded in fiscal 2012 related primarily to the net book value of deferred financing fees and the remaining debt discounts written off in connection with our debt transactions during the year.

Other (Income) Expense, Net. Other (income) expense, net consists of the effects of foreign currency fluctuations, gain/loss on the sale of fixed assets, and other costs. For fiscal 2014, other (income) expense, net was net income of $62.8 million compared to net expense of $99.2 million in fiscal 2013. The change in other (income) expense, net was primarily due to fluctuations in foreign currency exchange rates primarily related to the British Pound and the Euro.



For fiscal 2013, other (income) expense, net changed by $210.9 million to an expense of $99.2 million compared to net income of $111.7 million in fiscal 2012. The change in other (income) expense, net was primarily due to fluctuations in foreign currency exchange rates primarily related to the Euro.

Income Tax Provision (Benefit)

Year Ended May 31, Fiscal 2014 vs. 2013 Fiscal 2013 vs. 2012 Constant Constant



(in millions, except percentages) 2014 2013 2012

Actual Currency Actual Currency



Income tax provision (benefit) $ 12.6$ 22.6$ (16.3 )

(44.2 )% (37.6 )% NM NM Effective income tax rate 9.4 % (42.2 )% 5.0 %



* NM Percentage not meaningful

The effective tax rate for the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. Our effective tax rate may fluctuate as a result of changes in the forecasted annual income level and geographical mix of our operating earnings as well as a result of acquisitions, changes in liabilities recorded for unrecognized tax benefits, changes in the valuation allowances for deferred tax assets, tax settlements with U.S. and foreign tax authorities, and the impact from changes in enacted tax laws. Our provision for income taxes differs from the tax computed at the U.S. federal statutory rate primarily due to certain earnings considered as indefinitely reinvested in foreign operations, states taxes, and foreign earnings taxed at lower income tax rates than in the U.S. For fiscal 2014, we recorded income tax expense of $12.6 million, resulting in an effective tax rate of 9.4%. The change in our effective tax rate for fiscal 2014 compared to fiscal 2013 was driven by an increase in foreign earnings subject to lower tax rates, the elimination of the requirement to provide additional valuation allowance for IRC Section 163(j) interest disallowance, the release of foreign related valuation allowances due to the increase in foreign earnings and various foreign entity restructurings, the elimination of the need to provide for a valuation allowance for certain foreign earnings, and a reduction in the amount of unrecognized tax benefits due to the lapse of statutes for various exposures. 42



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For fiscal 2013, we recorded an income tax expense of $22.6 million, resulting in an effective tax rate of (42.2)%. The change in the effective tax rate for fiscal 2013, compared to the prior year, was primarily due to the change in earnings levels as a result of our acquisition of Lawson, a shift in the jurisdictional mix of operating income in the respective periods, the release of the valuation allowance for various foreign deferred tax assets, foreign subsidiary net operating losses not providing benefits, Subpart F inclusions, the establishment of a valuation allowance for nondeductible interest under IRC Section 163(j), the change in recorded liabilities for unrecognized tax benefits related to uncertain tax positions in various jurisdictions, the change in reorganizational costs, changes in various withholding tax, and tax law changes in Australia, Sweden, Japan and the United Kingdom.



For fiscal 2012, we recorded an income tax benefit of $16.3 million, resulting in an effective tax rate of 5.0%.

Following the Infor Combination transaction that occurred on April 5, 2012, we evaluated various tax structuring alternatives to rationalize various legal entities and reduce our overall global tax liability. During fiscal 2013, we completed several organizational restructuring actions resulting in the discrete release of the valuation allowance for various foreign deferred tax assets in the amount of $24.4 million. During fiscal 2014, we continued to execute multiple legal entity organizational restructuring actions to streamline and simplify business operations, lower back office costs, and provide access to various foreign deferred tax assets. As a result of such actions, various foreign valuation allowances were able to be eliminated during fiscal year 2014. Infor is included in the GGC Software Parent, Inc. consolidated federal income tax return. The Company and its subsidiaries provided for income taxes under the separate return method, by which Infor, Inc. and its subsidiaries compute tax expense as though they file a separate tax return. GGC Software Parent, Inc. entered into a tax allocation agreement (Tax Allocation Agreement) with the Company that is effective as of April 5, 2012. The Tax Allocation Agreement sets forth the obligation of the Company and its 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 fiscal 2014 and fiscal 2013, we made cash payments of $11.5 million and $9.5 million, respectively, to GGC Software Parent, Inc. under the terms of the Tax Allocation Agreement.



Non-GAAP Financial Measures

Our results of operations in this Management's Discussion and Analysis are presented in accordance with GAAP. In addition to reporting our financial results in accordance with GAAP, we present our non-GAAP revenues as well. We believe our presentation of non-GAAP revenues provides meaningful insight into our operating performance and an alternative perspective of our results of operations. We use these non-GAAP measures to assess our operating performance, to develop budgets, and to serve as a measurement for incentive compensation awards. Presentation of these non-GAAP measures allows users to review our results of operations from the same perspective as management and our Board of Directors. These non-GAAP financial measures provide users an enhanced understanding of our operations, facilitate analysis and comparisons of our current and past results of operations, facilitate comparisons of our operating results with those of our competitors and provide insight into the prospects of our future performance. We also believe that the non-GAAP measures are useful to users because they provide supplemental information that research analysts frequently use to analyze software companies including those that have recently made significant acquisitions. Additionally, certain non-GAAP disclosures are required by our lenders in our reporting to them. The method we use to produce non-GAAP results is not in accordance with GAAP and may differ from the methods used by other companies. These non-GAAP results should not be regarded as a substitute for corresponding GAAP measures but instead should be utilized as a supplemental measure of operating performance in evaluating our business. Non-GAAP measures do have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results. As such, these non-GAAP measures should be viewed in conjunction with both our financial statements prepared in accordance with GAAP and the reconciliation of the supplemental non-GAAP financial measures to the comparable GAAP results provided for each period presented below. 43



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Non-GAAP Revenues Year Ended May 31, Fiscal 2014 vs. 2013 Fiscal 2013 vs. 2012 Constant Constant (in millions, except percentages) 2014 2013 2012 Actual Currency Actual Currency GAAP revenues $ 2,761.8$ 2,718.0$ 2,540.7 1.6 % 1.4 % 7.0 % 8.5 % Non-GAAP revenue adjustments: Purchase accounting impact on software license fees and subscriptions 5.1 13.5



25.5

Purchase accounting impact on product updates and support fees 1.2 1.5



122.6

Purchase accounting impact on consulting services and other fees 1.9 4.8 6.8 Total non-GAAP revenue adjustments 8.2 19.8 154.9 Non-GAAP revenues $ 2,770.0$ 2,737.8$ 2,695.6 1.2 % 0.9 % 1.6 % 3.0 % The non-GAAP adjustments we make to our reported GAAP revenues are primarily related to purchase accounting and other acquisition matters. These amounts reflect pro forma adjustments to increase software license fees and subscriptions, product updates and support fees, and consulting services and other fees that we would have recognized if we had not adjusted acquired deferred revenues to their fair values as required by GAAP. Certain deferred revenue for software license fees and subscriptions, product updates and support fees, and consulting services and other fees on the acquired entity's balance sheet, at the time of the acquisition, were eliminated from our GAAP results as part of the purchase accounting for the acquisition as they do not reflect the fair value of performance obligations to us. As a result, our GAAP results do not, in management's view, reflect all of our software license fees and subscriptions, product updates and support fees, and consulting services and other fees. We believe the inclusion of the pro forma revenue adjustment provides users a helpful alternative view of our operations.



Liquidity and Capital Resources

Cash Flows Year Ended May 31, Fiscal 2014 Fiscal 2013 (in millions, except percentages) 2014 2013 2012 vs. 2013 vs. 2012 Cash provided by (used in): Operating activities $ 414.6$ 282.4$ 158.2 46.8 % 78.5 % Investing activities (251.7 ) (139.8 ) (1,533.2 ) 80.0 (90.9 ) Financing activities (15.7 ) (106.6 ) 1,444.2 (85.3 ) NM Effect of exchange rate changes on cash and cash equivalents 6.2 1.5 (21.8 ) 313.3 NM



Net change in cash and cash equivalents $ 153.4$ 37.5

$ 47.4 309.1 % (20.9 )%



* NM Percentage not meaningful

Capital Resources May 31, Fiscal 2014 Fiscal 2013 (in millions, except percentages) 2014 2013 2012 vs. 2013 vs. 2012 Working capital deficit $ (305.9 )$ (432.1 )$ (526.0 ) (29.2 )% (17.9 )% Cash and cash equivalents $ 575.3$ 421.9$ 384.4 36.4 % 9.8 % Our most significant source of operating cash flows is cash collections from our customers following the purchase and renewal of their subscriptions for licensed software updates (maintenance) and product support agreements. Payments from customers for these maintenance and support agreements are generally received near the beginning of the contracts' terms, which are generally one year in length. We also generate significant cash from new software license sales and, to a lesser extent, consulting and other services. Our primary uses of cash for 44



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operating activities are for personnel-related expenditures. We also make cash payments related to interest payments, taxes and leased facilities. During fiscal 2014 we also had significant investing and financing activities related to our acquisitions, primarily of PeopleAnswers, and the refinancing of portions of our debt. We are highly leveraged and our liquidity requirements are significant, primarily due to our debt service requirements. As part of our business strategy, we may use cash to acquire additional companies or products from time-to-time to enhance our product lines, which could have a material effect on our capital resources. In fiscal 2014, we completed two acquisitions for a purchase price of approximately $202.0 million. In fiscal 2013, we completed five acquisitions for an aggregate purchase price of $119.7 million, net of cash acquired. In fiscal 2012, we completed five acquisitions for an aggregate purchase price of $1,511.5 million, net of cash acquired. See Note 3, Acquisitions. As of each of our reported balance sheet dates, we have reported a deficit in working capital. This deficit in working capital represents an excess of our current liabilities over our current assets and is primarily the result of the significant balance of deferred revenue, reported as a current liability, at each balance sheet date. Our deferred revenues represent the excess of our collections from, or our billings due from our customers, for which the related revenues have not yet met all the criteria necessary to be recognized as earned in our Consolidated Statements of Operations. See Critical Accounting Policies and Estimates-Revenue Recognition above for a further description of those criteria. We believe that cash flows from operations, together with our cash and cash equivalents and borrowing capacity under our revolving credit facility, will be sufficient to meet our cash requirements for working capital, capital expenditures, restructuring activities, and investments for fiscal 2015 and for the foreseeable future. At some point in the future we may require additional funds for either operating or strategic purposes and may seek to raise the additional funds through public or private debt or equity financing. If we ever need to seek additional financing, there is no assurance that this additional financing will be available, or if available, will be on reasonable terms. If our liquidity and capital resources are insufficient to meet our requirements or fund our debt service obligations, we could face substantial liquidity problems and may not be able to generate sufficient cash to service all our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.



Cash Flows from Operating Activities

Net cash provided by operating activities for fiscal 2014 was $414.6 million. Our net income plus non-cash items provided $380.4 million in cash due to strong cash flows from operations, and changes in operating assets and liabilities provided cash of $34.2 million. The operating assets and liabilities sources of cash related to a $28.9 million increase in deferred revenue, primarily due to increased deferred SaaS revenue as well as increased deferred maintenance, and a $19.9 million increase in accounts payable, accrued expenses and other liabilities, primarily due to an increase in accrued interest. The sources of cash were partially offset by a $29.5 million change in income tax receivable/payable. Net cash provided by operating activities for fiscal 2013 was $282.4 million. Our net loss plus non-cash items provided $313.7 million in cash due to strong cash flows from operations while changes in operating assets and liabilities used cash of $31.3 million. The uses of cash were primarily from a $97.1 million decrease in accounts payable, accrued expenses and other liabilities, predominantly related to a decrease in accrued interest and a reduction in accrued incentive compensation, and a $19.4 million increase in prepaid expenses and other assets. These uses of cash were somewhat offset by a $58.0 million increase in deferred revenue, primarily due to the timing of maintenance renewals, $13.7 million related to our income tax receivable/payable and a $13.5 million decrease in accounts receivable, net. Net cash provided by operating activities for fiscal 2012 was $158.2 million. Changes in operating assets and liabilities provided cash of $113.0 million, primarily from a $119.8 million increase in deferred revenue, primarily due to the timing of maintenance renewals. Accounts payable, accrued expenses and other liabilities increased $41.5 million, predominantly related to an increase in accrued incentive compensation. These sources of cash were partially offset by a $33.5 million change in income tax receivable/payable, a $12.4 million increase in accounts receivable, net and a $2.4 million increase in prepaids and other assets. Overall non-cash items plus net loss from operations, provided $45.2 million in cash. The net loss from operations was the most substantial offset to the sources of cash, which included significant cash payments for transaction related expenses and severance for terminated employees related to the Lawson acquisition.



Cash Flows from Investing Activities

Net cash used in investing activities was $251.7 million in fiscal 2014. The primary uses of cash were $199.7 million net cash used for our acquisitions, $32.5 million used to purchase property, equipment and software and a $19.5 million increase in restricted cash. Net cash used in investing activities was $139.8 million in fiscal 2013. The primary uses of cash were $106.0 million net cash used for our acquisitions and $36.0 million used to purchase other property, equipment and software. Net cash used in investing activities was $1,533.2 million in fiscal 2012. The primary use of cash was the $1,511.5 million net cash used for our acquisitions, primarily Lawson, and the acquisition of other property, equipment and software of $21.5 million. 45



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Cash Flows from Financing Activities

Net cash used in financing activities was $15.7 million in fiscal 2014. The primary uses of cash were $3,457.5 million in debt repayments and $37.5 million that we capitalized as deferred financing fees relating to our refinancing transactions during the year. These uses of cash were mostly offset by $3,487.7 million from the issuance of debt related to our recent refinancing transactions. Net cash used in financing activities was $106.6 million in fiscal 2013. The primary uses of cash were $2,847.2 million in debt repayments, $27.6 million that we capitalized as deferred financing fees relating to the refinancing of our Tranche B Term Loan and $8.7 million related to stockholder loans. These uses of cash were mostly offset by $2,778.9 million proceeds from the issuance of debt related to our second quarter debt refinancing. Net cash provided by financing activities was $1,444.2 million in fiscal 2012. During the year we purchased Lawson, refinanced the Infor Global Solutions First Lien Term Loan and recapitalized our debt structure. Proceeds from the issuance of debt related to these actions totaled $6,916.9 million and related payments on long-term debt totaled $6,084.1 million. In addition, we capitalized a total of $192.7 million in deferred financing fees in conjunction with these actions. We received additional cash of $807.5 million from equity transactions.



Effect of Exchange Rate Changes

In fiscal 2014, changes in foreign currency exchange rates resulted in a $6.2 million increase in our cash and cash equivalents. Foreign currency exchange rate changes increased our cash and cash equivalents by $1.5 million in fiscal 2013 and decreased our cash and cash equivalents by $21.8 million in fiscal 2012.

Working Capital Deficit

Our working capital deficit, defined as current assets less current liabilities, was $305.9 million at May 31, 2014, compared to $432.1 million at May 31, 2013. At May 31, 2014, our cash increased by $153.4 million compared to the balance at May 31, 2013. Generally, increases in current assets are considered to be uses of cash and increases in current liabilities are considered to be sources of cash. During fiscal 2014, the most significant changes in our current assets, other than cash, included an increase of $14.9 million in other current assets primarily due to an increase in our restricted cash. During fiscal 2014 the most significant changes in our current liabilities included a $59.5 million decrease in our current portion of long-term debt related to our recent refinancing transactions, an increase in our deferred revenue of $47.6 million, primarily due to increased deferred SaaS revenues as well as an increase in deferred maintenance, and an increase in accrued expenses of $39.9, primarily due to an increase in accrued interest as a result of an early interest payment made at the end of fiscal 2013 in relation to our debt refinancing, as well as an increase in deferred rent.



Cash and Cash Equivalents

As of May 31, 2014, we had $575.3 million in cash and cash equivalents including amounts in operating accounts, money market investments and other short-term, highly liquid investments with initial maturities of three months or less. As of May 31, 2014, $227.4 million of our unrestricted cash and cash equivalents were held in the U.S. The remaining $347.9 million of our unrestricted cash and cash equivalents were held in foreign countries. Under current tax laws and regulations, if cash and cash equivalents and short-term investments held outside the U.S. are distributed to the U.S. in the form of dividends or otherwise, we may be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. It is not practicable to estimate the amount of these potential additional taxes due to the complexities of the tax laws in various jurisdictions, the number of jurisdictions in which we operate, the complexity of our legal entity structure, and the hypothetical nature of the calculations. In addition, our cash and cash equivalents include amounts held by our Venezuelan subsidiary of $0.4 million and $2.4 million at May 31, 2014 and 2013, respectively. While we plan to use these funds to expand our operations in Venezuela, these amounts are subject to the governmental restrictions and currency exchange controls in Venezuela which may limit the total amount of cash and cash equivalents that we may be able to repatriate at any given time in the future. See Note 2, Summary of Significant Accounting Policies-Highly Inflationary Accounting-Venezuela. The Venezuelan government has established official exchange rates for the Venezuelan Bolivar (BsF) and from time-to-time has devalued its currency, most recently in January and March of 2014. As a result of these devaluations, we recorded foreign currency transaction losses related to the remeasurement of the assets and liabilities of our Venezuelan operations denominated in BsF of $2.2 million in fiscal 2014 and a $2.3 million reduction in the cash and cash equivalents held by our Venezuelan subsidiary as of May 31, 2014. 46



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Long-Term Debt

The following table summarizes our long-term debt balances for the periods indicated: May 31, 2014 May 31, 2013 (in millions) Amount Effective Rate Amount Effective Rate First lien Term B-1 due October 5, 2016 $ - - $ 340.0 5.750 % First lien Term B-2 due April 5, 2018 - - 2,779.1 5.250 % First lien Term B-3 due June 3, 2020 477.4 3.750 % - - First lien Term B-5 due June 3, 2020 2,543.6 3.750 % - - First lien Euro Term due April 5, 2018 - - 321.7 6.750 % First lien Euro Term B due June 3, 2020 472.0 4.000 % - - 9.375% senior notes due April 1, 2019 1,015.0 9.375 % 1,015.0 9.375 % 10.0% senior notes due April 1, 2019 340.7 10.000 % 324.9 10.000 % 11.5% senior notes due July 15, 2018 560.0 11.500 % 560.0 11.500 % Debt discounts (37.4 ) (16.6 ) Total long-term debt 5,371.3 5,324.1 Less: current portion (31.7 ) (91.2 ) Total long-term debt-non-current $ 5,339.6



$ 5,232.9

As of May 31, 2014, we were in compliance with all applicable financial covenants included in the terms of our credit facilities and the indentures that govern our senior notes.

Recapitalization of Debt Structure

On April 5, 2012, we completed the Infor Combination. As part of these transactions, investment funds affiliated with Golden Gate Capital and Summit Partners invested $550.0 million in Infor Enterprise, of which $325.0 million was contributed as equity to Infor, Inc., and $225.0 million was used to repay a portion of the Lux PIK Term Loan (discussed below). Additionally, $344.0 million that we owed to Lux Bond Co, our parent, was forgiven and contributed as capital. In addition, we successfully refinanced our debt structure by entering into a new credit agreement, which consists of a new secured term loan facility and a new secured revolving credit facility, and issuing new senior notes. Proceeds from the borrowings under our new credit facilities, issuance of the notes and the additional equity investments were used to repay the outstanding balances related to our prior credit facilities and to pay related fees and expenses. Credit Facilities On April 5, 2012, we entered into a secured credit agreement with certain banks which consists of a secured term loan facility and a secured revolving credit facility (the Credit Agreement) which was subsequently amended pursuant to refinancing amendments described below. Under the secured term loan facility (the Term Loan Facility), we borrowed initial term loans having aggregate principal amounts of $2,770.0 million (the Tranche B Term Loan), $400.0 million (the Tranche B-1 Term Loan) and 250.0 million (the Euro Term Loan) on April 5, 2012. Interest on the term loans borrowed under the secured term loan facility (the Term Loans) is payable quarterly, in arrears. Quarterly principal payment amounts are set for each of the Term Loans with balloon payments at the applicable maturity dates. The Term Loans are subject to mandatory prepayments in the case of certain situations. The secured revolving credit facility (the Revolver) has a maximum availability of $150.0 million. As of May 31, 2014, we have made no draws against the Revolver and no amounts are currently outstanding. However, $9.9 million of outstanding (undrawn) letters of credit have reduced the amount available under the Revolver to $140.1 million. Pursuant to the Credit Agreement there is an undrawn line fee of 0.50% per annum (subject to a step-down to 0.375% if our total leverage ratio is below a certain threshold) and the Revolver matures on March 31, 2017. Amounts under the Revolver may be borrowed (and reborrowed) to finance working capital needs and for general corporate purposes. At our election, the annual interest rate applicable to the term loans and revolver borrowings under the Credit Agreement are based on a fluctuating rate of interest determined by reference to either (a) Adjusted LIBOR (as defined below) plus an applicable margin or (b) Adjusted Base Rate (ABR-as defined below) plus an applicable margin. For purposes of the Credit Agreement, as of May 31, 2014:



Adjusted LIBOR is defined as the London interbank offered rate for the

applicable currency, adjusted for statutory reserve requirements;

provided, the Adjusted LIBOR for the Tranche B-3 Term Loan, Tranche B-5

Term Loan and the Euro Tranche B Term Loan will at no time be less than 1.00% per annum. 47



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ABR is defined as the highest of (i) the administrative agent's prime

rate, (ii) the federal funds effective rate plus 1/2 of 1.0% and

(iii) one-month Adjusted LIBOR plus 1.0% per annum, provided that ABR for

the Tranche B-3 and B-5 Term Loans will at no time be less than 2.00% per

annum.

The credit facilities are guaranteed by Infor, Inc. and certain of our wholly owned domestic subsidiaries, and are secured by liens on substantially all of the borrower's assets and the assets of the guarantors. Prior to the Second Amendment described below, under the Credit Agreement we were required to maintain a total leverage ratio not to exceed certain levels as of the last day of each fiscal quarter. However, pursuant to the Second Amendment, this financial maintenance covenant is applicable only for the Revolver and then only for those fiscal quarters in which we have significant borrowings under the Revolver as of the last day of such fiscal quarter. We are subject to certain other customary affirmative and negative covenants as well.



Refinancing Amendments

On April 22, 2014, we entered into the Sixth Amendment to the Credit Agreement (as amended) to reflect the change in our fiscal year end from May 31 to April 30 effective June 1, 2014. No other changes were made to the terms of Credit Agreement or the related credit facilities.

On January 31, 2014, we entered into the Fifth Amendment to the Credit Agreement (as amended). The Fifth Amendment provides for the reduction of the interest rate margins applicable to borrowings made under our Revolver. 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. No other changes were made to the terms of the Revolver. On January 2, 2014, we entered into the Fourth Amendment to the Credit Agreement (as amended). The Fourth Amendment provided for the refinancing of all of the outstanding balance of our Tranche B-2 Term Loan with the proceeds of a new $2,550.0 million term loan (the Tranche B-5 Term Loan). Interest on the Tranche B-5 Term Loan is based on a fluctuating rate of interest determined by reference to either, at our option, an Adjusted LIBOR rate, plus a margin of 2.75% per annum, with a LIBOR floor of 1.0%, or an alternate base rate, plus a margin of 1.75% per annum, with a minimum alternative base rate floor of 2.0%. This was a reduction in our effective rate related to the new term loan as compared to the Tranche B-2 Term Loan which was based on an Adjusted LIBOR rate plus a margin of 4.0% per annum, with an Adjusted LIBOR floor of 1.25% per annum. The Tranche B-5 Term Loan matures on June 3, 2020, which is an extension of approximately 26 months compared to the original Tranche B-2 Term Loan maturity date. Pursuant to the terms of the Credit Agreement, the Tranche B-5 Term Loan is guaranteed by Infor and certain of our domestic subsidiaries, and is secured by liens on substantially all of our assets and the assets of the guarantors.



Proceeds from the Tranche B-5 Term Loan were used to refinance the outstanding principal of our Tranche B-2 Term Loan, together with accrued and unpaid interest and applicable fees.

On October 9, 2013, we entered into the Third Amendment to the Credit Agreement (as amended) to reflect a technical change clarifying certain defined terms added pursuant to the Second Amendment.

On June 3, 2013, we entered into the Second Amendment to the Credit Agreement (as amended). The Second Amendment provided for the refinancing of the then outstanding principal balance of our Tranche B-1 Term Loan and our Euro Term Loan with the proceeds of a new $483.0 million term loan (the Tranche B-3 Term Loan) and a new 350.0 million term loan (the Euro Tranche B Term Loan). Interest on the Tranche B-3 Term Loan is based on a fluctuating rate of interest determined by reference to either, at our option, an Adjusted LIBOR rate, plus a margin of 2.75% per annum, with an Adjusted LIBOR floor of 1.0%, or an alternate base rate, plus a margin of 1.75% per annum, with a minimum alternative base rate floor of 2.0%. The Tranche B-3 Term Loan matures on June 3, 2020, which is an extension of approximately three and a half years compared to the original Tranche B-1 Term Loan maturity date. Interest on the Euro Tranche B Term Loan is based on a fluctuating rate of interest determined by reference to an Adjusted LIBOR rate, plus a margin of 3.0% per annum, with an Adjusted LIBOR floor of 1.0%. The Euro Tranche B Term Loan matures on June 3, 2020, which is an extension of approximately 24 months compared to the original Euro Term Loan maturity date. Pursuant to the terms of the Credit Agreement, the Tranche B-3 Term Loan and Euro Tranche B Term Loan are guaranteed by the same guarantors, and are secured by liens on substantially all of the borrower's assets and the assets the guarantors. The Second Amendment also amended the Credit Agreement to, among other things, limit the applicability of the financial maintenance covenant (maximum total leverage ratio) to the Revolver and then only for those fiscal quarters in which we have significant borrowings under our Revolver outstanding as of the last day of such fiscal quarter. Proceeds from the Tranche B-3 Term Loan and Euro Tranche B Term Loan were used to refinance the outstanding principal balance of our Tranche B-1 Term Loan and our Euro Term Loan, together with accrued and unpaid interest and applicable fees. In addition, $250.0 million of the proceeds were used to repay a portion of the outstanding balance of our Tranche B-2 Term Loan. On September 27, 2012, we entered into the Refinancing Amendment No. 1 (the First Amendment) to the Credit Agreement. The First Amendment provided for the refinancing of the then outstanding principal balance of our Tranche B Term Loan of $2,763.0 million with the 48



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proceeds of a new $2,793.1 million term loan (the Tranche B-2 Term Loan). Interest on the Tranche B-2 Term Loan is based on a fluctuating rate of interest determined by reference to, at our option, an Adjusted LIBOR rate, plus a margin of 4.0% per annum, with an Adjusted LIBOR floor of 1.25% per annum, or ABR, plus a margin of 3.0% per annum, with an ABR floor of 2.25% per annum. This was a reduction in our effective rate related to this term loan as compared to the Tranche B Term Loan which was based on an Adjusted LIBOR rate plus a margin of 5.0% per annum. The Tranche B-2 Term Loan matures on April 5, 2018, which is the same as the original Tranche B Term Loan maturity date. Pursuant to the terms of the Credit Agreement, the Tranche B-2 Term Loan is guaranteed by the same guarantors, and is secured by liens on substantially all of our assets and the assets of the guarantors. Proceeds from the Tranche B-2 Term Loan were used to refinance the outstanding principal of our Tranche B Term Loan, together with accrued and unpaid interest and applicable fees, including a prepayment premium of 1.0% of the principal amount thereof, in accordance with the terms of the Credit Agreement.



Senior Notes

Infor 9 3/8% and 10.0% Senior Notes

On April 5, 2012, we issued approximately $1,015.0 million in aggregate principal amount of our 9 3/8% Senior Notes and 250.0 million aggregate principal amount of our 10.0% Senior Notes. The 9 3/8% and 10.0% Senior Notes mature on April 1, 2019, and bear interest at the applicable rates per annum that is payable semi-annually in cash in arrears, on April 1 and October 1 each year, beginning on October 1, 2012.



Infor 11.5% Senior Notes

On July 5, 2011, we issued approximately $560.0 million in aggregate principal amount of our 11.5% Senior Notes. The 11.5% Senior Notes mature on July 15, 2018 and bear interest at a rate of 11.5% per annum payable semi-annually in arrears, on January 15 and July 15, beginning January 15, 2012. The senior notes are general unsecured obligations of Infor (US), Inc. and are guaranteed by Infor, Inc. and certain of our wholly owned domestic subsidiaries. Under the indentures governing the senior notes, we are subject to certain customary affirmative and negative covenants. On August 23, 2012, we filed a Registration Statement on Form S-4 with the SEC which included an exchange offer related to our 9.375%, 10.0% and 11.5% Senior Notes (Exchange Offer). The terms of the exchange notes are substantially identical to those of the original senior notes, except the transfer restrictions, registration rights and certain additional interest provisions relating to the senior notes no longer apply. Under the Exchange Offer all of the notes were exchanged for applicable exchange notes.



Restricted Cash

We had approximately $26.8 million of restricted cash as of May 31, 2014, of which approximately $18.9 million and $7.9 million have been reflected in other current assets and other assets, respectively, on our Consolidated Balance Sheets. The restricted cash balance relates primarily to amounts held in escrow for certain litigation matters, which based on the current status of these matters we do not believe we will have to pay, and various collateral arrangements related to our property leases worldwide.



We had approximately $7.2 million held as restricted cash as of May 31, 2013, of which $0.1 million and $7.1 million have been classified as current and non-current assets, respectively, on our Consolidated Balance Sheets. These balances relate primarily to various collateral arrangements related to our property leases worldwide.

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Disclosures about Contractual Obligations and Commercial Commitments

The following summarizes our contractual obligations and commercial commitments as of May 31, 2014, and the effect these obligations and commitments are expected to have on our liquidity and cash flows in future periods:

1 Year 1 - 3 3 - 5 More than (in millions) Total or Less (1) Years Years 5 Years Balance sheet contractual obligations: Total outstanding debt (gross, excluding debt discount) $ 5,408.7$ 31.7$ 70.2$ 1,985.9$ 3,320.9 Interest on long-term debt 1,716.0 324.6 650.5 612.9 128.0 Capital leases 8.8 4.8 3.6 0.4 - Total balance sheet contractual obligations 7,133.5 361.1



724.3 2,599.2 3,448.9

Other contractual obligations: Operating leases 193.3 48.3 75.0 33.6 36.4 Purchase obligations 84.1 27.6 21.1 15.1 20.3 Total other contractual obligations 277.4 75.9 96.1 48.7 56.7 Total contractual obligations $ 7,410.9$ 437.0$ 820.4$ 2,647.9$ 3,505.6



(1) Reflects the 11 month period of June 1, 2014 through April 30, 2015, as a

result of the change in our fiscal year end. See Note 1, Nature of Business

and Basis of Presentation-Fiscal Year

Total contractual obligations at May 31, 2014 were $7,410.9 million. Our purchase obligations represent those commitments greater than $0.1 million annually. Total unrecognized tax benefits of $161.7 million are not included in the above table as we are unable to reasonably estimate when these amounts will ultimately be settled. See Note 18, Income Taxes, in Notes to Consolidated Financial Statements of this Form 10-K for additional information. Over the next 12 months, we do not expect any significant cash payments or significant additional changes related to these uncertain tax positions. For the purposes of this disclosure, we have estimated our future interest payments based on the weighted average interest rates applicable to the components of our debt structure as of May 31, 2014, over the projection period.



Off-Balance-Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.



Recent Accounting Pronouncements-Not Yet Adopted

Information regarding recent accounting pronouncements can be found in Note 2, Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements of this Form 10-K and is incorporated herein by reference.


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