UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K



[x]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, ~~2013~~2014



[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from to

Commission File Number 333-178959

Epicor Software Corporation

(Exact name of registrant as specified in its charter)

Delaware		45-1478440
(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentification No.)
4120 Dublin Boulevard Suite 300Dublin, CA		94568
804 Las Cimas Parkway Austin, TX		78746
(Address of principal executive offices)		(Zip Code)

(~~800~~512) ~~999~~ 328- ~~1809~~2300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes [ ] No [x]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act: Yes [x] No [ ]

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [] No [x] As a voluntary filer, not subject to the filing requirements, the registrant filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [] No [x] As a voluntary filer, the registrant is not required to submit Interactive Data Files pursuant to Rule 405 of Regulation S-T. The registrant has submitted all Interactive Data Files for the preceding 12 months.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer [ ]	Accelerated filer [ ]	Non-accelerated filer [x] (Do not check if a smaller reporting company)	Smaller reporting company [ ]

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

No public trading market exists for the common stock, no par value, of Epicor Software Corporation. The aggregate market value of the common stock held by non-affiliates of the registrant was zero as of March 31, ~~2013~~2014, the last business day of the registrant's most recently completed second fiscal quarter. All of the outstanding shares of common stock, no par value, of Epicor Software Corporation, are held by Eagle Holdco, Inc., the registrant's parent company.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

Class		Outstanding at December 1117, ~~2013~~2014
Common Stock, no par value		100 shares

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. None

Explanatory Note

As used in this Annual Report on Form 10-K for the year ended September 30, 2014 (the “Form 10-K”), the terms “Company,” “our,” “us” or “we” refer to Epicor Software Corporation.

This Form 10-K includes the restatement of certain of the Company’s previously issued consolidated financial statements and information.

On December 16, 2014, we filed a Form 8-K under Item 402 with the Securities and Exchange Commission relating to previously issued financial statements as described below. As indicated in the Form 8-K under Item 4.02 and in Note 2 of the “Notes to Consolidated Financial Statements” contained in Item 8 of this Form 10-K, the Company decided that it needed to correct an error related to its accounting for income taxes.

We have completed our assessment of the impact of the aforementioned correction in our accounting for income taxes. Based on that assessment, we have determined that we need to restate our annual and quarterly results for certain prior fiscal periods. In this Form 10-K, we therefore amend or restate the following types of financial information as of and for the periods (collectively, the "Restated Periods") noted in the table below.



Type of Financial Information	Date or Period
Consolidated Balance Sheets	September 30, 2013
Consolidated Statements of Comprehensive Loss, Stockholders’ Equity and Cash Flows	Fiscal Years Ended September 30, 2013 and 2012
Selected Financial Data	Fiscal Years Ended September 30, 2013 and 2012; Period from Inception to September 30, 2011
Unaudited quarterly financial information	Each quarter in the fiscal years ended September 30, 2013 and first, second and third quarters of 2014
Management’s discussion and analysis of financial condition and results of operations	Fiscal years ended September 30, 2013 and 2012

In addition, we have identified a material weakness with respect to our internal control over financial reporting for income taxes for the year ended September 30, 2014. Disclosures related to these matters are included in Part II, Item 9A, under "Controls and Procedures," which describes the material weakness and management's conclusion that the Company's internal control over financial reporting for income taxes was not effective as of September 30, 2014. Additionally, as the material weakness led to a restatement of financial information for the years ended September 30, 2013 and 2012, Part II, Item 9A includes management’s amended conclusion that our internal control over financial reporting for income taxes was not effective as of September 30, 2013 or September 30, 2012.

We believe that presenting all of the amended and restated information regarding the Restated Periods in this Form 10-K allows investors to review all pertinent data in a single presentation. In addition, the Company’s Quarterly Reports on Form 10-Q to be filed during fiscal 2015 will include the restated fiscal 2014 comparable prior quarter and year to date periods. We have not filed and do not intend to file amendments to (i) our Quarterly Reports on Form 10-Q for the first three quarterly periods in the year ended September 30, 2014 or (ii) our Annual Report on Form 10-K for the years ended September 30, 2013 and 2012 (collectively, the “Affected Periods”). Accordingly, investors should rely only on the financial information and other disclosures regarding the Restated Periods in this Form 10-K or in future filings with the SEC (as applicable), and not on any previously issued or filed reports, earnings releases or similar communications relating to these periods.

We have not modified or updated previously disclosed financial information for the years ended September 30, 2013 and 2012, except as required to reflect the effects of the restatement, in this Form 10-K.

The combined impact of the adjustments and specified line items in the Affected Periods resulting from the restatement is set forth in Notes 2 and 18 of Notes to the Consolidated Financial Statements. The following items of this Form 10-K are impacted as a result of the restatement.


•	Part I, Item IA, Risk Factors


•	Part II, Item 6, Selected Financial Data


•	Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations


•	Part II, Item 8, Financial Statements and Supplementary Data


•	Part II, Item 9A, Controls and Procedures

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EPICOR SOFTWARE CORPORATION

REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, ~~2013~~2014

INDEX

	Page
Forward-Looking Statements	2
Part I	3
Item 1. Business	3
Item 1A. Risk Factors	13
Item 1B. Unresolved Staff Comments	2628
Item 2. Properties	2628
Item 3. Legal Proceedings	2728
Item 4. Mine Safety Disclosures	28
Part II	28
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	28
Item 6. Selected Financial Data	29
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	7161
Item 8. Financial Statements and Supplementary Data	7363
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~141~~135
Item 9A. Controls and Procedures	~~141~~136
Item 9B. Other Information	~~143~~138
Part III	~~143~~138
Item 10. Directors, Executive Officers and Corporate Governance	~~143~~138
Item 11: Executive Compensation	~~147~~142
Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~162~~156
Item 13: Certain Relationships and Related Transactions, and Director Independence	~~164~~158
Item 14: Principal Accountant Fees and Services	~~167~~161
Part IV	~~167~~162
Item 15: Exhibits and Financial Statement Schedule	~~167~~162
Signatures	~~169~~164
Exhibits Index	~~171~~166

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

For purposes of this Annual Report on Form 10-K ("Report"), the terms "we", "our", "us", "Epicor" and the "Company" refer to Epicor Software Corporation and its consolidated subsidiaries. This Report contains forward-looking statements that set forth anticipated results based on management’s plans and assumptions. Such forward-looking statements involve substantial risks and uncertainties. These statements often include words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “seek”, “will”, “may”, or similar expressions. These statements include, among other things, statements regarding:


•	the economy, IT and software spending and our markets and technology, including Software as a Service and cloud offerings;


•	our strategy and ability to compete in our markets;


•	our results of operations, including the financial performance of acquired companies, products, services and technologies on a combined and stand-alone basis;

• our ability to generate additional ~~revenue~~revenues from our current customer base;


•	the impact of new accounting pronouncements, legal or regulatory requirements;


•	our acquisitions, including statements regarding financial performance, products, and strategies;

• our credit agreement and senior note indenture, our ability to comply with the covenants therein, and the terms of any future credit or debt agreements;

• the impact of our parent company's PIK Toggle Notes, and our related dividend payments to our parent company, on our liquidity;


•	the life of our assets, including amortization schedules;


•	our sources of liquidity, cash flow from operations and borrowings;


•	our financing sources and their sufficiency;


•	our expected capital expenditures;


•	our legal proceedings;


•	our forward or other hedging contracts and practices; and

• our tax expense and tax rate.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under “Part I, Item 1A. Risk Factors”, ~~and~~as well as elsewhere herein. and in our other filings with the Securities and Exchange Commission. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this ~~report~~Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this ~~report~~Report to conform these statements to actual results or to changes in our expectations, except as required by applicable law.

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PART I

ITEM 1 - BUSINESS

Background

On March 25, 2011 (“Inception”), Eagle Parent, Inc. (“Eagle”) was formed under Delaware law at the direction of funds advised by Apax Partners, L.P. and Apax Partners, LLP, together referred to as "Apax", solely for the purpose of acquiring Activant Group Inc. (“AGI”), the parent company of Activant Solutions Inc., the Predecessor for reporting purposes, (the “Predecessor” or “Activant”), and Epicor Software Corporation (“Legacy Epicor”). On May 16, 2011, Eagle consummated the acquisitions of AGI, Activant and Legacy Epicor, following which, Legacy Epicor, AGI and Activant became wholly-owned subsidiaries of Eagle. These acquisitions and the related transactions are referred to collectively as the “Acquisition” or “Acquisitions.” Effective as of December 31, 2011, Legacy Epicor, AGI and Activant were merged with and into Eagle under Delaware law (the “Reorganization”). In connection with the Reorganization, Eagle changed its name to Epicor Software Corporation. Unless explicitly stated otherwise, references in this report to “we,” “our,” “us” and the “Company” refer to Epicor Software Corporation and its consolidated subsidiaries. Funds advised by Apax and certain of our employees indirectly own all of the outstanding shares of the Company.

Our Business

WeEpicor ~~are~~Software Corporation ("we", "our", "us", "Epicor", and the "Company") is a leading global provider of enterprise application software and services focused on small and mid-sized companies and the divisions and subsidiaries of Global 1000 enterprises. We provide industry-specific solutions to the manufacturing, distribution, retail and services sectors. Our fully integrated solutions, which primarily include ~~license~~software, professional services and support services and may include hardware products, are considered “mission critical” to many of our customers, as they manage the flow of information across the core ~~business~~ functions, operations and resources of their ~~enterprises.~~businesses Byand ~~enabling~~ultimately ~~our~~to their customers and suppliers. By enabling companies to automate and integrate information and critical business processes throughout their enterprise, as well as across their supply chain and distribution networks, our customers can increase their efficiency and productivity, ~~resulting~~which may result in higher revenues, increased profitability and improved ~~working~~customer ~~capital~~loyalty.

Our fully integrated systems and services include one or more of the following software applications: inventory and production management, supply chain management (“SCM”), manufacturing execution systems ("MES"), order management, point-of-sale (“POS”) and retail management, accounting and financial management, customer relationship management (“CRM”), human capital management (“HCM”) and service management, among others. Our solutions also respond to our customers’ ~~need~~needs for increased supply chain visibility and transparency by offering ~~multichannel~~omni-channel ~~eCommerce~~commerce and collaborative capabilities that allow enterprises to extend their business and more fully integrate their operations with those of their customers, suppliers and ~~channel~~ partners. We believe this collaborative approach distinguishes us from most of the conventional enterprise resource planning (“ERP”) vendors, whose primary focus is predominately on internal processes and efficiencies within a single plant, facility or business. For this reason, we believe our products and services are deeply embedded in our customers’ businesses and are a critical component to their success.

In addition to processing the transactional business information for the vertical markets we serve, our data warehousing, business intelligence and industry catalog and content products aggregate industry data to provide our customers with advanced product information, multidimensional analysis, modeling and reporting.

We have developed strategic relationships with many of the well-known and influential market participants across all segments in which we operate, and have built a large and highly diversified base of more than 20,000 customers who use our systems, ~~maintenance~~support and/or services offerings on a regular, ongoing basis in over 35,000 sites and locations. ~~Additionally, our automotive parts catalog is used at approximately 27,000 locations, many of which are also our systems customers.~~

We have a global customer footprint ~~with~~across ~~customers in~~ more than 150 countries and we have a strong presence in both mature and emerging markets in North America, South America, Europe, Africa, Asia and Australia/New Zealand, with ~~over~~approximately 4,~~600~~500 employees worldwide as of September 30, ~~2013~~2014. Our software is available in more than 30 languages and we continue to translate and localize our systems to enter new geographical markets. In addition, we have a growing network of over 400 global partners, value-added resellers and systems integrators ~~that~~providing ~~provide~~ a comprehensive range of solutions and services based on our software. This worldwide coverage provides us with economies of scale, higher capital productivity through lower cost offshore operations, the ability to support increasingly global businesses and to more effectively deliver our systems and services to high-growth emerging markets.

Corporate Background

As a result of a series of mergers completed in May 2011, we became the parent company of Activant Group Inc. (“AGI”), the parent company of Activant Solutions Inc., our Predecessor for reporting purposes, (the “Predecessor” or “Activant”), and the former Epicor Software Corporation (“Legacy Epicor”). In December 2011, we changed our name to Epicor Software Corporation in connection with the merger of Legacy Epicor, AGI and Activant with and into us under Delaware law. Funds advised by Apax Partners L.P. and Apax Partners, LLP (together referred to as “Apax”) and certain of our employees indirectly own all of the outstanding shares of the Company.

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cost offshore operations, the ability to more effectively deliver our systems and services to high-growth emerging markets, and to support increasingly global businesses.

Segments

We specialize in and target three application software segments: ERP, Retail Solutions and Retail Distribution, which we consider our segments for reporting purposes. These segments are determined in accordance with how our management views and evaluates our business and based on the criteria as outlined in authoritative accounting guidance regarding segments. We ~~The~~believe ~~Predecessor~~these ~~had two reporting~~ segments ~~Wholesale~~accurately ~~Distribution~~reflect ~~Group,~~the ~~which~~manner ~~is now included~~ in which our ~~ERP~~management ~~segment,~~views and ~~Retail~~evaluates ~~Distribution~~the ~~Group, which is now included in our Retail Distribution segment~~business.

Because these segments reflect the manner in which our management views our business, they necessarily involve judgments that our management believes are reasonable in light of the circumstances under which they are made. These judgments may change over time or may be modified to reflect new facts or circumstances. Segments may also be changed or modified to reflect technologies and applications that are newly created, change over time, or evolve based on business conditions, each of which may result in reassessing specific segments and the elements included within each of those segments. Future events, including changes in our senior management, may affect the manner in which we present segments in the future.

A description of the businesses served by each of our reportable segments follows:

• ERP segment - ~~The~~Our ERP segment provides (1) distribution solutions designed to meet the expanding requirement to support a demand driven supply network by increasing focus on the customer and providing a more seamless order-to-shipment cycle for a wide range of vertical markets including electrical supply, plumbing, medical supply, heating and air conditioning, tile, industrial machinery and equipment, industrial supplies, building supplies, fluid power, janitorial and sanitation, medical, value-added fulfillment, ~~food and beverage,~~ redistribution and general distribution; (2) manufacturing solutions designed for discrete, process and mixed-mode manufacturers with batch, lean and “to-order” manufacturing in a range of verticals including industrial machinery, instrumentation and controls, ~~food and beverage,~~ medical devices, ~~printing,~~rubber ~~packaging~~and plastics, ~~automotive~~food and beverage, aerospace and defense, ~~energy~~electronics and high tech, and automotive; and (3) financial management and professional services solutions designed to provide the project accounting, time and expense management, and financial ~~analysis~~analytics and reporting necessary to support the complex requirements of serviced-based companies in the ~~consulting~~business services, ~~banking~~consulting, financial services, not-for-profit and ~~software~~technology services sectors.

• Retail Solutions segment - ~~The~~Our Retail Solutions segment supports both (1) ~~large,~~ distributed retail environments that require a comprehensive ~~multichannel~~omni-channel retail ~~solution~~solutions including POS store operations, mobility, cross-channel order management, customer relationship management ("CRM"), loyalty management, merchandising, planning and assortment planning, business intelligence and audit and operations management capabilities and (2) ~~small-~~retailers seeking to ~~mid~~leverage the cloud and on-~~sized~~demand ~~retailers~~computing with our ~~Epicor~~subscription ~~Software~~based asEpicor aRetail ~~Service~~SaaS ~~for~~offering ~~retail~~that ~~which~~includes ~~provides~~ a preconfigured, full suite retail solution, ~~including~~ the infrastructure for the host and store hardware, ongoing solution updates, monitoring, maintenance and support,. asRetailers can also choose a ~~subscription~~hosted ~~service~~option that provides a licensed, customizable solution with complete delivery, management, and support of the infrastructure and applications in the cloud. Our Retail Solutions segment caters to the general merchandise, specialty retail, apparel and footwear, sporting goods and department store verticals.

• Retail Distribution segment - ~~The~~Our Retail Distribution segment supports small- to mid-sized, independent or affiliated retailers that require integrated POS orand ERP offerings. ~~Our~~Customers ~~Retail~~in ~~Distribution~~this segment are primarily ~~supports~~ independent hardware retailers, lumber and home centers, lawn and garden centers, farm and agriculture retailers, retail pharmacies, sporting goods, and other specialty ~~hardlines~~ retailers,. asOur ~~well~~Retail asDistribution segment also supports customers involved in the manufacture, distribution, sale and installation of new and remanufactured parts used in the maintenance and repair of automobiles and light trucks primarily in North America ~~as well as the United Kingdom and Ireland, including several retail chains in North America~~.

See Note 13 - Segment Reporting in our audited consolidated financial statements for further information about our segments.

Our Products and Services

We design, develop, market, sell, implement and support enterprise software applications that provide small and mid-sized companies and the divisions and subsidiaries of Global 1000 enterprises with highly functional technically advanced business solutions that are aligned according to the markets and industries that they serve.

Most of our product offerings provide customers a range of deployment choices, from on-premise to on-demand or a combination thereof, providing a freedom of choice not generally available from most vendors who typically focus on a single deployment model by product. The ability to provide the same software solution on-premise, securely in the cloud, in a virtualized environment, or via a preconfigured appliance allows organizations increased flexibility and scalability. Customers

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~~Most~~can ofevolve ~~our~~and ~~product~~change ~~offerings~~their ~~provide customers a range of~~ deployment ~~choices, from on-premise to on-demand or a combination thereof, providing a freedom of choice not generally available from most vendors who typically focus on a single deployment~~ model byas ~~product.~~their ~~The~~business ~~ability~~needs ~~to provide the same software solution on-premise, securely in the cloud, in a virtualized environment, or via a preconfigured appliance allows organizations increased flexibility and scalability~~evolve. Our ~~Customers~~customers ~~can~~may ~~evolve~~move ~~and~~between ~~change their deployment model—~~“on-demand” ~~through~~ multi-tenant Software as a Service ("SaaS"), single-tenant (hosted), or as traditional on-premise licensed software~~—as~~ ~~their business needs evolve~~users.

Our ~~content~~software and ~~supply~~cloud ~~chain~~subscriptions ~~and transactional~~ services are comprised of proprietary catalogs, data warehouses, electronic data interchange, data management, connectivity and payment processing products. We provide comprehensive automotive parts catalogs, industry-specific analytics and database services related to point-of-sale transaction activity or parts information in other core verticals, as well as eCommerce connectivity offerings, ~~hosting,~~ and networking and security monitoring management solutions. These proprietary ~~database~~ products and services generate recurring revenues through periodic (generally monthly) subscription fees and differentiate our products from those of our competitors.

Our innovative software solutions include:

Epicor ERP. A highly configurable, global ERP solution, Epicor ERP was first introduced in ~~December~~ 2008. AsThe ofmost ~~September~~recent 30release, ~~2013,~~ Epicor ~~ERP~~E10, ~~has~~which ~~been~~became ~~made~~generally available in April 2014, is designed to ~~over~~provide 4increased performance,~~000~~ ~~customers~~scalability, ~~worldwide~~interoperability and ease of use, while reducing the cost and complexity of deployment and upgrades by leveraging a 100% Microsoft technology stack. The Epicor ERP product line combines functionality, business, and process capabilities from several of our heritage product lines with aan ~~new,~~ innovative, next generation service oriented architecture (SOA). A key benefit of Epicor ERP beyond its industry and global capabilities is its high degree of user flexibility, scalability and ease of implementation. Epicor ~~ERP~~E10 ~~has~~is ~~been~~ designed to ~~provide~~help ~~access~~organizations ~~seamlessly~~work ~~from~~more ~~smart~~effectively, ~~clients~~both internally and externally by focusing on collaboration, ~~Web~~responsiveness, ~~clients~~simplicity orand ~~mobile~~accessibility. The ~~devices~~architecture and performance characteristics of Epicor E10 are specifically designed for infrastructure typically found in cloud-based computing platforms. Epicor ERP is aavailable ~~true,~~as a multi-~~tenanted~~tenant SaaS solution or a perpetual license, which uniquely positions Epicor as one of the only ERP providers that can deliver athe ~~single,~~same highly functional, end-to-end software solution on-premise, hosted, or on-demand in the cloud. Epicor ERP is focused on the manufacturing, distribution and business services industry sectors and includes applications for CRM, sales ~~management~~, service, ~~management~~financials, human ~~capital~~resources ~~management,~~and ~~financial management~~payroll, supply chain ~~management~~, production ~~management~~, planning and scheduling ~~management~~, project management, ~~product data management,~~ enterprise performance management, ecommerce, governance, risk and compliance ~~management~~(GRC), and global business management.

Epicor Prophet 21 (Prophet 21). Designed for small and midsize wholesale distributors across a variety of vertical markets, Prophet 21 leverages our deep experience serving distribution businesses. A comprehensive end-to-end business management solution, Prophet 21 is designed for ease of use and scalability and can support a wide range of distribution environments from small single site distributors to complex, global distributors with hundreds of warehouse locations. Prophet 21 offers multiple and dynamic forecasting and inventory replenishment methods to help lower carrying costs, minimize excess or obsolete inventory, improve cash flow, and increase customer service levels by ~~ensuring~~enabling ~~they~~customers to get the right products out on time~~, every time~~. Prophet 21 ~~software~~ covers the full spectrum of requirements for wholesale distribution businesses including order management, inventory management, CRM, materials management, financial management, eCommerce, services, manufacturing and business analytics.

Epicor Eclipse (Eclipse). Designed for the electrical, HVAC (heating/ventilation and air conditioning), PVF (pipe, valve and fittings) and plumbing industries, Eclipse is a highly scalable business management solution for distributors ranging from 10 to more than 5,000 users. Leveraging our deep domain expertise and experience, Eclipse ~~has~~is ~~been~~ specifically designed to work the way industrial and wholesale distributors work. Eclipse combines vertical functionality, an intuitive user interface, embedded search and task automation with best practices for distribution operations to help companies drive costs out of their supply chain, increase sales and margins, and improve customer service. ~~The~~ Eclipse ~~product~~ operates under Microsoft Windows, UNIX and LINUX operating environments and includes applications for sales, pricing, CRM, purchasing, inventory, warehouse logistics, accounting and financial management, business intelligence and analytics.

Epicor Eagle (Eagle). A comprehensive retail business management software solution, Eagle is designed for small to mid-market retailers across a spectrum of verticals including specialty hard goods, lumber and building materials, lawn and garden, pharmacy, drugstores, sporting goods, and the automotive aftermarket. The most recent release, Epicor Eagle N Series which became generally available in August 2014, is designed to provide increased interoperability, an enhanced user experience and embedded analytics by leveraging Microsoft .NET technology. Eagle N Series provides a real time, customer centric, multi-location, ~~multi~~omni-channel approach to retail automation. Eagle provides independent, cooperative and regional retailers an effective, affordable solution that allows them to provide the same store and customer experience as large national chains. Designed to scale from single location businesses to regional or national chains, ~~the~~ Eagle ~~solution~~N Series delivers deep retail functionality including applications and modules for POS, store operations, mobility, customer and marketing management, merchandising, supply chain integration, order and operations management, payment processing and accounting and financial management.

Epicor Retail. Epicor Retail is a comprehensive retail management solution designed for fashion, apparel and specialty retailers, as well as general merchandise retailers and department stores. Highly functional and designed for integration and

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~~scalability,~~Epicor ~~the~~ Retail. Epicor Retail ~~solution~~delivers ~~supports large multi-store~~advanced, ~~multi~~end-~~channel~~to-end ~~retailers~~retail ~~allowing~~management ~~them~~solutions todesigned ~~provide~~for afashion, ~~consistent~~apparel, ~~store~~and ~~experience~~specialty ~~and~~retailers, ~~manage~~as ~~retail~~well ~~operations~~as ~~across~~general ~~thousands~~merchandise ofretailers ~~store~~and ~~locations~~department stores. Highly ~~Integrating~~functional ~~software,~~and ~~hardware~~designed ~~and~~for ~~support~~integration ~~services~~and scalability, the Epicor Retail ~~provides~~solution asupports ~~complete~~multi-store, ~~end~~multi-~~to-end~~channel ~~retail~~and ~~solution~~multi-national ~~from~~retailers ~~POS~~allowing ~~through~~them ~~the~~to ~~retail~~provide ~~supply~~a ~~chain~~consistent tocustomer ~~the~~experience, ~~back~~precisely ~~office.~~match ~~Epicor~~supply ~~Retail~~with ~~applications~~demand, ~~have~~and ~~been~~leverage ~~designed~~actionable tointelligence bein ~~delivered~~all aschannels aacross ~~complete~~the ~~suite~~enterprise. Integrating orsoftware, ~~independently~~hardware byand ~~module~~support services, asEpicor Retail solutions are delivered best-of-breed ~~solutions~~, ~~which~~packaged ~~can~~and bevia ~~integrated~~the ~~into~~cloud, aenabling ~~large~~ retailers' ~~existing~~to ~~environment.~~drive ~~Epicor~~business ~~Retail~~transformation ~~can~~on ~~also~~their beterms, ~~delivered~~improve ~~preconfigured~~profitability ~~or hosted with managed services to meet the needs of small~~ and ~~mid-sized~~accelerate ~~retailers~~growth. Epicor ~~Applications~~Retail applications and modules ofinclude ~~Epicor~~store ~~Retail~~POS, ~~include~~mobility ~~store~~and operations, cross-channel order management, merchandising, planning and assortment planning, sourcing and product lifecycle management, CRM, eCommerce, audit and operations management, and business intelligence~~, and financials~~.

Epicor HCM. A comprehensive, configurable HCM solution, Epicor HCM enables companies to track, manage and analyze all facets of their human resource ("HR") data throughout the entire employee lifecycle from recruitment to retirement. Applications and modules of Epicor HCM include core HR, self-service, benefits and compensation management, talent and performance management, employee training and development, timesheets, position control and budgeting. Comprehensive reporting and embedded analytical tools provide a company's management team with a complete picture of their workforce, as well as the information and documentation necessary to ~~support~~respond ~~constantly~~to evolving government and regulatory compliance requirements. Epicor HCM is available on-demand through a SaaS, hosted, or on-premise model.

Epicor iScala (iScala). iScala is an integrated ERP, CRM and SCM solution targeting the divisions and subsidiaries of Global 1000 corporations and large local and regional companies worldwide. iScala's collaborative functionality, country-specific localizations and multi-language capabilities are designed to support global, multi-company deployments with significant cross-border trading requirements. iScala is targeted to meet the unique needs of companies in industry segments including: pharmaceutical, chemical and allied products, industrial machinery, light engineering, consumer goods and hospitality.

Epicor BisTrack (BisTrack). BisTrack is a comprehensive business software suite for dealers and distributors of lumber, building materials (“LBM”), and construction supplies. Designed to manage LBM distribution and pro-dealer businesses of all sizes, BisTrack software provides contractor and professional builder-focused businesses the ability to meet industry-specific requirements such as: complex sales, delivery and special orders; installed sales, contract billing, and project tracking; lumber and wood products tallies; millwork and other manufacturing orders.

Epicor LumberTrack (LumberTrack). LumberTrack is a comprehensive software solution for lumber and wood products manufacturers and wholesale distributors. Designed for the forestry and wood products industry, LumberTrack can provide regional value-added manufacturers and vertically integrated forest products multinationals with the critical functionality they need to meet key industry-specific requirements including: hardwood and softwood; lumber, panel, and treated wood; value-added and by-products; import, domestic, and export sales; forest management and log yard operations.

Epicor Manufacturing Packaging Solutions (AVP and BVP). Epicor packaging manufacturing solutions are comprehensive software solutions designed specifically for needs of retail, consumer and corrugated packaging manufacturers. Epicor BVP is designed to meet the complex planning, scheduling and production requirements of multi-plant and multi-national corrugated packaging manufacturers. Epicor AVP is designed to meet the end-to-end requirements of retail and consumer packaging manufacturers~~, as well as single-plant corrugated manufacturers~~.

Epicor Manufacturing Execution and Intelligence Systems (Mattec and Informance). Epicor provides extended manufacturing execution systems (MES) to measure, monitor and optimize production and manufacturing operations through real-time data collection, analysis and performance tracking. Monitoring, alerting and reporting production lines, machines and operators in real-time allows manufacturers to pinpoint critical issues, reduce waste, and improve quality, efficiency and customer service whether in a single facility or across a globally distributed enterprise.

Epicor Tropos (Tropos). Tropos is a comprehensive software solution designed to meet the complex production, materials traceability and regulatory compliance requirements of process manufacturers. Tropos provides full recipe based production and support for co-products, byproducts and waste products and is optimized for recipe and rate based manufacturing. Epicor

Tropos supports the key business operations from demand planning, order processing, customer service, production scheduling, manufacturing and inventory control, while helping to ensure companies meet the stringent standards of industry and international regulators by managing quality control records, supporting full traceability and audit support.

Epicor CMS (CMS). CMS, formerly IVP)., ~~CMS~~ is a comprehensive ERP software solution designed for the automotive industry. Built to support intensive supply chains, CMS ~~can~~assists ~~help~~ automotive distributors and manufacturers eliminate shipping errors, tighten inventory accuracy, and strengthen enterprise-wide control and supplier management. CMS delivers numerous automotive industry features and capabilities including compliance for Honda's Star, Delta and GPCS systems in North America and

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supports AIAG-compliant labeling, MMOG/LE compliance, product lifecycle management (PLM), and advanced quality management.

Epicor Vision (Vision). Vision is an enterprise software system designed for warehouse distributors in the automotive parts aftermarket and office product market. Vision helps automotive warehouse distributors connect each part of the enterprise, linking their auto parts distribution centers, company-owned parts stores, independent jobbers, program buying groups, and service and repair shop operations.

Epicor Catalyst (Catalyst). Catalyst is a comprehensive, integrated ERP solution for large, multi-location lumber and building materials operations and dealers.

Industry Overview

The enterprise application software industry is evolving rapidly as companies look to improve their internal systems and processes to more quickly respond to the challenges of an increasingly global economy. While traditional ERP products have focused predominately on “back-office” transactional activities, such as accounting, order management, production and inventory control, enterprise applications have now expanded to include managing interactions across a company's complete value chain -− from customers and partners to suppliers and employees. Along with the increased requirement to manage global operations and data, today's systems must also automate a much broader and more complex range of administrative, regulatory, and operational business processes- − often across multiple industries. The ~~Despite~~velocity ~~the~~and ~~slower~~complexity ~~than~~of ~~expected~~business ~~worldwide economic recovery~~practices, ~~companies~~market ~~are~~dynamics ~~continuing to update their enterprise software applications~~ and ~~invest~~pace inof ~~new~~technology ~~information~~innovation ~~technologies~~means tocompanies ~~drive~~need ~~increased~~agile ~~productivity~~ and ~~efficiency.~~flexible ~~According~~business tosoftware. The ~~Gartner~~cloud, ~~“the~~analytics, ~~enterprise~~social ~~application~~collaboration ~~software~~and ~~market~~mobility ~~will~~are ~~have~~driving aentirely ~~five-year~~new ~~(2012~~technology ~~through~~adoption ~~2017)~~models ~~compound~~and ~~annual~~enhancing ~~growth~~access ~~rate (CAGR) of 8.2%.” Furthermore, “revenue share across regions will continue~~ to ~~shift~~both ~~during~~internal ~~the~~and ~~forecast~~external ~~period~~information. According Byto ~~2017~~Gartner, ~~Gartner~~“the ~~forecasts~~2014 ~~that~~global ~~Emerging~~spending ~~Asia/Pacific~~forecast ~~and~~for ~~Greater~~enterprise ~~China~~software ~~together~~is ~~will~~$321 ~~pick~~billion upin ~~approximately~~constant ~~2 percentage points~~dollars, ~~Latin~~with ~~America~~growth ~~and~~of ~~North~~6.9% ~~America~~over ~~will~~2013. Enterprise ~~gain~~software ~~more~~continues ~~than~~to 1be ~~percentage~~a ~~point~~beacon ~~each,~~of ~~and~~growth ~~Europe~~among ~~will~~technology ~~lose share~~spending.” Key ~~Furthermore~~software markets, “asuch ~~focus~~as ~~on constituent self-service~~CRM, ~~customer~~supply ~~retention/satisfaction~~chain management and ~~developing~~database ~~new~~management ~~business~~systems, ishave ~~driving~~been ~~organizations~~buoyed toby ~~renew~~initiatives ~~longer-term~~underpinned ~~investments~~by inthe ~~collaboration,~~Nexus ~~content~~of ~~management,~~Forces ~~CRM~~ and ~~supply~~the ~~chain~~digitalization ~~management~~of ~~(SCM) initiatives~~business, which ~~will~~are ~~keep~~augmenting ~~CAGRs~~foundational ~~for~~spending ~~these~~on ~~markets~~normal ~~above~~maintenance ~~10%~~and ~~through 2017~~replacements.” 1

With our advanced applications, geographic reach and localized products, we believe our business is well positioned to take advantage of the ~~growth~~ expected growth in both the large developed markets of North America and Western Europe, as well as emerging markets including Asia Pacific, Central and Eastern Europe, Latin America, Africa, and the Middle East.

1 Source: Gartner, Inc., “Forecast ~~Analysis~~: Enterprise ~~Application~~ Software Markets, Worldwide, ~~2012~~2011-~~2017~~2018, ~~2Q13~~3Q14 Update,” ~~July~~September 1210, ~~2013~~2014 (Analysts: ~~Tom~~Matthew ~~Eid~~Cheung; Yanna Dharmasthira; Chad Eschinger; Bianca Francesca Granetto ; Joanne M. Correia; Neil McMurchy; Federico De Silva; Tom Eid; Ruggero Contu; Colleen Graham; Fabrizio Biscotti; Chris Pang; David M. Coyle; Dan Sommer; Hai Hong Swinehart; Bhavish Sood; Jie Zhang; Jin-Sik Yim; Michael Warrilow; Vassil Mladjov; Laurie F. Wurster; Terilyn Palanca)

The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this Report) and the opinions expressed in the Gartner Report(s) are subject to change without notice.

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Traditionally, software spending in small and mid-sized companies and the divisions and subsidiaries of Global 1000 enterprises that make up our core market has outpaced spending in the larger ERP market segment. We believe that small and mid-sized businesses inhave ~~these~~dynamic information requirements, but limited resources. These markets are increasingly taking advantage of information technology to increase productivity and more effectively manage their operations. We have identified a number of common factors we believe drive this demand for technology solutions for our target customers:

• ~~Need for~~ Integrated ~~Business Management~~ Solutions with Vertical-Specific Functionality. Software applications from vendors such as Microsoft Corporation, Oracle Corporation, SAP AG, and NetSuite Inc., have a broad or horizontal approach, which we believe does not adequately address the needs of businesses that have high industry-specific functionality requirements. In addition, our typical customer generally does not have a large dedicated technology team to integrate and manage information technology solutions across multiple vendors and partners. As a result, our customers generally prefer a “single point of accountability” with one vendor providing and supporting a large portion of their information technology infrastructure, often on a turnkey basis~~, which includes software, product support and professional services and, in many cases, extends to hardware, network management, content, and supply chain services~~.

•

The Internet of Things. The world is becoming an information system itself as uniquely identifiable sensors and transponders are embedded in an ever wider range of devices and objects that can then be linked, accessed and interconnected through the Internet. With the increased use of “smart devices” and increasingly ever-present access through low-cost wireless communications, the Internet of Things is expected to transform automation in nearly all fields and industries and enhance utilization and productivity by optimizing usage, providing real-time tracking and more accurate decision support.


•	Complex Supply Chains. Many of our customers operate in markets that may have multi-level supply chains consisting of manufacturers, distributors and buying groups on the supply side and service providers, commercial customers and consumers on the demand side. Businesses with complex supply chains require more sophisticated, tailored systems and services to operate effectively.

• Inventory Management. Many of our customers operate in complex supply chain environments where they must manage, market and sell large quantities of diverse ~~types of~~ products. They can have complex, high cost, configured products, as well as low value, high velocity inventory. The ability to track and manage inventory more efficiently is critical to improving the operational and financial performance of these organizations.

• ~~Need for~~ Modern Technology. Many of the systems currently in use in the vertical markets that we serve are older, character-based or in house systems, with spreadsheets and custom built databases that provide limited extensibility, scalability or flexibility. Such legacy solutions can also be responsible for restricting the agility of an organization from rapidly adapting to new opportunities. As global competition increases, ~~these~~ businesses will need to replace their older systems with more modern, comprehensive business management solutions in order to increase efficiencies and optimize their business performance. ~~Additionally,~~Modern ~~companies~~enterprise ~~with~~applications ~~modern~~generally ~~ERP~~can ~~systems~~provide ~~are~~much ~~considering~~broader ~~cloud-based~~and ~~replacement~~deeper ~~systems~~integration capabilities, better usability, responsive design to ~~reduce~~support ITdevice-independent ~~overhead~~access, orcloud ~~improve~~and ~~collaboration~~on-demand ~~with~~deployment, ~~other~~social ~~corporate~~and ~~constituents~~collaborative tools and embedded analytics.

• ~~High~~ Customer ~~Service Requirements~~Experience. Many of our customers seek to differentiate themselves in their respective marketplaces by providing a high degree of customer service and value added services. ~~Our systems and services are specifically designed~~ to ~~facilitate~~improve ~~this level of~~ customer ~~service~~loyalty. For example, in the distribution market, professional and trade customers expect on-time delivery of complex orders to their job sites, the ability to charge the orders to their account and the ability to receive a credit for any unused materials. In order to meet these high service requirements, businesses in the vertical markets we serve are increasingly adopting more advanced business management solutions. Our systems and services are specifically designed to facilitate this level of customer service.

• ~~Increased~~Embedded ~~Adoption~~Social and Collaborative Tools. Companies in a wide variety of ~~Two-Tier~~industries ~~ERP~~see ~~Systems.~~social ~~Larger,~~and ~~distributed~~collaboration ~~enterprises~~tools ~~are~~as having an increasingly ~~adopting~~important ~~what~~role ~~has~~in ~~been~~their ~~termed~~future ~~“two-tier~~business. ~~ERP~~The ability to search,” ~~where~~filter, atag, ~~parent~~follow ~~entity~~and ~~retains~~share ~~their~~information ~~corporate~~− ~~system~~both ~~while~~internally ~~their~~and ~~subsidiaries,~~externally ~~business~~can ~~units~~be beneficial in improving customer and ~~satellite~~supplier ~~offices~~communications ~~standardize~~and onservice. aLeveraging ~~second~~social technologies with ERP ~~system~~allows ~~that~~employees isand ~~typically~~teams ~~mid-market~~to ~~focused~~better share ideas, ~~provides~~as ~~vertical~~well ~~specialization~~as track, ~~increased~~monitor, ~~flexibility~~and follow up on projects through real-time activity streams that can organize and ~~lower~~aggregate ~~cost~~a wide variety of ~~ownership~~information and data. Embedding social tools and concepts within ERP can provide the ability for both formal and informal teams to more easily communicate and collaborate on projects, orders, customers, suppliers or almost any other business information within the enterprise.

• ~~Increased~~Two-Tier ~~Regulatory~~ERP ~~and Data Security Requirements~~Systems. ~~Organizations~~Larger, ~~need~~distributed toenterprises beare ~~able~~increasingly toadopting ~~effectively~~what ~~support~~has ~~their~~been ~~business~~termed ~~initiatives~~“two-tier ~~while~~ERP,” ~~maintaining~~in ~~compliance~~which ~~with~~a ~~rapidly~~parent ~~evolving~~entity ~~industry~~retains ~~and~~their ~~regulatory~~corporate ~~standards~~system ~~around~~while ~~information~~their ~~and data security including regulations developed by payment card issuers~~subsidiaries, ~~through~~business ~~the~~units ~~Payment~~and ~~Card Industry Security Standards Council (PCI SSC), to ensure that organizations properly safeguard sensitive customer information.~~satellite

• Software as a Service and Cloud Computing. Companies are increasingly evaluating applications delivered on a subscription basis or on-demand for their potential ability to lower upfront costs, reduce cost of ownership, stay current with the latest technology, and reduce overall information technology complexity. In an increasingly global marketplace, growing companies can leverage applications and solutions delivered over the web anywhere they do business without the requirement to invest in expensive infrastructure and servers.

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•offices ~~Increased~~standardize ~~Access~~on ~~via~~a ~~Mobile~~second ~~Devices.~~ERP ~~Companies~~system ~~are~~that ~~increasingly~~is ~~looking~~typically tomid-market ~~access~~focused, ~~and~~provides ~~transact~~vertical ~~information where it happens through smart phones~~specialization, ~~tablet~~increased ~~computers~~flexibility and ~~other~~lower ~~wireless devices. Mobile solutions can securely and~~ cost~~-effectively~~ ~~distribute and automate information from enterprise business systems both inside and outside~~ of ~~the company network, allowing companies to speed up sales cycles and improve service delivery by streamlining customer interactions~~ownership.

• ~~Industry~~Regulatory ~~Specific~~and Data ~~and~~Security ~~Supply Chain Connectivity~~Requirements. ~~Many~~Organizations ofneed ~~our~~to ~~customers~~be ~~are~~able ~~increasingly reliant on industry specific data and analytics~~ to ~~understand~~effectively ~~and~~support ~~grow~~ their ~~businesses.~~business ~~They~~initiatives ~~benefit~~while ~~from~~maintaining ~~deep~~compliance ~~vertical~~with ~~domain~~rapidly ~~expertise~~evolving ~~and~~ industry~~-specific~~ ~~information.~~and Inregulatory ~~addition,~~standards ~~the~~around ~~small~~information and ~~mid-sized~~data ~~companies~~security weincluding ~~serve~~regulations ~~need~~developed toby ~~connect~~payment ~~and~~card ~~engage~~issuers, inthrough ~~commerce~~the ~~with~~Payment anCard ~~ever~~Industry ~~expanding~~Security ~~network~~Standards ofCouncil ~~customers~~(PCI ~~and consumers~~SSC), ~~channel~~to ~~partners~~ensure ~~and~~that ~~suppliers~~organizations ~~globally~~properly safeguard sensitive customer information.

•

Software as a Service and Cloud Computing. Companies are increasingly evaluating applications delivered on a subscription basis or on-demand for their potential to lower upfront costs, reduce cost of ownership, stay current with the latest technology, and reduce overall information technology complexity. In an increasingly global marketplace, growing companies can leverage applications and solutions delivered over the web anywhere they do business without the requirement to invest in expensive infrastructure and servers. Migrating enterprise applications to the cloud can allow small and mid-sized companies to leverage their often constrained IT assets and resources more effectively including redeploying them to focus on projects of higher strategic value.

•

Mobile Devices. Companies are increasingly looking to access and transact information where and when it happens through smart phones, tablet computers and other wireless devices. Mobile solutions can securely and cost-effectively distribute and automate information from enterprise business systems both inside and outside of the company network, allowing companies to speed up sales cycles and improve service delivery by streamlining customer interactions.

•

Industry Specific Data and Supply Chain Connectivity. Many of our customers are increasingly reliant on industry specific data and analytics to understand and grow their businesses. They benefit from deep vertical domain expertise and industry-specific information. In addition, the small and mid-sized companies we serve need to connect and engage in commerce with an ever expanding network of customers and consumers, partners and suppliers globally.

Competition

The enterprise business applications software industry is intensely competitive, rapidly changing and significantly affected by new product offerings and other market activities. A number of companies offer enterprise application suites similar to our product offerings that are targeted at the same markets. In addition, a number of companies offer “best-of-breed,” or point solutions, similar to or competitive with a portion of our enterprise business application suite. Some of our current competitors, as well as a number of potential competitors have larger technical organizations, larger more established marketing and sales organizations and significantly greater financial resources than we do. In addition, potential customers may increasingly demand that certain of our ERP systems incorporate certain databases or operating system software offered by competing products, but not currently supported by our products.

We believe the key factors influencing customers' technology purchase decisions in the markets we serve include, among others: ability to provide a turnkey business management solution with vertical specific functionality, depth of vertical expertise, pricing, level of service offered, credibility and scale of the technology vendor, on-demand and cloud deployment options, and connectivity with chosen industry trading partners.

A number of our competitors vary in size, target markets and overall product scope. Our primary competition comes from independent software vendors in four distinct groups, including (i) large, multinational ERP vendors that increasingly target mid-sized businesses as their traditional market becomes saturated, including Oracle Corporation and SAP AG, (ii) mid-range ERP vendors, including Infor Global Solutions, IFS, and Microsoft Corporation (iii) established point solution providers that compete with only one portion of the Company's overall ERP suite, including Sage Software, Ltd. for financial accounting; Deltek, Inc. and UNIT4 Agresso N.V, for professional services automation; HighJump Software, Inc. (acquired by Accellos Software in 2014), and Manhattan Associates, Inc. for distribution and warehousing; QAD, Inc., for automotive manufacturing; JDA Software Group, Inc., SAP AG, Oracle Corporation (includes MICROS) and NCR Corporation, for specialty retail; and (iv) SaaS providers including NetSuite Inc., Plex Systems, Inc., and Workday, Inc.

In certain markets, we primarily compete against smaller software companies with solutions for a single vertical market or with proprietary systems developed by or for industry participants. In the hardlines and lumber vertical market, we compete primarily with smaller, niche-focused companies, many of which target specific geographic regions. Some of our competitors in this market include Spruce Computer Systems, Inc., e-commerce Industries, Inc., and Distribution Management Systems Inc. In the automotive parts aftermarket, we compete primarily with smaller software and content companies that operate regionally or in a specific niche of the market and with proprietary systems developed by or for industry participants.

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Some of our competitors in this vertical market include Autologue Computer Systems, Inc., and WHI Solutions, Inc. (acquired by eBay in 2012).

In addition, as we sell our products to larger companies, we face increased competition from larger and well-established competitors such as Oracle Corporation and SAP AG. While these competitors offer broad application suites, we believe that our end-to-end product offerings, vertical industry focus, advanced architecture and level of product integration provide a significant competitive advantage.

Our Competitive Strengths

We believe that we are well-positioned to capitalize on the following competitive strengths to achieve future growth:

•

Deep Vertical Domain Expertise with a Mid-Market Customer Focus. We are focused on mid-market companies in industries and vertical markets that have specialized functionality, terminology, processes and best practices that are critical to their success. Moreover, mid-market businesses in these industries build customer loyalty through high-touch customer services which is key to differentiating them from their larger counterparts. We believe the unique and specialized product and service offerings, which are often the competitive strengths of successful mid-market businesses, are not adequately served by general purpose business software suites. We believe mid-market companies require more cost effective systems that have broad functionality and global capabilities, yet are rapidly implemented, easily adapted and highly configurable to their unique business requirements. We provide the deep industry functionality and domain expertise that our mid-market customers need and require to compete more effectively in their particular markets.

• Recognized Software Brand with Global Scale. Based upon our ~~revenue~~revenues, we are the sixth largest global ERP vendor and focus predominantly on the mid-market segment. We are a leading mid-market ERP software provider in many of the industry verticals we serve and have high market shares in those vertical markets as a result of our deep sector expertise, valuable technology and content and high quality of customer service. We have customers in more than 150 countries and offer products in more than 30 languages. We believe our strong brand and ~~increased~~ scale will provide us with momentum to increase our market share by further penetrating our target markets and expanding our service offerings.

• Large Recurring Revenue Base. ~~Services~~Software support, software and cloud subscriptions, hosting, network support and hardware maintenance revenues comprise approximately 58% of revenues for the year ended September 30, ~~2013~~2014. These revenues are generally recurring in nature since they are derived primarily from ~~maintenance~~support services, ~~catalog,~~software ~~databases~~updates, ~~connectivity~~SaaS offerings, ~~managed~~proprietary ~~services~~catalogs, ~~SaaS~~eCommerce ~~offerings~~ and ~~other~~electronic ~~services.~~data Weinterchange, ~~believe~~data ~~that~~warehouses, ~~the~~other ~~generally~~data ~~recurring~~management ~~nature~~products ofand ~~our~~services, ~~maintenance~~hosting and ~~content~~hardware ~~and~~maintenance ~~connectivity~~contracts. ~~revenues~~We ~~provides~~believe that these products and services provide us with a more predictable and stable stream of revenues relative to ~~systems~~our ~~revenues~~other revenue streams. All new ~~systems~~software license customers subscribe to ~~maintenance~~support services and most ~~generally~~ continue to subscribe as long as they use our products. Combining our ~~recurring~~software ~~revenue~~support and ~~systems~~software and cloud subscriptions revenues and other revenue from existing customers, we derived ~~approximately~~over 8980% of our revenue for the year ended September 30, ~~2013~~2014 from our existing customer base.

• Large Diversified Customer Base ~~Across~~across Multiple Mid-Market Verticals. We serve a large diversified base of over 20,000 customers worldwide across the manufacturing, distribution, retail and services industries and are considered a leader in many of our target vertical markets. We also provide industry-specific solutions to a range of subsectors within these vertical markets, including industrial machinery, instrumentation/controls, medical devices, ~~consumer goods~~printing, ~~printing and~~ packaging, food and beverage, automotive and aerospace and defense in manufacturing; electrical, industrial, plumbing, heating/ventilation air conditioning, fluid power and fasteners in distribution; hardware stores, home centers, lumber dealers, the automotive aftermarket, lawn and garden, farm and agriculture, pharmacies, apparel and footwear, department stores and general merchandise in retail; financial and professional services providers; and hotels, resorts and entertainment venues in hospitality. ~~In addition, our automotive parts catalog is used by approximately 27,000 locations. Many of these catalog locations are also systems customers.~~

• Strong Customer Retention. We believe our product and service offerings are integral to the operations of our customers' businesses and switching from our systems generally requires significant time and expense and may present an operating risk for our customers. In addition, our deep vertical focus and strong, ongoing customer relationships drive significant industry-specific functionality that would be difficult for competitors to readily replicate. Our service is critical to many customers as small and mid-sized companies typically lack a large, dedicated technology team to implement and support software and other information technology solutions across multiple vendors. Our focus on providing high-value services enhances the “mission critical” nature of our customer

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~~present an operating risk for our customers. In addition, our deep vertical focus and strong, ongoing customer~~ relationships ~~drive significant industry-specific functionality that would be difficult for competitors to readily replicate~~. Our service is critical to many customers as small and mid-sized companies typically lack a large, dedicated technology team to implement and support software and other information technology solutions across multiple vendors. ~~Our focus on providing high-value services enhances the “mission critical” nature of our customer relationships.~~ As a result, over the ~~past~~last ~~five~~three years, we ~~and the Predecessor~~ have had retention rates in excess of 90% annually on our go-forward platforms.

• Leading Technology Platform. Our technology and product strategy is designed to increase a business' efficiency and agility by automating business processes, improving the visibility and reliability of information and supporting rapid processing of increasing volumes of business transactions. Our key products leverage the latest software tools and technologies. We utilize industry-standard, open technologies for database management, operating systems, user-interface components, infrastructure and network connectivity. Increasingly, we develop our applications based on a services architecture which includes support for ~~Web~~web services protocols. Our next-generation computing model is designed to increase a business' efficiency and agility, which we believe simplifies the development, maintenance, deployment and customization of our products, all of which are critical to our customer base.

•

Global Development Capabilities and Resources. Our global development infrastructure and resources provide us with flexible development capacity to more cost effectively advance the feature sets, technology foundation and architecture of our products. Our global development resources provide round-the clock development capacity. Critical products are built and tested continuously, allowing resources in any time zone the ability to continue the development process. Our agile development process allows us to more effectively respond to and support our customers and markets, which increasingly have worldwide operations and extended global commerce requirements. Our global development centers further allow us increased access to highly technical development resources in lower cost geographies, which is an essential element of our competitive cost structure and operating efficiency.

Our Strategy

We are focused on small and mid-market customers, as well as divisions and subsidiaries of Global 1000 companies that require advanced software solutions and products that are catered to meet their needs. The principal features of our strategy are:

•

Capitalize on a Large and Growing Market Opportunity. While many software sectors have matured and growth has moderated, we are focused on several market opportunities that are growing faster than the overall software market, including the mid-market, customer relationship management, supply chain management, human capital management and business intelligence software markets. With a ten to twelve year product life-cycle, we believe our target market is approaching a potentially significant refresh opportunity. We support customers in more than 150 countries and have an industry-leading breadth of vertical-specific software offerings catered to our small and mid-market ERP customers and divisions of Global 1000 companies which we believe positions us well to capture such growth.

• Expand Our Position in Vertical and Geographic Markets. We believe that businesses in our target vertical markets are increasingly taking advantage of information technology to more effectively manage their operations. Our software enables customers to leverage a solution tailored to the unique needs of their market, as well as focused industry and vertical expertise, through our professional services organization and strategic relationships with key partners. Customers, particularly in the small and mid-sized markets, can benefit through solutions that are easier to implement, easier to use and require less customization than a horizontal solution. We intend to continue to ~~provide~~enhance our ~~solutions~~software and service offerings to better serve, ~~customers~~and ~~deeper~~increase ~~into~~the ~~our~~value ~~target~~we ~~vertical~~deliver ~~and~~to, ~~geographic~~customers ~~markets~~in ~~across~~our ~~the~~target ~~globe~~vertical markets worldwide.

• Maintain Our Technology Leadership. We intend to leverage our large development organization, technical expertise and vertical experience to continue to provide innovative products and services to our customers. Our customer base includes long-term customers using our older, character-based systems, as well as those who have upgraded to our recently developed products running on Microsoft ~~Windows,~~.NET ~~Linux, AIX~~ and ~~several~~Microsoft ~~UNIX platforms~~Windows. We have developed our current generation of products to provide an efficient migration path for customers operating older systems while preserving existing functionality, vertical domain capabilities and offering significant advantages in ease of use, business process management, eCommerce, collaboration, mobile and ~~Web~~web access, business intelligence and analytics.

• Continue to Improve Operational Efficiencies. We have taken significant steps to improve our cost structure and enhance the efficiency of our operations and expect to achieve additional cost savings moving forward. For example, we intend to continue to leverage shared general and administrative costs and rationalize our facilities footprint and legal entity structure. From this and other operational areas, we have identified potential synergies, as well as opportunities to leverage our sizeable, global development organization to grow and improve our business.

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we intend to continue to leverage shared general and administrative costs and rationalize our facilities footprint and legal entity structure. From this and other operational areas, we have identified potential synergies, as well as opportunities to leverage our sizeable, global development organization to grow and improve our business.

•

Selectively Pursue Acquisition Opportunities. We have a successful track record of acquiring and integrating companies and products that have enabled us to broaden our product and customer portfolios, as well as enhance relationships with many of our existing customers. We intend to continue employing a disciplined and focused acquisition strategy and exploring additional acquisition opportunities of varying sizes to expand our product lines, increase our customer base and enhance relationships with our customers. We will seek to opportunistically acquire businesses, products and technologies in existing or complementary vertical markets at attractive valuations, and through leverage and integration strategies, we expect to increase our overall revenue and profitability.

Sales and Marketing

We sell, market and distribute our products and services worldwide, primarily through a direct sales force and internal telesales, as well as through an indirect channel including a network of value added resellers ("VARs"), distributors, national account groups and referral partners who market our products on a predominately nonexclusive basis. Our marketing approach includes developing strategic relationships with many of the well-known and influential market participants in the vertical markets that we serve. In addition to obtaining endorsements, referrals and references, we have data licensing and supply chain service agreements with many of these businesses that we believe are influential. The goal of these programs is to enhance the productivity of the field and inside sales teams and to create leveraged selling opportunities, as well as offering increased benefits to our customers by providing access to common industry business processes and best practices.

Incentive pay is a significant portion of the total compensation package for ~~all~~our sales representatives and sales managers. Our field sales teams are generally organized by new account sales, which focuses on identifying and selling to new customers and teams focused on existing customers including those migrating from one of our legacy systems to one of our new solution offerings. We also have dedicated inside sales teams that focus on selling services, upgrades and new software applications to our installed base of customers.

In recognition of global opportunities for our software products, we have committed resources to a global sales and marketing effort. We have established offices worldwide to further such sales and marketing efforts. We sell our products in the Americas, EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific) through a mix of direct operations, VARs and certain third-party distributors. We translate and localize certain products directly or, on occasion, through outside contractors, for sale in Europe, the Middle East, Africa, Latin America and Asia Pacific.

Product Development

Our product development strategy combines innovative new software capabilities and technology architectures with our commitment to the long-term support of our products to meet the unique needs of our customers and vertical industries we serve. We seek to enhance our existing product lines, offer streamlined upgrade and migration options for our existing customers and develop compelling new products for our existing customer base and prospective new customers. Our customer base includes long-term customers using our older systems, as well as those who have upgraded to our recently developed products running on Microsoft .NET, Microsoft Windows, Linux, AIX and several UNIX platforms. We believe there is a significant opportunity to migrate customers using older systems to our current generation of systems running on more modern technology platforms and the option to deploy their ERP systems in the cloud. We have developed our current generation of products to provide an efficient migration path for customers operating older systems while preserving existing functionality and offering significant advantages in ease of use and new eCommerce capabilities. In the development of our software, we use industry standard tools such as Microsoft .Net, ~~Java,~~and other toolsets from Microsoft Corporation, Java and Progress Software Corporation and a variety of open source technologies. We also leverage a set of key technology relationships with third-party vendors to offer or facilitate a complete turnkey business management solution to our customers. We have relationships with several third-party vendors, including (1) Dell Inc., International Business Machines Corporation and Intermec Inc. for hardware platforms and peripherals, (2) Microsoft Corporation for tools, operating systems and databases, (3) Progress Software Corporation for development tools, (4) Sterling Commerce, Inc. (owned by IBM) and GXS Worldwide, Inc. (formerly Inovis, Inc.) for electronic data interchange and (5) SonicWALL, Inc. for security solutions.

Our product development expense was $~~102~~104.67 million, $83102.36 million and $3183.43 million for the ~~year~~years ended September 30, ~~2013~~2014, ~~the year ended~~ September 30, ~~2012~~2013 and ~~the period from Inception to~~ September 30, ~~2011~~2012, respectively. ~~The Predecessor's product development expense was $19.7 million for the period from October 1, 2010 to May 15, 2011.~~

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Intellectual Property

We regard our software as proprietary in that title to and ownership of the software generally resides exclusively with the Company, and we attempt to protect it with a combination of copyright, trademark and trade secret laws, employee and third-party nondisclosure agreements and other industry standard methods for protecting ownership of our proprietary software. Despite these precautions, there can be no assurance unauthorized third parties will not copy certain portions of the Company's products or reverse engineer or obtain and use information the Company regards as proprietary. To date, ~~the~~we ~~Company~~have ~~has~~ relied to a limited extent on patent protection for ~~its~~our software products. While ~~the~~our ~~Company's~~ competitive position may be affected by ~~its~~our ability to protect ~~its~~our proprietary information, ~~the~~we ~~Company~~believe ~~believes~~ that trademark and copyright protections are less significant to ~~the~~our ~~Company's~~ success than other factors such as the knowledge, ability and experience of the Company's personnel, name recognition and ongoing product development and support. There can be no assurance that the mechanisms used by ~~the~~us ~~Company~~ to protect ~~its~~our software and other intellectual property rights will be adequate or that ~~the~~our ~~Company's~~ competitors will not independently develop products that are substantially equivalent or superior to ~~the~~our ~~Company's~~ software products.

~~The~~Our ~~Company's~~ software products are generally licensed to end users on a “right to use” basis pursuant to a perpetual, non-exclusive license that generally restricts use of the software to the organization's internal business purposes. Additionally, the end user is generally not permitted to sublicense or transfer the products, without paying a fee. When sold through VARs and distributors, Epicor typically licenses its software products pursuant to “shrink wrap” licenses that are not signed by licensees and therefore may be unenforceable under the laws of certain jurisdictions. In addition, the laws of some countries outside the United States do not protect ~~the~~our ~~Company's~~ proprietary rights to the same extent as do the laws of the United States. Certain components of ~~the~~our ~~Company's~~ products are licensed from third parties; however, we do not believe our results of operations are materially dependent on any of these products.

The source code for Avanté and certain other products historically has been licensed to customers for the operation of the software or to enable them to customize the software to meet particular requirements. The standard customer license for such products contains a confidentiality clause protecting the products. In the event of termination of the license agreement, the customer remains bound by the confidentiality obligation and is responsible for any accrued and unpaid license fees. However, there can be no assurance that such customers will take adequate precautions to protect the source code or other confidential information.

There can be no assurance that third parties will not assert infringement claims against the Company in the future with respect to current or future products or that any such assertion may not require the Company to enter into royalty arrangements or result in costly litigation.

Customers and Backlog

No single customer accounted for more than 10% of sales during the year ended September 30, ~~2013~~2014. Products are generally shipped as ordered and are typically received by our customers within a short period thereafter and, accordingly, ~~the~~we ~~Company~~have ~~has~~ historically operated with little or no license backlog. Because of the generally short cycle between order and shipment, ~~the~~we ~~Company~~believe ~~believes~~ that ~~its~~our backlog as of any particular date is not significant or meaningful.

Competition

We believe the key factors influencing customers' technology purchase decisions in the markets we serve include, among others: ability to provide a turnkey business management solution with vertical specific functionality, depth of vertical expertise, pricing, level of services offered, credibility and scale of the technology vendor and connectivity with chosen industry trading partners.

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We have a number of competitors that vary in size, target markets and overall product scope. Our primary

competition comes from independent software vendors in four distinct groups, including (i) large, multinational ERP vendors that are increasingly targeting midsized businesses as their traditional market becomes saturated, including Oracle Corporation (includes PeopleSoft and J.D. Edwards) and SAP AG, (ii) mid-range ERP vendors, including Infor Global Solutions (includes Geac, Lawson, Mapics, Softbrands, SSA, Symix and Systems Union), IFS, and Microsoft Corporation (includes Dynamics, Great Plains, Axapta and Navision), (iii) established point solution providers that compete with only one portion of the Company's overall ERP suite, including Sage Software, Ltd. for financial accounting; Deltek, Inc. and UNIT4 Agresso N.V, for professional services automation; HighJump Software, Inc., and Manhattan Associates, Inc. for distribution and warehousing; QAD, Inc., for automotive manufacturing; JDA Software Group, Inc., SAP AG, Oracle Corporation, and MICROS Systems, Inc., for specialty retail; and Salesforce.com Inc., Siebel Systems Inc. (owned by Oracle Corporation) and FrontRange Solutions USA Inc. for sales force automation, customer service and support and ITSM and (iv) SaaS providers including NetSuite Inc., Plex Systems, Inc., Workday, Inc., and Salesforce.com, Inc.

In certain markets, we primarily compete against smaller software companies with solutions for a single vertical market or with proprietary systems developed by or for industry participants. In the hardlines and lumber vertical market, we compete primarily with smaller, niche-focused companies, many of which target specific geographic regions. Some of our competitors in this market include Spruce Computer Systems, Inc., e-commerce Industries, Inc., and Distribution Management Systems Inc.. In the automotive parts aftermarket, we compete primarily with smaller software and content companies that operate regionally or in a specific niche of the market and with proprietary systems developed by or for industry participants. Some of our competitors in this vertical market include Autologue Computer Systems, Inc., in systems, and WHI Solutions, Inc. (acquired by eBay in 2012), in systems and content and data services.

In addition, as we sell our products to larger companies, we face increased competition from larger and well-established competitors such as Oracle Corporation and SAP AG. While these competitors offer dedicated applications, we believe that our broad product offerings, vertical industry focus, advanced architecture and level of product integration provide a significant competitive advantage.

Suppliers

We purchase materials, supplies, product components, and products as well as license third-party software from a large number of vendors, generally all of which are competitively priced and readily available, however, we do rely on single suppliers or a limited number of suppliers for some of the products included in our business management solutions. We do not believe that we are materially dependent on any single supplier.

Employees

We have ~~over~~approximately 4,~~600~~500 employees worldwide as of September 30, ~~2013~~2014. None of our employees are represented by unions. We have not experienced any labor problems resulting in a work stoppage and believe we have good relations with our employees.

Item 1A — RISK FACTORS

RISK FACTORS

We operate in rapidly changing economic and technological environments that present numerous risks, many of which are driven by factors that we cannot control or anticipate. You should carefully consider the following risks, in addition to the other information contained in this report. The risks described below could materially adversely affect our business, financial condition or results of operations. The risks described below are not exhaustive; additional risks and uncertainties not currently known to us or that we currently consider immaterial could also harm our business, operating results and financial condition.

Risks Related to Our Business

Indebtedness

We have substantial indebtedness, which increases our vulnerability to general adverse economic and industry conditions and may limit our ability to pursue strategic alternatives and react to changes in our business and industry or pay dividends to our parent company to fund interest payments.

As of September 30, 2013, the principal amount of our outstanding debt was of $853.6 million, before $6.2 million unamortized original issue discount ("OID"), under our 2011 Senior Secured Credit Agreement, as amended (the "2011 Credit Agreement") due 2018 and $465.0 million of Senior Notes due 2019 (the "Senior Notes"). Our debt service related to the 2011

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~~Credit~~We ~~Agreement~~have ~~and~~substantial ~~Senior~~indebtedness, ~~Notes~~which ~~for~~increases ~~the~~our ~~year~~vulnerability ~~ended~~to ~~September~~general ~~30,~~adverse ~~2013~~economic ~~was~~and ~~$163.0~~industry ~~million,~~conditions ~~including~~and ~~$8.6~~may ~~million~~limit ofour ~~debt~~ability ~~repayment~~to ~~related~~pursue strategic alternatives and react to ~~the~~changes ~~2011~~in ~~Credit~~our ~~Agreement,~~business and ~~$85.4~~industry ~~million~~or ofcause ~~cash~~us ~~paid~~to ~~for~~pay dividends to our parent company to fund interest payments.

~~Our~~As ~~debt~~of ~~service~~September ~~requirements~~30, ~~with~~2014, ~~respect~~the toprincipal ~~this~~ amount of ~~indebtedness~~our ~~may~~outstanding ~~limit~~debt ~~our~~was ~~operational~~of ~~flexibility~~$818.8 million, ~~our~~before ~~access~~$5.8 tomillion ~~additional~~unamortized ~~capital~~original ~~and~~issue discount ("OID"), under our ~~ability~~2011 toSenior ~~make~~Secured ~~capital~~Credit ~~expenditures~~Agreement, ~~and~~as ~~other~~amended ~~investments~~(the in"2011 ~~our~~Credit ~~business. It~~Agreement") ~~may~~due ~~also~~2018 ~~increase~~and ~~our~~$465.0 ~~vulnerability~~million toof ~~general~~Senior ~~adverse~~Notes ~~economic~~due ~~and~~2019 ~~industry~~(the ~~conditions,~~"Senior ~~may~~Notes"). ~~limit~~Our ~~our~~debt ~~ability~~service related to ~~pursue~~the ~~strategic~~2011 ~~alternatives~~Credit ~~including~~Agreement ~~merger~~and orSenior ~~acquisition~~Notes ~~transactions,~~for tothe ~~withstand~~year ~~economic~~ended ~~downturns~~September ~~and~~30, ~~interest~~2014 ~~rate~~was ~~increases~~$114.5 million, toincluding ~~plan~~$34.8 ~~for~~million orof ~~react~~debt repayment related to ~~changes~~the in2011 ~~our~~Credit ~~business~~Agreement and ~~our~~$79.7 ~~industry,~~million toof ~~comply~~cash ~~with~~paid ~~financial~~for ~~and~~interest ~~other~~(including ~~restrictive~~$3.5 ~~covenants~~million inof ~~our~~interest ~~indebtedness~~settlement orpayments ~~pay~~for ~~dividends~~our interest rate swap).

Our debt service requirements with respect to this amount of indebtedness may limit our operational flexibility, our access to additional capital and our ability to make capital expenditures and other investments in our business. It may also increase our vulnerability to general adverse economic and industry conditions, may limit our ability to pursue strategic alternatives including merger or acquisition transactions, to withstand economic downturns and interest rate increases, to plan for or react to changes in our business and our industry, to comply with financial and other restrictive covenants in our indebtedness or to pay dividends.

Additionally, our ability to comply with the financial and other covenants contained in our debt instruments may be affected by changes in economic or business conditions or other events beyond our control. If we do not comply with these covenants and restrictions, we may be required to take actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing all or part of our existing debt, or seeking additional equity capital.

We may not be able to generate sufficient cash to service all of our indebtedness, including the 2011 Credit Agreement and Senior Notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on, or to refinance, our debt obligations, including the 2011 Credit Agreement and Senior Notes, depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, including the Senior Notes. If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and may be forced to reduce or delay investments and capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness~~, including the Senior Notes~~.

If we are required to restructure or refinance our ~~debt~~indebtedness, or we believe that it is in our best interest to restructure or refinance our ~~debt~~indebtedness, our ability to do so will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our ~~debt~~indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations, or such refinancing may not be available on terms acceptable to us or at all. Further, the terms of existing or future debt instruments ~~and the indenture that will govern the Senior Notes~~ may restrict us from some of these alternatives.

In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. In the absence of cash flows and financial resources from additional indebtedness, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our ~~Moreover, our~~ 2011 Credit Agreement and the indenture that governs the Senior Notes restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions on terms acceptable to us or the proceeds that we could realize from them may not be adequate to meet any debt service obligations then due. Any failure to meet our current or future debt service obligations ~~would~~could have a material adverse effect on our business.

Covenants in the 2011 Credit Agreement, the indenture governing the Senior Notes and debt agreements we may enter into in the future will restrict our business in many ways.

The 2011 Credit Agreement and the indenture governing the Senior Notes contains various covenants that limit, subject to certain exceptions, our ability and/or our restricted subsidiaries’ ability to, among other things:


•	incur or assume liens or additional debt or provide guarantees in respect of obligations of other persons;


•	issue redeemable stock and preferred stock;


•	pay dividends or distributions or redeem or repurchase capital stock;


•	prepay, redeem or repurchase subordinated debt;

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•	make loans, investments and capital expenditures;


•	enter into agreements that restrict distributions from our subsidiaries;


•	grant liens on our assets or the assets of our restricted subsidiaries;


•	enter into certain transactions with affiliates; and


•	consolidate or merge with or into, or sell substantially all the assets of ours and our subsidiaries, taken as a whole.

A breach of any of these covenants could result in a default under the 2011 Credit Agreement and/or the indenture governing the Senior Notes. Further, additional indebtedness that we incur in the future may subject us to further covenants. Our failure to comply with these covenants could result in a default under the agreements governing the relevant indebtedness. If a default under the 2011 Credit Agreement or the indenture governing the Senior Notes or any such debt agreement is not cured or waived, the default could result in the acceleration of indebtedness under our debt agreements that contain cross-acceleration or cross-default provisions, which could require us to repurchase or repay debt prior to the date it is otherwise due and that could adversely affect our financial condition.

14Our ability to comply with covenants contained in the 2011 Credit Agreement, the indenture governing the Senior Notes and any other debt agreements to which we are or may become a party may be affected by events beyond our control, including prevailing economic, financial and industry conditions. Even if we are able to comply with all of the applicable covenants, the restrictions on our ability to manage our business in our sole discretion could adversely affect our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities that we believe would be beneficial to us.

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If a default under the 2011 Credit Agreement or the indenture or any such debt agreement is not cured or waived, the default could result in the acceleration of debt under our debt agreements that contain cross-acceleration or cross-default provisions, which could require us to repurchase or repay debt prior to the date it is otherwise due and that could adversely affect our financial condition.

Our ability to comply with covenants contained in the 2011 Credit Agreement, the indenture and any other debt agreements to which we are or may become a party may be affected by events beyond our control, including prevailing economic, financial and industry conditions. Even if we are able to comply with all of the applicable covenants, the restrictions on our ability to manage our business in our sole discretion could adversely affect our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities that we believe would be beneficial to us.

General Business

Economic and market conditions can materially adversely impact our business, results of operations and financial condition as well as that of our customers.

Our global operations and financial performance vary significantly due to changes in worldwide economic conditions and the overall demand for enterprise software and services. ~~Uncertainty~~Uncertain ~~about current~~ global economic conditions ~~may~~could adversely affect our business and financial performance asif consumers and businesses ~~may continue to~~ postpone spending in response to tighter credit markets, increased unemployment, negative financial news and/or declines in income or asset values,. Macroeconomic ~~which~~developments ~~could~~such ~~have~~as athe ~~material~~recent ~~negative~~recession ~~effect~~and onslow ~~demand~~recovery ~~for~~in ~~our~~the ~~products~~U.S. and ~~services. In~~Europe ~~particular,~~as ~~the~~well ~~global~~as ~~economic outlook remains uncertain, primarily due to~~ the ~~recent~~ European sovereign debt crisis ~~and recession~~, ~~slowing~~could ~~economy~~affect inour ~~China~~business, ~~and~~operating ~~the~~results ~~continued~~and ~~slow~~financial ~~pace of economic recovery in the United States~~condition. A general weakening of, and related declining corporate confidence in, the global economy or the curtailment in government or corporate spending could cause current or potential customers to reduce their IT budgets or be unable to fund software, hardware systems or services purchases, which could cause customers to delay, decrease or cancel purchases of our products and services or cause customers not to pay us or to delay paying us for previously purchased products and services. These and other economic factors ~~have in the past, and~~ could ~~in the future,~~ materially adversely affect demand for our products and services and our financial condition and operating results.

Our operating results are difficult to predict and are subject to substantial fluctuation.

Our ~~and the Predecessor’s~~ revenue and income ~~(loss)~~ from operations have fluctuated significantly in the past. Our operating results may continue to fluctuate in the future as a result of many specific factors that include:

• ~~continued~~ turmoil in the global economy, particularly economic weakness in the U.S., Europe and Asia;

• ~~the~~ demand for our products, including reduced demand related to changes in marketing focus for certain products, software market conditions or general economic conditions as they pertain to IT spending;

• ~~fluctuations~~growth inrates ~~the length~~ of ~~our sales cycles~~, ~~which~~or ~~may~~sudden ~~vary~~changes ~~depending~~in, on the ~~complexity~~market ofsegments ~~our~~in ~~products~~which aswe ~~well as the complexity of the customer’s specific software and service needs~~compete;


•	fluctuations in the length of our sales cycles, which may vary depending on the complexity of our products as well as the complexity of our customers' or prospective customers' specific software and service needs;


•	productivity of our sales and consulting forces and the impact of any reorganizations of those forces;


•	the size and timing of orders for our software products and services, which, because many orders are completed in the final days of each reporting period, may be delayed to future reporting periods;


•	our ability to grow and convert our sales "pipeline";

• the number, timing and significance of new software product announcements, ~~both~~ by us and our competitors;


•	customers’ unexpected postponement or termination of expected system upgrades or replacement due to a variety of factors including economic conditions, credit availability, changes in IT strategies or management changes;


•	changes in accounting standards, including software revenue recognition standards;


•	extraordinary expenses, such as litigation or other dispute-related settlement payments;

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•	general political developments and governmental budgetary constraints;


•	currency fluctuations and devaluation; and


•	fluctuations in number of customers continuing to subscribe to maintenance and support services or content and connectivity offerings.

In addition, we have historically realized a significant portion of our software license revenues in the final month of the reporting period, with a concentration of such revenues recorded in the final ten business days of that month. Further, we generally realize a significant portion of our annual software license revenues in the final quarter of the fiscal year. If expected sales at the end of any reporting period or at the end of any fiscal year are delayed for any reason, including the failure of anticipated orders to materialize, or our inability to ship products prior to quarter-end to fulfill orders received near the end of the reporting period, our results for that reporting period or for the full fiscal year could fall below our expectations or those of our stakeholders.

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Due to the above factors, among others, our revenues are difficult to forecast. We, however, base our expense levels, including operating expenses and hiring plans, in significant part, on our expectations of future revenue and the majority of our expenses are fixed in the short term. As a result, we may not be able to reduce our expenses quickly enough or in sufficient amounts to offset any expected shortfall in revenue. If this occurs, our operating results could be adversely affected and below expectations.

~~Further, we have a limited history operating as a combined company and our integration efforts are continuing.~~ As a result of all of these factors and other factors discussed in these risk factors, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful, and you should not rely upon them as an indication of our future performance.

Our results have been harmed by, and our future results could be harmed by, economic, political, geographic, regulatory and other specific risks associated with our international operations.

We have significant operations in jurisdictions outside the United States and we plan to continue to expand our international operations and sales activities. We believe that our future growth will be dependent, in part, upon our ability to maintain and increase revenues in our existing and emerging international markets. We can provide no assurance that the revenues that we generate from foreign activities will be adequate to offset the expense of maintaining foreign offices and activities. In addition, maintenance or expansion of our international sales and operations are subject to inherent risks, including:


•	rapidly changing economic and political conditions;


•	differing intellectual property and labor laws;


•	lack of experience in a particular geographic market;


•	compliance with a wide variety of complex foreign laws, treaties and regulatory requirements;


•	activities by our employees, contractors or agents that are prohibited by United States laws and regulations such as the Foreign Corrupt Practices Act and by local laws prohibiting corrupt payments to government officials or other persons, in spite of our policies and procedures designed to promote compliance with these laws;


•	tariffs and other barriers, including import and export requirements and taxes on subsidiary operations;


•	fluctuating exchange rates, currency devaluation and currency controls;


•	restrictions on our ability to access cash in foreign jurisdictions;


•	difficulties in staffing and managing foreign sales and support operations;

• longer accounts receivable ~~payment~~collection cycles;


•	potentially adverse tax consequences, including repatriation of earnings;


•	development and support of localized and translated products;


•	lack of acceptance of localized products or the Company in foreign countries;


•	shortage of skilled personnel required for local operations; and


•	perceived health risks, natural disasters, hostilities, political instability or terrorist risks which impact a geographic region and business operations therein.

Any one of these factors or a combination of them could materially and adversely affect our future international sales and, consequently, our business, operating results, cash flows and financial condition.

~~The~~Offshoring ~~failure~~and outsourcing certain of our ~~Epicor~~operations ~~ERP~~ and/or ~~other~~services ~~products~~may toadversely ~~compete~~affect ~~successfully could materially impact~~ our ability to ~~grow~~maintain ~~our business. In addition, we may not be successful in our strategy to expand~~ the ~~marketing~~quality of ~~our~~service ~~systems~~that towe ~~new~~provide ~~retail~~ and ~~ERP~~damage ~~subvertical markets, which would negatively impact~~ our ~~financial performance~~reputation.

~~Epicor~~As ~~ERP,~~part of our ~~ERP~~efforts ~~software product, became generally available in 2008. If we are not able~~ to ~~continue~~streamline tooperations ~~successfully market~~ and ~~license~~reduce ~~Epicor ERP or our other products in the future~~costs, itwe ~~may~~ have anoffshored ~~adverse effect on our financial condition~~ and ~~results~~outsourced certain of ~~operations.~~our ~~In addition~~operations, weservices ~~operate~~and inother afunctions ~~highly competitive segment of the software industry~~ and ifwe ~~our~~will ~~competitors~~continue ~~develop~~to ~~more~~evaluate ~~successful~~additional ~~products~~offshoring or ~~services,~~outsourcing ~~our~~possibilities. ~~revenue~~If ~~and profitability will most likely decline.~~

We have begun to market our products to new retail markets and wholesale subvertical markets. There can be no assurance that our products will achieve widespread acceptance in these markets, that we will be able to successfully compete against incumbent suppliers, or that we will successfully develop industry association relationships which will help lead to penetration of this new subvertical. If we are unable to expand into new subvertical markets, our financial performance may be negatively impacted.

The market for our software products and services is highly competitive. If we are unable to compete effectively with existing or new competitors our business could be negatively impacted.

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~~The~~our ~~business~~outsourcing ~~information~~partners ~~systems~~or ~~industry~~operations infail ~~general~~to ~~and~~perform ~~the~~their ~~manufacturing,~~obligations ~~distribution,~~in ~~retail,~~a ~~customer~~timely ~~relationship~~manner ~~management~~or ~~and~~at ~~financial~~satisfactory ~~computer~~quality ~~software~~levels ~~industries~~or ~~specifically,~~if ~~in which~~ we ~~compete~~ are ~~very~~unable ~~competitive and subject~~ to ~~rapid~~attract ~~technological~~or ~~change,~~retain ~~evolving~~sufficient ~~standards,~~personnel ~~frequent~~with ~~product~~the ~~enhancements~~necessary ~~and~~skill ~~introductions~~sets ~~and~~to ~~changing~~meet ~~customer requirements. Many of~~ our ~~current~~offshoring ~~and potential competitors have (i) longer operating histories~~needs, ~~(ii)~~the ~~significantly~~quality ~~greater~~of ~~financial,~~our ~~technical and marketing resources~~services, ~~(iii)~~products ~~greater name recognition, (iv) larger technical staffs, larger international presence~~ and~~/or~~ ~~(v) a larger installed customer base than ours. In addition~~operations, as ~~we continue to sell to larger companies outside the mid-market, we face more competition from large~~ well~~-established~~ ~~competitors such~~ as ~~SAP AG and Oracle Corporation. A number of companies offer products that are similar to~~ our ~~products~~reputation, ~~and~~could ~~target the same markets~~suffer. Our Insuccess ~~addition~~depends, ~~any of these competitors may be able to respond more quickly to new or emerging technologies and changes~~ in ~~customer~~part, ~~requirements (such as commerce~~ on ~~the~~our ~~Internet~~ability ~~and Web-based application software), and~~ to ~~devote~~manage ~~greater~~these ~~resources~~difficulties towhich ~~the~~could ~~development,~~be ~~promotion~~largely ~~and~~outside ~~sale~~ of ~~their~~our ~~products than we can~~control. In ~~Furthermore~~addition, ~~because~~much ~~there~~of ~~are~~our ~~relatively~~offshoring ~~low~~takes ~~barriers~~place ~~to entry~~ in ~~the~~developing ~~software~~countries ~~industry, we expect additional competition from other established~~ and ~~emerging~~as ~~companies.~~a ~~Such~~result ~~competitors~~ may ~~develop~~also ~~products~~be ~~and~~subject ~~services~~to ~~that~~geopolitical ~~compete with those offered by us or may acquire companies, businesses and product lines that compete with us~~uncertainty. Diminished Itservice ~~also~~quality isfrom ~~possible~~offshoring ~~that competitors may create alliances~~ and ~~rapidly~~outsourcing ~~acquire significant market share, including new and emerging markets. Competition~~ could ~~cause~~have ~~extended~~an ~~payment~~adverse ~~terms,~~material ~~price~~impact ~~reductions,~~to ~~reduced margins or loss of market share for~~ our ~~products and services, any of which could materially and adversely affect our business,~~ operating results ~~and~~due ~~financial condition. There can be no assurance that we will be able~~ to ~~compete~~service ~~successfully~~interruptions ~~against current~~ and ~~future~~negative ~~competitors~~customer ~~or that the competitive pressures that we may face will not materially adversely affect our business, operating results, cash flows and financial condition~~reactions.

The failure of Epicor E10, Eagle N Series or our other primary products to compete successfully could materially impact our ability to grow our business. In addition, we may not be successful in our strategy to expand the marketing of our systems to new retail and ERP subvertical markets, which would negatively impact our financial performance.

Epicor E10, an ERP software product, became generally available in April 2014. Eagle N Series, a Retail Distribution product, became generally available in July 2014. If we are not able to successfully market and license Epicor E10, Eagle N Series or our other primary products in the future, it may have an adverse effect on our financial condition and results of operations. In addition, we operate in a highly competitive segment of the software industry and if our competitors develop more successful products or services, our revenue and profitability will most likely decline.

We have begun to market our products and services to new subvertical segments of the retail, distribution and ERP markets. There can be no assurance that our products will achieve widespread acceptance in these markets, that we will be able to successfully compete against incumbent suppliers, or that we will successfully develop industry association relationships which will help lead to penetration of these new subverticals. If we are unable to expand into new subvertical markets, our financial performance may be negatively impacted.

The market for our software products and services is highly competitive. If we are unable to compete effectively with existing or new competitors our business could be negatively impacted.

The business information systems industry in general and the enterprise applications market specifically, in which we compete are very competitive and subject to rapid technological change, evolving standards, frequent product enhancements, new offerings, regulatory mandates and changing customer requirements. Many of our current and potential competitors have (i) longer operating and product development histories, (ii) significantly greater financial, technical and marketing resources, (iii) greater name recognition, (iv) larger technical organizations, (v) larger international presence and/or (vi) a larger installed customer base than ours. In addition, as we continue to sell to larger companies outside the mid-market, we face more competition from large well-established competitors such as SAP AG (“SAP”) and Oracle Corporation (“Oracle”). Furthermore, if larger customers or prospects want to reduce their number of software vendors, they may elect to purchase competing products from SAP or Oracle as such larger vendors offer a wider range of products. A number of companies offer products that are similar to our products and target the same markets. Any of these competitors may be able to respond more quickly to new or emerging technologies and market trends (such as cloud computing, and social and mobile applications), and devote greater resources to the development, promotion and sale of their products than we can. Moreover, because there are relatively low barriers to entry in the software industry, we expect additional competition from other established and emerging companies. Such competitors may develop products and services that compete with those offered by us or may acquire companies, businesses and product lines that compete with us. It also is possible that competitors may create alliances and rapidly acquire significant market share, including new and emerging markets. Further, our competitors may offer extended payment terms or price reductions for their products and services, either of which could materially and adversely affect our ability to compete successfully, operating results and financial condition. There can be no assurance that we will be able to compete successfully against current and future competitors or that the competitive pressures that we may face will not materially adversely affect our business, market share, operating results, cash flows and financial condition.

We face intense competition in the marketplace which may necessitate changes to our pricing models to successfully compete.

Competition and general economic and market conditions may necessitate changes to our pricing model. If our competitors offer deep discounts or other favorable commercial terms, such as extended payment terms, contractual warranties, implementation terms or guarantees, on certain competing products or services, we may need to respond by lowering prices or offering additional favorable terms in order to compete successfully. Any such changes to our pricing could adversely affect our revenue, operating results and cash flows. Our ~~maintenance~~software and hardware support ~~fees~~services are generally priced as a percentage of our software license fees and hardware product fees, respectively. If our competitors offer lower pricing on their ~~maintenance~~software and hardware support offerings, it would put additional pressure on us to discount our pricing for these services.

A significant portion of our future revenue is dependent upon our existing installed base of customers continuing to license additional products, as well as purchasing consulting services and continuing to subscribe to maintenance and support services. Our revenues and results of operations could be materially impacted if our existing customers do not continue, or reduce the level of, their subscriptions to maintenance and support services, or fail to purchase new user licenses or product enhancements or additional services from us at historical levels.

For the year ended September 30, 2013, approximately 89% of our total revenues were generated from our installed base of customers. For certain of our products, maintenance and support agreements with customers are renewed at the customer’s discretion, and for other products, customers may elect to terminate support and maintenance services, typically upon 60 days' notice. There normally is no requirement that a customer renew maintenance and support or that a customer pay new license or service fees to us following the initial purchase. Some customers have not renewed, or have terminated, or reduced the level of, maintenance and support services as a result of the recent economic downturn. If our existing customers do not renew or continue maintenance and support services or fail to purchase new user licenses or product enhancements or additional services at historical levels, our revenues and results of operations could be materially impacted.

Our customer base may shrink due to a number of factors which may reduce our revenues, and negatively impact our financial performance.

The markets we serve are highly fragmented. These markets have in the past and are expected to continue to experience consolidation. For example, the hard goods and lumber vertical market served by the Retail Distribution segment has experienced consolidation as retail hardware stores and lumber and building materials dealers try to compete with mass merchandisers such as The Home Depot, Inc., Lowe’s Home Centers, Inc. and Menard, Inc.

Our customers may be acquired by companies with their own proprietary business management systems or by companies that utilize a competitor’s system. We may lose these customers as a result of this consolidation.

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~~solutions~~A orsignificant ~~stay~~portion inof ~~business.~~our Infuture ~~addition,~~revenue ~~the~~is ~~recent~~dependent ~~economic~~upon ~~downturn~~our ~~has~~existing ~~caused~~installed base of customers continuing to ~~exit~~license ~~the~~additional ~~market~~products, ~~altogether~~as well as purchasing consulting services and ~~there~~continuing ~~may~~to subscribe to support services, managed services, hosting and software and cloud subscriptions. Our revenues and results of operations could be ~~insufficient~~materially ~~new~~impacted if our existing customers ~~entering~~do ~~the~~not ~~market~~continue, toor ~~replace~~reduce the ~~business~~level of, ~~exiting~~their ~~customers.~~support services, managed services, hosting and software and cloud subscriptions, or fail to purchase new user licenses or product enhancements or additional services from us at historical levels.

~~Our~~We generate a substantial majority of our revenue ~~may~~from ~~also~~our ~~contract~~installed ifbase of customers. For ~~reduce~~certain ~~the~~of ~~level~~our ofproducts, ~~maintenance~~support and other service agreements with customers are renewed at the customer’s discretion, and for other products, customers may elect to terminate support services, ~~subscribed~~typically upon 60 days' notice. ~~This~~There ~~may~~normally ~~occur~~is inno ~~response~~requirement tothat a ~~downturn~~customer inrenew ~~economic~~support and ~~market~~other ~~conditions.~~service ~~For~~agreements ~~example,~~or asthat ~~customers~~a ~~reduce~~customer ~~their~~pay ~~employee~~new ~~base~~license or service fees to us following the initial purchase. Some customers have not renewed, ~~they~~or ~~may~~have ~~reduce~~terminated, or reduced the ~~number~~level of, ~~users~~support ~~for~~services ~~which~~and ~~they~~other ~~subscribe~~service ~~for~~agreements ~~maintenance~~following ~~and~~the ~~support~~last economic downturn. ~~Additionally,~~If weour ~~anticipate~~existing ~~that~~customers ~~maintenance~~do ~~and~~not renew or continue support ~~revenue~~services ~~from~~or ~~our~~other ~~legacy~~service ~~products~~agreements ~~for~~or ~~which~~fail weto ~~have~~purchase ~~decreased~~new ~~development~~user ~~funding~~licenses ~~will~~or ~~decline~~product ~~over~~enhancements ~~time~~or additional services at historical levels, our revenues and results of operations could be materially impacted.

Revenues from our existing customer base may shrink due to a number of factors which may negatively impact our financial performance.

The markets we serve are highly fragmented. These markets have experienced consolidation in the past and are expected to continue to do so. For example, the hard goods and lumber vertical markets served by the Retail Distribution segment have experienced consolidation as retail hardware stores and lumber and building materials dealers try to compete with mass merchandisers such as The Home Depot, Inc., Lowe’s Home Centers, Inc. and Menard, Inc.

We may also lose customers if customers exit the markets in which we operate or migrate to competitors’ products and services. For example, if original equipment manufacturers successfully increase sales into the automotive parts aftermarket, our customers in this vertical market may lose revenues, which could adversely affect their ability to purchase and maintain our solutions or stay in business. Additionally, economic downturns may cause customers to exit the market altogether and there may be insufficient new customers entering the market to replace the business of existing customers.

Our revenue may also contract if customers reduce the level of support subscriptions and other subscription-based service agreements. This may occur in response to a downturn in economic and market conditions, if customers determine that they can no longer afford our support and other services or if customers reduce their employee base and reduce the number of users for which they subscribe for support and other service agreements. Additionally we anticipate that support and other services agreement revenue from our legacy products, for which we have decreased development funding, will decline over time.

If we do not develop new relationships and maintain our existing relationships with key customers and/or well-known market participants, our revenues could decline significantly and our operating results could be materially adversely affected.

We have developed strategic relationships with many well-known market participants in the retail and wholesale distribution vertical markets. For example, we are a preferred and/or a recommended business management solutions provider for the members of the Ace Hardware Corporation, True Value Company and Do it Best Corp. cooperatives and Aftermarket Auto Parts Alliance, Inc. We believe that our ability to increase revenues depends in part upon maintaining our existing customer and market relationships, including exclusive, preferred and/or recommended provider status, and developing new relationships. We may not be able to renew or replace our existing licensing agreements upon expiration or maintain our market relationships that allow us to market and sell our products effectively. The loss or weakening of key relationships, in whole or in part, could materially adversely impact our business.

We may not retain or attract customers if we do not develop new products and enhance our existing products in response to technological changes and competing products.

We operate in an industry with rapid technological change, evolving standards and regulations and changing and increasingly sophisticated customer needs. If we are unable to develop new products and services or enhance and improve our existing products and services in a timely manner, customers may not purchase our software or subscribe to subscription-based service agreements or renew their support subscriptions and other subscription-based service agreements. Our business may be adversely affected if:

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•	we do not continue to develop and release new or enhanced products and services within the anticipated time frames;


•	there is a delay in market acceptance of a new, enhanced or acquired product lines or services; or


•	there are changes in information technology trends that we do not adequately anticipate or address with our product development efforts.

We rely on automotive aftermarket and original equipment parts manufacturer information for our electronic automotive parts and applications catalog, and we are increasingly facing pressure to present our electronic automotive parts and applications catalog in a flexible format, each of which could expose us to a variety of risks, including increased pressure on our pricing.

We are dependent upon automotive aftermarket and original equipment parts manufacturers to supply and continually update information for our electronic automotive parts and applications catalog. Currently, we obtain most of this information without a written agreement with these suppliers. In the future, more suppliers may require us to enter into a license agreement or may make it more generally available to others. In addition, as a result of competitive pressures and technical requirements, we may be required to provide our electronic automotive parts and applications catalog in an industry standard format, which could make it more difficult for us to maintain control over the way information presented in our catalog is used. For example, an industry association is currently developing a data collection format that would make this information more accessible to consumers and provide it in a more generalized format. Any significant change in the manner or basis on which we currently receive this information or in which it is made available to others who are or who could become competitors could have a material adverse effect on our electronic automotive parts and applications catalog business, which could have a material adverse effect on our business and results of operations.

If the emerging and current technologies and platforms of Microsoft Corporation and others upon which we build our products do not gain or retain broad market acceptance, or if we fail to develop and introduce in a timely manner new products and services compatible with such emerging technologies in a timely manner, we may not be able to compete effectively and our ability to generate revenues will suffer.

Our software products are built and depend upon several underlying relational database management system platforms such as systems offered by Microsoft Corporation, Progress Software Corporation, Oracle Corporation, MySQL, and Rocket Software, Inc., which are regularly evolving. The market for our software products is subject to ongoing rapid technological developments, quickly evolving industry standards and rapid changes in customer requirements, and there may be existing or future technologies and platforms that achieve industry standard status, which are not compatible with our products. Additionally, because our products rely significantly upon popular existing user interfaces to third party business applications, we must forecast which user interfaces will be popular in the future. For example, we believe the Internet, ~~has~~mobile and the cloud have and will continue to transform the way businesses operate and the software requirements of customers, who are increasingly shifting towards ~~web~~Web-based, mobile and cloud applications and away from server-based applications. ~~Specifically, we believe that customers desire business software applications that enable a customer to engage in commerce or service over the Internet.~~ We are continuing to develop several of our primary product lines upon the Microsoft .NET technology. If we cannot continue to develop such .NET-compatible products in time to effectively bring them to market, or if .NET does not continue to be a widely accepted industry standard, or if customers adopt competitors’ products when they shift to Web-based, mobile and cloud applications, the ability of our products to interface with popular third party applications will be negatively impacted and our competitive position, operating results and revenues could be adversely affected.

18As Software as a Service ("SaaS"), hosting, subscription-based and other new software technologies or models become more widespread, we may be driven to alter our business model resulting in adverse effects on our operating results.

~~Table~~Development of ~~Contents~~ new technologies or models may cause us to change how we license or price our products, which may adversely impact our revenues and operating results. Developing licensing models include SaaS and subscription-based licensing, in which the licensee essentially rents software for a defined period of time, as opposed to the perpetual license model. We currently offer a hosted model as well as a SaaS model to customers of some of our retail and ERP products. Currently, we sell the majority of our software under perpetual licensing arrangements where we record revenue when the software is delivered. If our SaaS business continues to grow, more revenue will shift from perpetual licenses to subscriptions, which will cause a deferral of revenues and cash received from customers.

New software technologies could cause us to alter our business model resulting in adverse effects on our operating results.

Development of new technologies may cause us to change how we license or price our products, which may adversely impact our revenues and operating results. Developing licensing models include SaaS, hosting and subscription-based licensing, in which the licensee essentially rents software for a defined period of time, as opposed to the current perpetual license model. We currently offer a hosted model as well as a SaaS model to customers of some of our retail and ERP products. Currently, we sell the majority of our software under perpetual licensing arrangements where we record revenue when the software is delivered. If our SaaS and on demand business continues to grow, more revenue will shift from perpetual licenses to subscriptions, which will cause a deferral of revenues and cash received from customers.

Our future business, operating results and financial condition will depend on the ability of our sales force to sell an integrated comprehensive set of business software products and our ability to recognize and implement emerging industry standards and models, including new pricing and licensing models. Our competitive position and revenues could be adversely affected if we fail to respond to emerging industry standards including licensing models and end-user requirements.

Our increasingly complex software products may contain errors or defects, which could result in the rejection of our products and damage to our reputation as well as cause lost revenue, delays in collecting accounts receivable, diverted development resources and increased service costs and warranty claims.19

~~Our~~Table software products are complex and often contain undetected errors or failures (commonly referred to as bugs). Despite testing by us, and by current and potential customers, prior to general release to the market, our products may still contain material errors. Such material defects or errors may result in loss of or delay in market acceptance, release or shipment of our products, or if the defect or error is discovered only after customers have received the products, these defects or errors could result in increased costs, litigation, customer attrition, reduced market acceptance of our systems and services or damage to our reputation. Ultimately, such errors or defects could lead to a decline in our revenues. We have from time to time been notified by some of our customers of errors in our various software products. If we are unable to correct such errors in a timely manner it could have a material adverse effect on our results of operations and our cash flows. In addition, if material technical problems with the current release of the various database and technology platforms, on which our products operate, including offerings by Progress Software Corporation, Rocket Software, Inc., Oracle Corporation and Microsoft Corporation (i.e., SQL Server and .NET), occur, such difficulties could also negatively impact sales of these products, which could in turn have a material adverse effect on our results of operations.Contents

Our increasingly complex software products may contain errors, defects, security flaws or be implemented incorrectly which could result in the rejection of our products and damage to our reputation as well as cause lost revenue, delays in collecting accounts receivable, diverted development resources and increased service costs and warranty claims.

Although our products are tested prior to release, because our products are deployed in large and complex environments, they can only be fully tested for reliability when deployed in networks for long periods of time. Our software programs may contain undetected errors or defects (commonly referred to as bugs) when first introduced or as new versions are released. Our customers might encounter difficulties with the implementation of our products, experience corruption of their data or encounter performance or scaling problems only after our software programs have been deployed. The services needed for implementing our products are also complex, and require knowledge and cooperation between both the customer and the implementation team. As a consequence, from time to time we have received customer complaints or have been sued. We may not be able to avoid or limit liability for disputes relating to product performance, product implementation or security flaws, which may result in loss of or delay in market acceptance, release or shipment of our products, or if the defect or error is discovered only after customers have received the products, these defects or errors could result in increased costs, litigation, customer attrition, reduced market acceptance of our systems and services or damage to our reputation. Ultimately, such errors or defects could lead to a decline in our revenues. In addition, if material technical problems with the current release of the various database and technology platforms, on which our products operate, including offerings by Progress Software Corporation, Rocket Software, Inc., Oracle Corporation and Microsoft Corporation (i.e., SQL Server and .NET), occur, such difficulties could also negatively impact sales of these products, which could in turn have a material adverse effect on our results of operations.

The market for new development tools, application products and consulting and education services continues to emerge, which could negatively affect our client/server and Web-based products, and, if we fail to respond effectively to evolving requirements of these markets, our business, financial condition, results of operations and cash flows could be materially and adversely affected.

Our development tools, application products and consulting and education services generally help organizations build, customize and deploy solutions that operate in both client/server-computing and Web-based environments. We believe that the environment for application software is continuing to change from client/server to a Web-based environment to facilitate commerce on the Internet. There can be no assurance that we will be able to effectively respond to the evolving transition to Web-based markets. Deterioration in the client/server market or our failure to respond effectively to the transition to and needs of Web-based markets could harm our ability to compete or grow our business which would adversely affect our financial condition and results of operations.

In the event of a failure in a customer’s computer system installed by us or failed installation of a system sold by us, a claim for damages may be made against us regardless of our responsibility for the failure, which could expose us to liability.

We provide business management solutions that we believe are critical to the operations of our customers’ businesses and provide benefits that may be difficult to quantify. In addition, we are introducing new backup products for our customers and assuming additional responsibility for their disaster recovery plans and procedures. Any failure of a customer’s system installed by us or any aborted installation of a system sold by us could result in a claim for substantial damages against us, regardless of our responsibility for the failure. Although we attempt to limit our contractual liability for damages resulting from negligent acts, errors, mistakes or omissions in rendering our services, the limitations on liability we include in our agreements may not be enforceable in all cases, and those limitations on liability may not otherwise protect us from liability for damages. Furthermore, our insurance coverage may not be adequate and that coverage may not remain available at acceptable costs. Successful claims brought against us in excess of our insurance coverage could seriously harm our business, prospects, financial condition and results of operations. Even if not successful, large claims against us could result in significant legal and other costs and may be a distraction to our senior management.

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Our software products incorporate and rely upon third party software products for certain key functionality. Our revenues, as well as our ability to develop and introduce new products, certain of which are provided by sole suppliers, could be adversely affected by our inability to control or replace these third party products and operations.

Our products incorporate and rely upon software products developed by several other third party entities such as Microsoft Corporation, Progress Software Corporation, and Rocket Software, Inc. Specifically, our software products are built and depend upon several underlying and evolving relational database management system platforms including Microsoft SQL Server, Progress OpenEdge and Rocket U2TM and also are integrated with several other third party provider products for the purpose of providing or enhancing necessary functionality. In the event that these third party products were to become unavailable to us or to our customers, either directly from the third party manufacturers or through other resellers of such ~~products, we may not be able to readily replace these products with substitute products. We cannot provide assurance that these third parties will:~~

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products, we may not be able to readily replace these products with substitute products. We cannot provide assurance that these third parties will:


•	remain in business;


•	continue to support our product lines;


•	maintain viable product lines;


•	make their product lines available to us on commercially acceptable terms; and


•	not make their products available to our competitors on more favorable terms.

Any interruption could have a significant detrimental effect on our ability to continue to market and sell those of our products relying on these specific third party products, additionally any errors or defects in third-party software could result in errors or a failure of our software and services, which could have a material adverse effect on our business, results of operations, cash flows and financial condition.

If we were to lose and not be able to replace the services of the members of our senior management team and other key personnel, we may not be able to execute our business strategy and achieve our financial objectives.

Our future success depends in a large part upon the continued service of key personnel, including members of our senior management team and highly skilled employees in technical, marketing, sales and other key positions. We face extreme competition for these resources, particularly from within our industry. All of our key employees, including our executive officers, are at-will employees. There can be no assurance that we will continue to attract and retain key personnel, and the failure to do so could have a material adverse effect on our business, operating results, cash flows and financial condition.

We expect to continue to pursue strategic acquisitions, investments and relationships and we may not be able to successfully manage our operations if we fail to successfully integrate such acquired businesses and technologies, which could adversely affect our operating results.

As part of our business strategy, we expect to pursue strategic acquisitions, investments and relationships, such as joint development agreements and technology licensing agreements, in order to expand our product offerings to include application software products and services that are complementary to our existing software applications, particularly in the areas of electronic commerce or commerce over the Internet, or to gain access to established customer bases into which we can sell our current products. For example, in fiscal 2012, we acquired the remaining equity interests of Internet AutoParts, Inc. ("Internet AutoParts") and certain assets of Cogita Business Services Ltd. ("Cogita"), and in fiscal 2013 we acquired the business of Solarsoft Business Systems~~. In~~ ~~connection with these acquisitions, investments and relationships, we commonly encounter the following risks:~~("Solarsoft").

In connection with acquisitions, investments and relationships, we commonly encounter the following risks:


•	the potential failure to achieve the expected benefits of the combination or acquisition;


•	potential for unknown liabilities associated with the acquired businesses to materialize;


•	difficulty valuing the acquired business on a strategic and financial basis;


•	difficulty in effectively integrating any acquired technologies or software products into our current products and technologies;


•	difficulty in predicting and responding to issues related to product transition such as development, distribution and customer support;


•	adverse impact on existing relationships with third party partners and suppliers of technologies and services;

• failure to retain customers of the acquired company who might not accept new ownership and may transition to different technologies or attempt to renegotiate contract terms or relationships, including ~~maintenance~~support orand ~~support~~service agreements;


•	failure to completely identify and resolve in a timely manner material issues associated with product quality, product architecture, product development, intellectual property, key personnel or legal and financial contingencies;


•	difficulty in integrating acquired operations, including incorporating internal control structures, due to geographical distance, and language and cultural differences; and


•	difficulty in retaining employees of the acquired company.

20A failure to successfully integrate acquired businesses or technology for any of these reasons could disrupt our ongoing business, distract our management or otherwise have a material adverse effect on our results of operations.

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A failure to successfully integrate acquired businesses or technology for any of these reasons could have a material adverse effect on our results of operations.

Initiatives to upgrade our information technology infrastructure involve many risks which could result in, among other things, business interruptions and higher costs.

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We regularly implement business process improvement initiatives to optimize our performance. Our current business process initiatives include plans to improve business results through standardization of business processes and technology that support our Company through implementation of integrated software solutions over the next few years. We may experience difficulties as we transition to these new or upgraded systems and processes, including loss of data, decreases in productivity as our personnel become familiar with new systems and lost revenues. In addition, transitioning to these new or upgraded systems requires significant capital investments and personnel resources. Difficulties in implementing new or upgraded information systems or significant system failures could disrupt our operations and have a material adverse effect on our capital resources, financial condition, results of operations or cash flows.

We expect implementation of this new information technology infrastructure to have a pervasive impact on our business processes and information systems across a significant portion of our operations, including our finance operations. As a result, we may experience significant changes in our operational processes and internal controls as our implementation progresses. If we are unable to successfully implement this system, including harmonizing our systems, data and processes, our ability to conduct routine business functions could be negatively impacted and significant disruptions to our business could occur. In addition, we could incur material unanticipated expenses, including additional costs of implementation or costs of conducting business. These risks could result in significant business disruptions and have a material adverse effect on our operations, financial reporting process, capital resources, financial condition, results of operations, or cash flows.

~~Offshoring~~We have taken restructuring actions in connection with acquisitions and ~~outsourcing~~the ~~certain~~globalization of our ~~operations~~workforce and~~/or~~ ~~services~~we may ~~adversely~~take ~~affect~~additional ~~our~~restructuring ~~ability~~actions toin ~~maintain~~ the ~~quality~~future ofthat ~~service~~would ~~that~~result wein ~~provide~~additional ~~and~~charges ~~damage~~which would have a negative impact on our ~~reputation~~results of operations in the period the action is taken.

As ~~part~~a result of our ~~efforts to streamline operations and reduce costs~~acquisitions, wethe ~~have~~globalization ~~offshored and outsourced certain~~ of our ~~operations~~workforce, ~~services~~prevailing ~~and~~economic ~~other~~conditions ~~functions~~ and weour ~~will~~decision ~~continue~~ to ~~evaluate~~more ~~additional~~properly ~~offshoring~~align ~~or outsourcing possibilities. If~~ our ~~outsourcing~~cost ~~partners~~structure ~~or operations fail to perform their obligations in a timely manner or at satisfactory quality levels or if we are unable to attract or retain sufficient personnel~~ with ~~the~~our ~~necessary~~projected ~~skill~~revenues, ~~sets to meet~~ our ~~offshoring~~management ~~needs,~~approved ~~the~~restructuring ~~quality~~plans ofeliminating ~~our~~certain ~~services,~~employee ~~products~~positions and ~~operations,~~consolidating ascertain ~~well~~excess asfacilities. ~~our~~For ~~reputation,~~the ~~could~~year ~~suffer.~~ended ~~Our~~September ~~success depends~~30, ~~in part~~2014, onwe ~~our~~recorded ~~ability~~restructuring tocharges ~~manage these difficulties which could be largely outside~~ of ~~our control~~$3.9 ~~In addition~~million, ~~much~~primarily ofrelated ~~our offshoring takes place in developing countries and as a result may also be subject~~ to ~~geopolitical~~employee ~~uncertainty.~~severance ~~Diminished service quality from offshoring~~ and ~~outsourcing~~excess ~~could~~facility ~~have an adverse material impact to our operating results due to service interruptions and negative customer reactions~~costs.

WeFuture ~~have taken restructuring actions in connection with~~ acquisitions and wesubsequent ~~may~~integration ~~take~~activities, ~~additional~~adverse ~~restructuring~~global ~~actions~~economic inconditions ~~the~~and ~~future~~other ~~that~~management ~~would~~approved ~~result~~restructuring inplans ~~additional~~could ~~charges which would~~ have a ~~negative~~material adverse impact on our results of operations ~~in the period the action is taken~~.

AsWorkforce ~~a result of our acquisitions~~restructurings, ~~the~~including ~~current~~reorganizations economic conditions and our decision to more properly align our cost structure with our projected revenues, our management approved restructuring plans eliminating certain employee positions and consolidating certain excess facilities. For the year ended September 30, 2013, we recorded restructuring charges of ~~$4.9 million, primarily related to employee severance and excess facility costs. As a result of~~ our ~~acquisitions~~sales ~~and further integration activities~~force, orcan ~~if we continue to~~ be ~~adversely affected by the global economic downturn, we may decide to take additional restructuring actions to improve our operational efficiencies~~disruptive. ~~Any such decisions could have a material adverse impact on our results of operations for that period.~~

We have in the past restructured or made other adjustments to our workforce, including our direct sales force on which we rely heavily, in response to management changes, product changes, performance issues, acquisitions and other internal and external considerations. In the past, these types of restructurings have resulted in increased restructuring costs and temporary reduced productivity while the workforce adjusted to their new roles and responsibilities. These effects could recur in connection with future acquisitions and other restructurings and our revenues and other results of operations could be negatively affected.

We have a material amount of goodwill and other acquired intangible assets on our balance sheet and if our goodwill is impaired in the future, we may record charges to earnings, which could adversely impact our results of operations.

As a result of ~~the~~prior ~~Acquisitions~~acquisitions, ~~the purchase of Solarsoft, the purchase of Internet AutoParts and the purchase of Cogita,~~ we recorded goodwill and intangible assets with carrying values of $1,~~302~~288.0 million and $~~731~~595.1 million, respectively, as of September 30, ~~2013~~2014. We account for goodwill and other intangibles in accordance with relevant authoritative accounting principles. Our goodwill is not amortized and we are required to test the goodwill for impairment at least yearly and test intangibles and goodwill any time there is indication impairment may have occurred. See Note 4 - Goodwill ofin our audited consolidated financial statements for a description of our impairment testing. If we determine that the carrying value of the goodwill or other intangible assets is in excess of its fair value, we will be required to write down a portion or all of the goodwill or other acquired intangible assets, which would adversely impact our results of operations.

21We rely, in part, on third parties to sell and implement our products. Disruptions to these channels or failure of these channels to adequately market and implement our products would adversely affect our ability to generate revenues.

We distribute products through our direct sales force as well as through an indirect distribution channel, which includes value added resellers (“VARs”) and other third party distributors, consisting primarily of professional firms and we implement our products using our internal professional services team as well as third party implementers. If our relationships with these VARs, third party distributors and system implementers deteriorate or terminate, our results of operations could be materially and adversely affected if our distributors cease distributing or recommending our products or emphasize competing products and our third party system implementers stop installing our systems. Additionally, our distributors may generally terminate their agreements with us upon as little as 30 days' notice and almost all distributors may effectively terminate their agreements at any time by ceasing to promote or sell our products. Our results of operations could be adversely affected if our distributors

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Weare ~~rely,~~unable into ~~part,~~effectively onpromote ~~third~~or ~~parties to~~ sell our products. ~~Disruptions~~or if several were to ~~these~~cease ~~channels~~doing business or ~~failure~~terminate oftheir ~~these~~agreements ~~channels~~and we are unable to ~~adequately~~replace ~~market~~them in a timely fashion. Further, there can be no assurance that having both a direct sales force and a third party distribution channel for our products ~~would~~will not lead to conflicts between those two sales forces that could adversely ~~affect~~impact our ability to ~~generate~~close sales transactions or could have a negative impact upon average selling prices, any of which may negatively impact our operating revenues ~~from~~and results of operations. Finally, many distributors operate on narrow operating margins and may be negatively impacted by weak economic conditions, including the ~~sale~~loss of personnel to promote our products and services or inability to remain in business. Our financial condition and operating results could be materially adversely affected if the financial condition of these distributors weakens.

We distribute products through our direct sales force as well as through an indirect distribution channel, which includes value added resellers (VARs) and other third party distributors, consisting primarily of professional firms. Our results of operations could be materially and adversely affected if our distributors cease distributing or recommending our products or emphasize competing products. Additionally, our distributors may generally terminate their agreements with us upon as little as 30 days' notice and almost all distributors may effectively terminate their agreements at any time by ceasing to promote or sell our products. Our results of operations could be adversely affected if our distributors are unable to effectively promote or sell our products or if several were to cease doing business or terminate their agreements and we are unable to replace them in a timely fashion. Further, there can be no assurance that having both a direct sales force and a third party distribution channel for our products will not lead to conflicts between those two sales forces that could adversely impact our ability to close sales transactions or could have a negative impact upon average selling prices, any of which may negatively impact our operating revenues and results of operations. Finally, many distributors operate on narrow operating margins and may be negatively impacted by weak economic conditions, including the loss of personnel to promote our products and services or inability to remain in business. Our financial condition and operating results could be materially adversely affected if the financial condition of these distributors weakens.

If third parties infringe upon our intellectual property, we may expend significant resources enforcing our rights or suffer competitive injury, which could adversely affect our operating results. In addition, we may be subject to claims that we infringe upon the intellectual property of others.

We consider our proprietary software and the related intellectual property rights in such products to be among our most valuable assets. We rely on a combination of copyright, trademark and trade secret laws (domestically and internationally), employee and third party nondisclosure agreements and other industry standard methods for protecting ownership of our ~~proprietary~~intellectual ~~software~~property. However, we cannot provide assurance that, in spite of these precautions, an unauthorized third party will not copy or reverse-engineer certain portions of our products or obtain and use information that we regard as proprietary. This risk is potentially heightened in such diverse international markets as Eastern Europe, Asia and the Middle East where intellectual property laws are often less rigorous than in the United States. From time to time, we have in the past taken legal action against third parties whom we ~~believe~~believed were infringing upon our intellectual property rights. However, there is no assurance that the mechanisms that we use to protect our intellectual property will be adequate.

Moreover, from time to time, we receive claims from third parties that our software products infringe upon the intellectual property rights of others. We expect that as the number of software products in the United States and worldwide increases and the functionality of these products further overlap, the number of these types of claims will increase. Although it has not yet occurred to date, any such claim, with or without merit, could result in costly litigation and require us to enter into royalty or licensing arrangements or result in an injunction against us. The terms of such royalty or license arrangements, if required, may not be favorable to us.

In addition, in certain cases, we provide the source code for some of our application software under licenses to our customers to enable them to customize the software to meet their particular requirements and to VARs and other distributors or other third party developers to translate or localize the products for resale in foreign countries. Although the source code licenses contain confidentiality and nondisclosure provisions, we cannot be certain that such customers, distributors or third-party developers will take or have taken adequate precautions to protect our source code or other confidential information. Moreover, regardless of contractual arrangements, the laws of some countries in which we do business or distribute our products do not offer the same level of protection to intellectual property as do the laws of the United States.

If open source software expands into enterprise software applications, our software license revenues may decline.

Open source software includes a broad range of software applications and operating environments produced by companies, development organizations and individual software developers and typically licensed for use, distribution and modification at a nominal cost or often, free of charge. To the extent that the open source software models expand and non-commercial companies and software developers create and contribute competitive enterprise software applications to the open source community, we may have to adjust our pricing, maintenance and distribution strategies and models, which could adversely affect our revenue and operating margins. Additionally, if one of our developers embedded open source components into one of our products without our knowledge or authorization, we may be required to release source code to third parties, under open source license terms. We currently take steps to train our developers and monitor the content of products in development; however, there is no assurance that this will always be effective.

Unplanned or unforeseeable business interruptions could adversely affect our business.

A number of particular types of business interruptions including natural disaster, terrorist attack or other natural or manmade catastrophe with respect to which we have no control could greatly interfere with our ability to conduct business. For example, asome ~~substantial portion~~ of our facilities that conduct critical business operations are located near major earthquake faults. We do not carry earthquake insurance and do not reserve for earthquake-related losses. In addition, ~~including~~our computer systems are susceptible to damage from fire, floods, earthquakes, power loss, interruptions in cooling systems, telecommunications failures, and similar events. We continue to consider and implement our ~~corporate~~options ~~headquarters~~and develop contingency plans to avoid and/or ~~other~~minimize ~~critical~~potential ~~business~~disruptions ~~operations~~to our telecommunication services. However, ~~are~~any force majeure or act of God as described above could cause severe disruptions in our business.

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located near major earthquake faults. We do not carry earthquake insurance and do not reserve for earthquake-related losses. In addition, our computer systems are susceptible to damage from fire, floods, earthquakes, power loss, interruptions in cooling systems, telecommunications failures, and similar events. We continue to consider and implement our options and develop contingency plans to avoid and/or minimize potential disruptions to our telecommunication services. However, any force majeure or act of God as described above could cause severe disruptions in our business.

Interruptions in our connectivity applications and our systems could disrupt the services that we provide and materially adversely affect our customers' business as well as our business and our results of operations.

Certain of our customers depend on the efficient and uninterrupted operation of our software connectivity applications, such as our SaaS solutions, AConneX and our eCommerce and hosting services. A number of our connectivity applications rely on our data center or third-party datacenter, hosting, cloud services and infrastructure providers. Any loss or interruption of these applications could result in system downtime, errors, security breaches or loss of data which could have a material adverse financial impact on our customers. We have in the past experienced interruptions in our AConneX connectivity solution and we continue to evaluate and make certain changes and modifications to this service, however, we cannot provide assurance that these changes and modifications will wholly eliminate interruptions, which could harm our brand and customer relations. In addition, our businesses are highly dependent on our ability to communicate with our customers in providing services and to process, on a daily basis, a large number of transactions. We rely heavily on our telecommunications and information technology infrastructure, as well as payroll, financial, accounting and other data processing systems. As we continue to place additional strain on this infrastructure through increasing the number of products that we host, these applications and systems are increasingly vulnerable to damage or interruption from a variety of sources, including natural disasters, telecommunications failures, hackers or other breaches of security and electricity brownouts or blackouts. If any of these systems fail to operate properly or become disabled, we could suffer financial loss, a disruption of our business, or damage to our reputation. Our insurance policies may not adequately compensate us for any losses that may occur due to any failures in our connectivity applications or in these services or the harm to our reputation due to these failures. We have certain recovery plans in place to protect our business against natural disasters, security breaches, power or communications failures or similar events. At the same time, we have concluded it is not cost effective at this time to maintain full secondary “off-site” systems to replicate our connectivity applications, and we do not maintain a catastrophic disaster recovery capability with respect to these applications. In ~~Despite our preparations, in~~ the event of a catastrophic occurrence, our disaster recovery plans may not be successful in preventing loss of customer data, service interruptions, disruptions to our operations or ability to communicate with our customers, or damage to our important locations. A loss or damage to our data center, telecommunications or information technology infrastructure, or our connectivity applications, could result in damage to our reputation and lost revenues due to service interruptions and adverse customer reactions.

WeOur ~~may~~business beis ~~exposed~~subject to ~~new~~complex and evolving U.S. and foreign laws and regulations ~~around~~regarding privacy, data ~~access~~protection, ~~transmission~~ and ~~liability~~other matters, ~~the~~as ~~potential~~well ~~for~~as ~~security~~changing ~~breaches~~industry orstandards ~~unauthorized~~in ~~access~~many ~~with~~areas. Many ~~respect~~of these laws, regulations and standards are subject to change and uncertain interpretation, and could result in claims, changes to our onbusiness ~~demand~~practices, ~~offerings~~monetary penalties, increased cost of operations, loss of current or prospective customers, or otherwise harm our business.

~~While~~We weare ~~believe~~subject to a variety of laws and regulations in the United States and abroad that ~~our~~involve ~~software~~matters ~~applications~~central ~~comply~~to ~~with~~our ~~applicable~~business, ~~laws~~including privacy and ~~industry~~data ~~security~~protection, intellectual property, data retention and ~~transmission~~deletion, ~~requirements~~personal information, financial security, taxation and ~~that~~online payment services. Further, we ~~have~~must comply with industry guidelines in ~~place~~many ~~appropriate~~areas, ~~levels~~including ofincreasingly ~~security~~stringent tostandards ~~reduce~~regarding ~~the~~credit ~~possibility~~card processing. The introduction of ~~unauthorized~~or ~~access~~expansion of new products or services in certain jurisdictions may subject us to ~~the~~additional ~~systems~~laws, regulations and guidelines. In addition, foreign data ~~that~~protection, isprivacy, ~~hosted~~and other laws and regulations can be more restrictive than those in the U.S. These U.S. federal and state and foreign laws and regulations, which can be enforced by usprivate parties or ingovernment ~~third~~entities, ~~party~~are ~~datacenters~~constantly evolving and can be subject to significant change. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the rapidly evolving industry in which we ~~cannot~~operate, ~~guarantee~~and ~~that~~may be interpreted and applied inconsistently from country to country and inconsistently with our ~~hosted~~current ~~systems~~policies and practices. Similarly, there are a number of legislative proposals in the U.S., at both the federal and state level, that could ~~not~~impose benew ~~breached~~obligations in areas affecting our business, such as privacy or online payment services. In addition, some countries are considering or have passed legislation requiring local storage and processing of data or similar requirements that, ~~unauthorized~~if ~~access~~enacted, could increase the cost and complexity of delivering our services. These existing and proposed laws and regulations can be ~~completely~~costly ~~prevented.~~to Acomply ~~breach~~with and can delay or impede the development of new products, result in ~~security~~negative publicity, ~~failure~~increase ofour aoperating ~~data~~costs, ~~center~~require significant management time and attention, ~~communications~~and subject us to inquiries or investigations, claims or other ~~infrastructure~~remedies, ~~could~~including ~~result~~fines inor ~~lost~~demands ~~revenues~~that aswe ~~well~~modify asor ~~damage~~cease toexisting ~~our~~business ~~reputation~~practices.

If weour ~~experience~~security ~~shortages~~measures orare ~~delays~~breached inand ~~the~~unauthorized ~~receipt~~access ofis ~~equipment~~obtained orto ~~hardware~~a ~~necessary~~customer’s todata ~~develop~~or our ~~business~~data ~~management~~or ~~solutions~~our ~~and~~IT systems, weour service may ~~suffer~~be ~~product~~perceived ~~delays,~~as ~~which~~not ~~could~~being ~~have~~secure, acustomers ~~material~~may ~~adverse~~curtail ~~effect~~or onstop using our ~~business~~service and we may incur significant legal and financial ~~results~~exposure and liabilities.

WeCertain ~~rely~~of onour aservices ~~single~~involve ~~supplier~~the orstorage aand ~~limited~~transmission ~~number~~ of ~~suppliers~~customers’ ~~for~~proprietary ~~some~~information, ofand ~~the~~security ~~products~~breaches ~~and~~could ~~software~~expose ~~licenses~~us ~~included~~to ina ~~our~~risk ~~business~~of ~~management~~loss ~~solutions~~of this information, litigation and possible liability. IfThese ~~there~~security ismeasures may be breached as a ~~shortage~~result of third-party action, orincluding ~~delay~~intentional inmisconduct ~~supplying~~by uscomputer ~~with~~hackers, ~~the~~employee ~~necessary~~error, ~~equipment~~malfeasance or ~~hardware,~~otherwise weand ~~would~~result ~~likely~~in ~~experience~~someone ~~shipment~~obtaining ~~delays~~unauthorized ~~and~~access ~~increased~~to ~~costs~~our ofcustomers’ ~~developing~~data or our ~~business~~data, ~~management~~including ~~solutions~~our intellectual property and other confidential business information, or our IT systems. Additionally, ~~This~~third ~~could~~parties ~~result~~may inattempt ato ~~loss~~fraudulently ofinduce ~~sales~~employees or customers into disclosing sensitive information such as user names, ~~thus~~passwords ~~reducing~~or other information in order to gain access to our customers’ data or our data or IT systems. Because ~~revenue~~the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and ~~gross~~generally ~~margin.~~are not recognized until launched against a target, we may be

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unable to anticipate these techniques or to implement adequate preventative measures. In addition, our customers may authorize third-party technology providers to access their customer data. Because we do not control our customers and third-party technology providers, or the processing of such data by third-party technology providers, we cannot ensure the integrity or security of such transmissions or processing. Malicious third-parties may also conduct attacks designed to temporarily deny customers access to our services. Any security breach could result in a loss of confidence in the security of our service, damage our reputation, negatively impact our future sales, disrupt our business and lead to legal liability. These risks will increase as we continue to grow our cloud-based offerings and services and process increasingly large amounts of our customers’ information and data and host or manage parts of our customers’ businesses in cloud-based IT environments. Additionally, we may assume these risks as we integrate acquisitions.

If we experience shortages or delays in the receipt of third party software or hardware necessary to develop our business management solutions and systems, we may suffer product delays, which could have a material adverse effect on our business and financial results.

We rely on a single supplier or a limited number of suppliers for some of the products and software licenses included in our business management solutions. If there is a shortage of, or delay in supplying us with the necessary third party software or hardware, we would likely experience shipment delays and increased costs of developing our business management solutions and systems. This could result in a loss of revenues or deferral of revenue from one period to another, thus reducing our revenues and operating margins.

Failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting, which could harm our reputation and our business and have a material adverse effect on our financial condition and results of operations.

Our ability to successfully implement our business plan and comply with regulations, including the Sarbanes-Oxley Act, requires an effective planning and management process. We are required to document and test our internal controls over financial reporting so that we can provide reasonable assurance with respect to our financial reports and prevent fraud. We expect that we will need to continue to improve existing, and implement new, operational and financial systems, procedures and controls to manage our business effectively in the future. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures and controls, could harm our ability to accurately forecast sales demand, manage our supply chain and record and report our financial performance on a timely and accurate basis, which could materially and adversely affect our results of operations. If our management is unable to annually certify the effectiveness of our internal controls or if material weaknesses in our internal controls are identified, we could be subject to regulatory scrutiny and a loss of public confidence, which could harm our business and our financial condition and results of operations.

23We have identified a material weakness in accounting for income taxes in our internal controls over financial reporting. Failure to implement and maintain effective internal controls over financial reporting has resulted in, and could in the future result in, material misstatements in our financial statements which could require us to restate financial statements.

Management, through documentation, testing and assessment of our internal controls over financial reporting has concluded that our internal controls over financial reporting were not effective as of September 30, 2013 and 2014 due to a material weakness in accounting for income taxes; see Item 9A - Controls and Procedures.

While new and enhanced controls have been implemented to remedy our material weakness for income taxes as described further in Item 9A - Controls and Procedures, we can provide no assurance that we will be able to effectively remediate this material weakness in a timely manner, or in the course of remediating this weakness we may find additional historical errors in our accounting for income taxes or discover new facts that cause us to reach different conclusions with respect to uncertain tax positions or otherwise change our existing opinion of these matters. Any failure to maintain or implement required new or improved controls over the accounting for income taxes, or any difficulties we encounter in their implementation, could delay the remediation of the above mentioned material weakness, cause us to fail to meet our periodic reporting obligations or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of periodic management evaluations regarding the effectiveness of our internal controls over financial reporting. The existence of a material weakness could result in errors in our financial statements that could result in a restatement of financial statements, cause us to fail to meet our reporting obligations require us to expend significant resources to correct the material weakness, expose us to regulatory or legal proceedings, subject us to fines, penalties or judgments or cause investors and creditors to lose confidence in our reported financial information.

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expect that we will need to continue to improve existing, and implement new, operational and financial systems, procedures and controls to manage our business effectively in the future. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures and controls, could harm our ability to accurately forecast sales demand, manage our supply chain and record and report our financial performance on a timely and accurate basis, which could materially and adversely affect our results of operations. If our management is unable to annually certify the effectiveness of our internal controls or if material weaknesses in our internal controls are identified, we could be subject to regulatory scrutiny and a loss of public confidence, which could harm our business and our financial condition and results of operations.

Fluctuations in foreign currency exchange rates may negatively impact our financial results.

Our results of operations or financial condition may be negatively impacted by fluctuations in foreign currency exchange rates and devaluations of foreign currencies. We operate throughout the world through international sales subsidiaries, networks of exclusive and non-exclusive third party distributors, and nonexclusive VARs. As a result, certain sales and related expenses are denominated in currencies other than the United States Dollar. The foreign currencies for which we currently have the most significant exposure are the Australian Dollar, Canadian Dollar, Euro, British Pound, Mexican Peso, Malaysian Ringgit, Swedish Krona and Venezuelan Bolivar. Our results of operations may fluctuate due to exchange rate fluctuation between the United States Dollar and other currencies because our financial results are reported on a consolidated basis in United States Dollars. We have historically implemented a foreign exchange hedging program using derivative financial instruments (e.g. forward contracts and options contracts) and operational strategies (e.g. natural hedges, netting, leading and lagging of accounts payables and account receivables) to hedge certain foreign exposures. However, we can provide no assurance that any of these strategies will be effective or continued nor do we rely on our hedging program to eliminate all foreign currency exchange rate or devaluation risk.

We may have exposure to additional tax liabilities.

As a multinational company, we are subject to both income, withholding and non-income taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, both in the United States and various foreign jurisdictions. Significant judgment is required in determining our worldwide income tax provision and other tax accruals. In operating our global business, we enter into transactions across jurisdictions and taxing authorities may have different views as to pricing and characterization onof those transactions. In addition, our worldwide tax provision may be impacted by changes in foreign currency exchange rates, by entry into new businesses and geographies and changes to our existing businesses, by acquisitions, or by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations. We are regularly under audit by tax authorities with respect to income and non-income taxes and may have exposure to additional tax liabilities. Although we believe that our tax estimates are reasonable, there is no assurance that the determination of tax audits or tax disputes will not be materially different from what is reflected in our historical income tax provisions and accruals.

Fluctuations in foreign currency exchange rates may negatively impact our financial results.

Our results of operations or financial condition may be negatively impacted by fluctuations in foreign currency exchange rates and devaluations of foreign currencies. We operate throughout the world through international sales subsidiaries, networks of exclusive and non-exclusive third party distributors, and non-exclusive VARs. As a result, certain sales and related expenses are denominated in currencies other than the United States Dollar. The foreign currencies for which we currently have the most significant exposure are the Australian Dollar, Canadian Dollar, Euro, British Pound, Mexican Peso, Malaysian Ringgit, Swedish Krona, Hungarian Forint, Russian Rouble and Venezuelan Bolivar. Our results of operations may fluctuate due to exchange rate fluctuation between the United States Dollar and other currencies because our financial results are reported on a consolidated basis in United States Dollars. We have historically implemented a foreign exchange hedging program using derivative financial instruments (e.g. forward contracts and options contracts) and operational strategies (e.g. natural hedges, netting, leading and lagging of accounts payables and account receivables) to hedge certain foreign exposures. However, we can provide no assurance that any of these strategies will be effective or continued or can we rely on our hedging program to eliminate all foreign currency exchange rate or devaluation risk.

Elimination of or substantial reduction in the Investissement Quebec Credit Program may negatively impact our financial results.

The province of Quebec, Canada has established a program to attract and retain investment in the information technology sector in Quebec. A corporation with employees performing eligible activities can apply for and receive a refund of up to 3024% of eligible salaries (Salary Rebate), up to a maximum of $20,000 ~~Canadian~~(CAD) ~~through~~per ~~2015~~eligible ~~and then increasing to $22,500 Canadian~~employee. The program is administered by Investissement Quebec (“IQ”). IQ reviews applications and issues annual eligibility ~~certificates~~certificate to qualifying companies. IQ also issues annual eligibility certificates confirming named qualifying employees. The payment of the Salary Rebate is made by the Minister of Revenue of Quebec and is subject to audit at a later date. The Salary Rebate is taxable in the year of receipt. The classification of the rebate to these financial statement line items is consistent with the classification of the qualifying salaries that were eligible for the credit. The program was recently extended through 2025 and we plan to continue to apply for the credits for each eligible year. However, there is no guarantee that the program will continue ~~and~~or ~~were~~that we will continue to be able to participate. If the Quebec Government were to materially alter or eliminate the program or were subsequent audits by the Minister of Revenue found to materially reduce or eliminate the rebate for any specific year or periods, our financial results at quarter or fiscal year end could be materially and negatively impacted.

The interests of our controlling stockholders (“the "sponsors”) may differ from the interests of our other stakeholders.

The interests of the sponsors may differ from our other stakeholders in material respects. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of our sponsors, as equity holder of the Company, might conflict with the interests of the holders of the ~~notes~~Senior Notes. The sponsors and their affiliates may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks to the holders of our ~~notes~~Senior Notes, including the incurrence of additional indebtedness. Additionally, the indenture governing the Senior Notes permits us to pay fees, dividends or make other restricted payments under certain circumstances, and the sponsors may have an interest in our doing so.

24The sponsors and their affiliates are in the business of making investments in companies and may, from time to time in the future, acquire interests in businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours. The interests of the sponsors and their affiliates may differ from the interests of the Senior Note holders.

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additional indebtedness. Additionally, the indenture governing the notes permits us to pay fees, dividends or make other restricted payments under certain circumstances, and the sponsors may have an interest in our doing so.

The sponsors and their affiliates are in the business of making investments in companies and may, from time to time in the future, acquire interests in businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours. The interests of the sponsor may differ from the interests of the note holders.

A failure to remain current in our filings with the Securities and Exchange Commission ("SEC") may have material adverse impacts on our business and liquidity.

If we are not able to remain current in our filings with the SEC, we will face several adverse consequences and restrictions. While the Company is a voluntary filer and is not required by the rules and regulations of the SEC to continue filing current and periodic reports, in accordance with the terms of the indenture governing its Senior Notes, the Company files an annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K in a manner that complies in all material respects with the requirements specified in such forms, and is required to do so in a timely manner. Failure to remain current in our filings will constitute a breach of our covenants under the 2011 Credit Agreement and indenture and such breach could result in an event of default that would accelerate our payment obligations under the Senior Notes. In addition, we will not be able to use a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), covering a public offering of securities during the period that we are not current in our filings and we may be limited in our ability to raise funds in a private placement of our securities under Regulation D. These restrictions may impair our ability to raise funds in the public markets or private markets, should we desire to do so, and to attract and retain employees.26

~~Payment~~Table of dividends to fund interest payments on our Parent Company's PIK Toggle Notes will utilize cash resources which could otherwise be utilized to fund operating cash flow requirements and service our debt obligations. These dividend payments may require us to borrow against our revolving credit facility, and may affect our ability to comply with financial covenants contained in our debt instruments.Contents

If we are not able to remain current in our filings with the SEC, we may face several adverse consequences and restrictions. While the Company is a voluntary filer and is not required by the rules and regulations of the SEC to continue filing current and periodic reports, in accordance with the terms of the indenture governing its Senior Notes, the Company files an annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K in a manner that complies in all material respects with the requirements specified in such forms, and is required to do so in a timely manner. Failure to remain current in our filings will constitute a breach of our covenants under the indenture governing our Senior Notes and such breach could result in an event of default that would accelerate our payment obligations under the Senior Notes. In addition, we will not be able to use a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), covering a public offering of securities during the period that we are not current in our filings and we may be limited in our ability to raise funds in a private placement of our securities under Regulation D. These restrictions may impair our ability to raise funds in the public markets or private markets, should we desire to do so, and to attract and retain employees.

Payment of dividends to fund interest payments on our parent company's PIK Toggle Notes will utilize cash resources which could otherwise be utilized to fund operating cash flow requirements and service our debt obligations. These dividend payments may require us to borrow against our revolving credit facility, and may affect our ability to comply with financial covenants contained in our debt instruments.

In addition to our debt discussed above, our indirect parent company, Eagle Midco Inc. ("EGL Midco"), has issued $400 million in principal amount of Senior PIK Toggle Notes (the "Midco Notes"). The $400 million of Midco Notes were issued on June 10, 2013 and mature on June 15, 2018. We and our consolidated subsidiaries have not guaranteed the Midco Notes, and we have not pledged any assets as collateral for the payment of the Midco Notes. The Midco Notes are unsecured.

However, we expect to pay dividends of approximately $36 million per year to EGL Midco to fund interest payments on the Midco Notes. Payment of these dividends will utilize cash resources which could otherwise be utilized to fund operating cash flow requirements and service our debt obligations. When sufficient cash resources are not available to pay these cash dividends, we intend to borrow against our revolving credit facility to finance these cash dividends. The first lien senior secured leverage ratio covenant in our 2011 Credit Agreement is effective when we have a balance outstanding on our revolving credit facility. As a result, our intent to pay dividends to EGL Midco to service the Midco Notes may affect our ability to meet debt service requirements on our debt as well as our ability to comply with financial covenants contained in our debt instruments.

We are, and expect to be ~~subject to~~ in the future subject to, litigation and legal proceedings which may adversely affect our business, financial condition and results of operations.

We are party to lawsuits and legal proceedings in the normal course of business. These matters are often expensive and disruptive to normal business operations and require significant management time and attention. We are currently subject to, or may be subject to in the future, legal proceedings by various stakeholders including employees, customers, patent owners, suppliers, distributors, stockholders, former stockholders or others through private actions, class actions, administrative proceedings or other litigation. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages, and include claims for injunctive relief. Litigation and regulatory proceedings can be lengthy, expensive, and disruptive to our operations and results cannot be predicted with certainty. Adverse outcomes with respect to litigation or any of these legal proceedings may result in significant settlement costs or judgments, penalties and fines, or require us to modify our products and features or require us to stop offering certain products, all of which could negatively impact our business and financial results. There may also be adverse publicity associated with legal proceedings, regardless of whether the allegations are valid or whether we are ultimately found liable or otherwise experience a negative outcome. As a result, litigation may adversely affect our business, financial condition and results of operations.

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We are a “voluntary filer” with the SEC which may reduce the information you have access to regarding the Company, its controlling stockholders and certain transactions.

The Company is a "voluntary filer” with the SEC and is not required by the rules and regulations of the SEC to continue filing current and periodic reports. In accordance with the terms of the indenture governing the Senior Notes, the Company files an annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K in a manner that complies in all material respects with the requirements specified in such form. However, the Company is not a fully reporting company that is subject to review under Section 408 of the Sarbanes-Oxley Act of 2002 and is not subject to certain other statutory provisions such as prohibitions on personal loans to directors and executive officers, the requirement to have a fully independent Audit Committee and the requirement to disgorge profits following an accounting restatement. Furthermore, the Company is not subject to the going private rules and certain tender offer regulations, and the beneficial holders of the Company's securities do not need to report on acquisitions or dispositions of the Company's securities or their plans regarding their influence and control over the Company, nor is the Company required to distribute proxy materials in connection with its annual meeting. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act exempted issuers other than large accelerated filers and accelerated filers from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. Finally, the Company's securities are not listed on an exchange and, accordingly, the Company is not subject to the corporate governance requirements set forth in the listing rules of The NASDAQ Stock Market, the New York Stock Exchange or any other exchange. Therefore, the Company's status as a voluntary filer reduces investors' rights to access significant information regarding the Company and its controlling stockholders and limits the governance requirements to which the Company is subject.

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large accelerated filers and accelerated filers from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. Finally, the Company's securities are not listed on an exchange and, accordingly, the Company is not subject to the corporate governance requirements set forth in the listing rules of The NASDAQ Stock Market, the New York Stock Exchange or any other exchange. Therefore, the Company's status as a voluntary filer reduces investors' rights to access significant information regarding the Company and its controlling stockholders and limits the governance requirements to which the Company is subject.

ITEM 1B - UNRESOLVED STAFF COMMENTS

None.

ITEM 2 - PROPERTIES

AsOur properties consist primarily of ~~September~~leased 30office facilities which we use for our sales, ~~2013~~marketing, consulting, customer support, product development, executive and administrative functions. Additionally, we ~~owned~~own buildings in Montreal, Canada and Columbus, Ohio. We are in contract to sell our Montreal, Canada building and we plan to lease space in the same area. Our corporate headquarters and executive offices are located in Austin, Texas where we currently lease approximately ~~141~~100,000 square feet of ~~office~~space. We ~~and~~conduct ~~distribution~~our ~~space~~principal ~~and~~operations ~~leased~~in aAustin, ~~total~~Texas as well as several other locations across the Americas, including Dublin, California, where we lease approximately 75,000 square feet of space, Bensalem, Pennsylvania, where we lease approximately ~~950~~43,000 square feet of ~~office~~space and ~~distribution~~Minneapolis, ~~space~~Minnesota, where we lease approximately ~~141~~62,000 square feet ~~and~~of ~~600~~space. We also lease an additional 239,000 square feet of ~~which,~~space ~~respectively,~~for isvarious ~~located~~functions in other locations across the U.S. In ~~Our~~addition, ~~headquarters~~internationally ~~are~~we ~~located~~lease approximately 406,000 square feet of space for operations and for sales offices in ~~Dublin~~Latin America, ~~California~~Canada, EMEA, and Asia Pacific. Expiration Wedates ~~consider~~of leases on all of our ~~properties~~facilities ~~suitable~~range ~~for~~from ~~their~~2015 ~~present~~to ~~and~~2024. ~~intended~~We ~~purposes~~believe that our existing domestic and ~~adequate~~international ~~for~~facilities are sufficient to meet our current ~~level~~needs. In addition, we believe suitable additional or alternative space would be available on commercially reasonable terms to accommodate expansion of our operations, if required. The restructuring plans we have implemented over the past few years have involved the exit or reduction in space of certain of our leased facilities. See Note 11 - Restructuring Costs in our audited consolidated financial statements for additional information.

The table below outlines the Company’s material owned properties as of September 30, 2013:

Location Square Footage

Montreal, Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000

Columbus, Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000

The table below outlines the Company’s material property leases as of September 30, 2013:

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Location	Approximate Square Footage (1)	Lease Termination
Austin, Texas	106,000	2015 through 2018
Dublin, California	75,000	2018
Irvine, California	68,000	2021
Newburgh, New York	66,000	2013
Yardley, Pennsylvania	45,000	2013
Bensalem, Pennsylvania	43,000	2024
Minneapolis, Minnesota	60,000	2022
Monterrey, Mexico	56,000	2015
Denver, Colorado	25,000	2020
Westminster, Colorado	24,000	2014
Moscow, Russia	24,000	2013
Bracknell, United Kingdom	23,000	2019
Hyannis, Massachusetts	11,500	2014
Greenville, South Carolina	8,000	2018
Plano, Texas	6,900	2016
Des Plaines, Illinois	8,000	2018
London, Ontario	33,000	2014
British Colombia, Canada	24,000	2014 and 2022
San Diego, California	9,000	2014
Budapest, Hungary	11,500	2016
Sydney, Australia	8,000	2014

(1) Locations of smaller square footage or that have been exited prior to lease termination are not listed; however, they are included in the total square footage of 950,000.

In addition to the locations listed above, the Company leases other offices for sales, service, and product development in various locations worldwide. The Company is continually evaluating its facilities for cost effectiveness and suitability for purpose and will adjust its facilities portfolio to fit the needs of the Company at any point in time. However, the Company believes its current facilities are suitable for their respective uses and adequate for the Company’s needs.

ITEM 3 - LEGAL PROCEEDINGS

We are a party to various legal proceedings and administrative actions, all of which are of an ordinary or routine nature incidental to our operations, except as otherwise described below. We do not believe that such proceedings and actions will, individually or in the aggregate, have a material adverse effect on our business, financial condition, results of operations or cash flows, except as may otherwise be described below.

State Court Shareholder Litigation

In connection with the announcement of the proposed acquisition of Epicor Software Corporation ("Legacy Epicor") by funds advised by Apax in April 2011, four putative stockholder class action suits were filed in the Superior Court of California, Orange County, and two such suits were filed in Delaware Chancery Court. The actions filed in California were entitled Kline v. Epicor Software Corp. et al., (filed Apr. 6, 2011); Tola v. Epicor Software Corp. et al., (filed Apr. 8, 2011); Watt v. Epicor Software Corp. et al., (filed Apr. 11, 2011), and Frazer v. Epicor Software ~~Corp.~~ et al., (filed Apr. 15, 2011). The actions filed in Delaware were entitled Field Family Trust Co. v. Epicor Software Corp. et al., (filed Apr. 12, 2011) and Hull v. Klaus et al., (filed Apr. 22, 2011). Amended complaints were filed in the Tola and Field Family Trust actions on April 13, 2011 and April 14, 2011, respectively. Plaintiff Kline dismissed his lawsuit on April 18, 2011 and shortly thereafter filed an action in federal district court. Kline then dismissed his federal lawsuit on July 22, 2011. The state court suits alleged that the Legacy Epicor directors breached their fiduciary duties of loyalty and due care, among others, by seeking to complete the sale of Legacy Epicor to funds advised by Apax through an allegedly unfair process and for an unfair price and by omitting material information from the Solicitation/Recommendation Statement on Schedule 14D-9 that Legacy Epicor filed on April 11, 2011 with the SEC. The complaints also alleged that Legacy Epicor, Apax Partners, L.P. and Element Merger Sub, Inc. aided and abetted the directors in the alleged breach of fiduciary duties. The plaintiffs sought certification as a class and relief that included, among other things, an order enjoining the tender offer and merger, rescission of the merger, and payment of plaintiff's attorneys' fees and costs. On April 25, 2011, plaintiff Hull filed a motion in Delaware Chancery Court for a preliminary injunction seeking to enjoin the parties from taking any action to consummate the transaction. On April 28, 2011, plaintiff Hull withdrew this motion. On December 30, 2011, Hull dismissed his Delaware suit.

27On May 2, 2011, after engaging in discovery, plaintiffs advised that they did not intend to seek injunctive relief in connection with the merger, but would instead file an amended complaint seeking damages in California Superior Court following the consummation of the tender offer. On May 11, 2011, the Superior Court for the County of Orange entered an Order consolidating the Tola, Watt, and Frazer cases pursuant to a joint stipulation of the parties. Plaintiffs filed a Second Amended Complaint on September 1, 2011, which made essentially the same claims as the original complaints. Plaintiffs Kline and Field Family Trust have both joined in the amended complaint. We filed a demurrer (motion to dismiss) to this amended complaint on September 29, 2011. The demurrers were heard on December 12, 2011, and the Court overruled them. The Defendants answered the Complaint on December 22, 2011. On June 22, 2012, the court granted plaintiff's motion for class certification and dismissed Mr. Hackworth as a defendant.

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The state court suits alleged that the Legacy Epicor directors breached their fiduciary duties of loyalty and due care, among others, by seeking to complete the sale of Legacy Epicor to funds advised by Apax through an allegedly unfair process and for an unfair price and by omitting material information from the Solicitation/Recommendation Statement on Schedule 14D-9 that Legacy Epicor filed on April 11, 2011 with the SEC. The complaints also alleged that Legacy Epicor, Apax Partners, L.P. and Element Merger Sub, Inc. aided and abetted the directors in the alleged breach of fiduciary duties. The plaintiffs sought certification as a class and relief that included, among other things, an order enjoining the tender offer and merger, rescission of the merger, and payment of plaintiff's attorneys' fees and costs. On April 25, 2011, plaintiff Hull filed a motion in Delaware Chancery Court for a preliminary injunction seeking to enjoin the parties from taking any action to consummate the transaction. On April 28, 2011, plaintiff Hull withdrew this motion. On December 30, 2011, Hull dismissed his Delaware suit.

On May 2, 2011, after engaging in discovery, plaintiffs advised that they did not intend to seek injunctive relief in connection with the transaction, but would instead file an amended complaint seeking damages in California Superior Court following the consummation of the tender offer. On May 11, 2011, the Superior Court for the County of Orange (the "Court") entered an Order consolidating the Tola, Watt, and Frazer cases pursuant to a joint stipulation of the parties. Plaintiffs filed a Second Amended Complaint on September 1, 2011, which made essentially the same claims as the original complaints. Plaintiffs Kline and Field Family Trust have both joined in the amended complaint. We filed a demurrer (motion to dismiss) to this amended complaint on September 29, 2011. The demurrers were heard on December 12, 2011, and the Court overruled them. The Defendants answered the Complaint on December 22, 2011. On June 22, 2012 the Court granted plaintiff's motion for class certification and dismissed Mr. Hackworth as a defendant.

After the parties had completed fact discovery and begun expert discovery, plaintiffs sought leave to amend their complaint to add two new defendants, the Company's former chief financial officer and the Company's former financial advisor, Moelis & Company. On February 22, 2013, the Court granted plaintiffs leave, and plaintiffs' Third Amended Complaint was filed. On April 5, 2013, pursuant to a stipulation between the parties, the Court dismissed Legacy Epicor from this action with prejudice. On April 29, 2013, the Court overruled demurrers by the new defendants to the Third Amended Complaint.

InAlthough ~~light~~we ofbelieved this lawsuit was without merit and have vigorously defended against the ~~amendment~~claims, the parties engaged in a mediation on October 21, 2013. Following the mediation, the parties reached an agreement in principle to settle the action, subject to the approval of the ~~complaint~~Court. On May 23, 2014, the Court preliminarily approved the proposed settlement and ordered the ~~addition~~creation of a settlement fund of $18 million from the ~~two~~various ~~new~~defendants ~~parties~~and their insurers. On October 24, 2014, the ~~prior~~hearing ~~case~~on ~~schedule~~final approval of the settlement was held and ~~trial~~the ~~date~~court ~~have~~approved ~~been~~the ~~amended~~settlement and issued a final order and judgment. A final hearing was set for April 24, 2015, at which hearing the plaintiffs shall report to the Court on the payment of claims to the Epicor shareholders. ~~Pursuant~~During the year ended September 30, 2014, we paid $7.7 million to asettle ~~stipulation~~our ~~from~~portion of the ~~parties~~litigation. As of September 30, 2014, we do not believe we will pay any additional amounts for the ~~Court~~litigation, ~~has~~and ~~continued~~as such, we have no remaining liability recorded for the ~~trial~~litigation ~~date~~as toof ~~April~~September 2830, 2014.

Although we believe this lawsuit is without merit and are prepared to vigorously defend against the claims, the parties engaged in a mediation on October 21, 2013. Following the mediation, the parties reached an agreement in principle to settle the action, subject to the approval of the Court. If approved by the Court, a settlement fund of $18 million will be created by the various defendants.

ITEM 4 - MINE SAFETY DISCLOSURES

Not Applicable.

PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

No public trading market exists for the common stock, no par value, of Epicor Software Corporation. All of the outstanding shares of common stock, no par value, of Epicor Software Corporation are held by Eagle Holdco, L.P., the registrant's parent company.

In November 2011, the Board of Directors of Eagle Topco LP, a limited partnership (“Eagle Topco”), our indirect parent company, approved a Restricted Unit plan for purposes of compensation to our employees and certain directors. See Note 10 - Share Based Compensation in our audited consolidated financial statements for further information. The following table summarizes restricted units granted by Eagle Topco to our employees and directors during the quarter ended September 30, ~~2013~~2014.



Month		Restricted Units Granted
August 2014		173,000

The sales of the above securities were exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the securities issued in these transactions.

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Month		Restricted Units Granted
August 2013		1,795,000

All recipients had adequate access, through their relationships with the Company and Eagle Topco, to information about the Company and Eagle Topco. The sales of these securities were made without any general solicitation or advertising.

~~See~~In ~~Note~~December 102011, -Eagle ~~Share~~Topco ~~Based~~issued ~~Compensation~~707,010 inSeries ~~our~~B ~~audited~~units ~~consolidated~~to ~~financial~~certain ~~statements~~employees and directors as compensation, for ~~further~~an ~~information~~initial contribution of $2. 8571 per unit. In December 2013 and January 2014, we repurchased 409,506 Series B Units in Eagle Topco for a total of $1.4 million.

~~The~~In ~~sales~~December of2013 ~~the~~and ~~above~~June ~~securities~~2014, ~~were~~we ~~exempt~~made ~~from~~voluntary ~~registration~~dividend ~~under~~payments ~~the~~of ~~Securities~~$18.5 ~~Act~~million inand ~~reliance~~$18.0 ~~upon~~million, ~~Section 4(2)~~respectively, ofto ~~the~~our ~~Securities~~indirect ~~Act~~parent ascompany, ~~transactions~~EGL byMidco, anto ~~issuer~~fund ~~not~~interest ~~involving~~payments ~~any~~on ~~public~~the ~~offering.~~$400 ~~The~~million ~~recipients~~ of ~~the~~Midco ~~securities~~Notes inwhich ~~each~~mature ofin ~~these~~June ~~transactions~~2018. We ~~represented~~intend ~~their intentions~~ to ~~acquire~~continue ~~the~~making ~~securities~~voluntary ~~for~~dividend ~~investment~~payments ~~only~~to ~~and~~EGL ~~not~~Midco ~~with a view~~ to orfund ~~for~~future ~~sale~~interest inpayments ~~connection~~on ~~with~~the ~~any~~Midco ~~distribution~~Notes. If ~~thereof,~~EGL ~~and~~Midco ~~appropriate~~pays ~~legends~~all ~~were~~interest ~~placed upon the securities issued~~ in ~~these transactions. All recipients had adequate access~~cash, ~~through~~we ~~their~~anticipate ~~relationships~~that ~~with~~our ~~the~~voluntary ~~Company~~dividend ~~and~~payments ~~Eagle Topco,~~ to ~~information~~EGL ~~about~~Midco ~~the~~will ~~Company~~be ~~and~~approximately ~~Eagle~~$36 ~~Topco.~~million ~~The~~per ~~sales~~year offrom ~~these~~fiscal ~~securities~~2015 ~~were~~through ~~made~~fiscal ~~without any general solicitation or advertising~~2018.

~~Beginning~~Interest inon ~~fiscal~~the ~~2014,~~Midco weNotes ~~intend~~will be required to ~~voluntarily~~be ~~make~~paid ~~dividend~~in ~~payments~~cash to ~~our~~the ~~indirect~~extent ~~parent~~that ~~company,~~we ~~EGL~~are ~~Midco,~~permitted to ~~fund~~make ~~interest~~dividend payments onto EGL Midco. The 2011 Credit Agreement and the ~~$400~~indenture ~~million~~governing ofthe ~~Midco~~Senior Notes ~~which~~restrict ~~mature~~our inability ~~June~~to ~~2018. If~~pay ~~EGL~~dividends ~~Midco~~or ~~pays~~make ~~all~~distributions ~~interest~~or inother ~~cash,~~payments weto ~~anticipate~~EGL ~~that~~Midco ~~our~~to ~~voluntary~~fund ~~dividend~~ payments with respect to ~~EGL~~the Midco ~~will~~Notes beor ~~approximately~~to ~~$36~~repay ~~million~~or ~~per~~repurchase ~~year~~the ~~from~~Midco ~~fiscal~~Notes ~~2014~~unless ~~through~~the ~~fiscal~~restricted ~~2018~~payment covenants in these agreements are satisfied. ~~See~~ However, ~~"Parent~~dividend ~~Company~~payments ~~PIK~~will ~~Toggle~~only ~~Notes"~~be inprovided ~~Note~~to 6the -extent ~~Debt~~that inafter funding the interest payment our ~~audited~~domestic ~~consolidated~~cash ~~financial~~and ~~statements~~cash ~~for~~equivalents ~~further~~plus ~~information~~available ~~regarding~~borrowings ~~the~~under ~~Midco~~our ~~Notes~~revolving credit facility exceed $25.0 million.

See "Parent Company PIK Toggle Notes" in Note 6 - Debt in our audited consolidated financial statements for further information regarding the Midco Notes.

ITEM 6 - SELECTED FINANCIAL DATA

The following table sets forth our selected historical consolidated financial data for the periods presented. The summary historical consolidated financial information as of September 30, ~~2013~~2014 and ~~2012,~~2013 and for the fiscal years ended September 30, 2014, 2013 and 2012, ~~and for the period from Inception through September 30, 2011~~ are derived from, and should be read in conjunction with, our audited consolidated financial statements included elsewhere in this Report. ~~The~~As ~~summary~~discussed ~~historical~~further ~~consolidated~~in ~~financial~~Note ~~information~~2 as of ~~September~~the ~~30,~~“Notes ~~2011~~to ~~has~~Consolidated ~~been~~Financial ~~derived~~Statements” ~~from~~contained ~~and should be read~~ in ~~conjunction~~Item ~~with,~~8 ~~our~~of ~~audited~~this ~~consolidated financial statements included in our Report on~~ Form 10-K ~~for the fiscal year ended September 30~~, ~~2012,~~we ~~filed~~have ~~with~~restated ~~the~~our ~~Securities and Exchange Commission on December 12, 2012. The summary historical~~ consolidated financial ~~information~~statements ~~for the period from October 1, 2010~~ to ~~May~~correct ~~15,~~certain ~~2011~~errors ~~has been derived from, and should be read~~ in ~~conjunction~~our ~~with,~~prior ~~the~~period ~~Predecessor’s audited consolidated~~ financial statements ~~included~~related ~~elsewhere~~to inaccounting ~~this Report. The summary historical consolidated financial information as of September 30, 2010 and 2009 and~~ for ~~the~~income ~~fiscal years ended September 30, 2010 and 2009 has been derived from the Predecessor’s audited consolidated financial statements not included in this Report~~taxes. Please also refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the notes to our audited consolidated financial statements included elsewhere in this Report.

The summary historical consolidated financial information as of September 30, 2012 and 2011 and for the period from Inception to September 30, 2011 have been derived from and should be read in conjunction with, our audited consolidated financial statements included in our Report on Form 10-K for the fiscal year ended September 30, 2012, filed with the Securities and Exchange Commission on December 12, 2012. The consolidated statements of stockholder's equity were revised to reflect a 2011 income tax benefit adjustment resulting in an increase to retained earnings and total stockholder’s equity of $0.8 million. Revisions to increase goodwill associated with tax adjustments from the 2011 merger of approximately $8.0 million are reflected in the beginning balance as of October 1, 2012.

The summary historical consolidated financial information as of September 30, 2010, for the period from October 1, 2010 to May 15, 2011, and for the fiscal year ended September 30, 2010, have been derived from the Predecessor’s audited consolidated financial statements not included in this Report. Please also refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the notes to our audited consolidated financial statements included elsewhere in this Report.

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	Predecessor													Year Ended September 30,
	As of and for the year ended September 30,
(in thousands)		As of and for the year ended September 30, 2010				October 1, 2010 to May 15, 2011				Inception to September 30, 2011				2012				2013				2014
(in thousands)	2009				2010				October 1, 2010 to May 15, 2011				Inception to September 30, 2011				Year Ended September 30, 2012				Year Ended September 30, 2013
										(Restated)				(Restated)				(Restated)
Total revenues	$	~~367,738~~$	369,222		$	~~369,222~~$	227,330		$	~~227,330~~$	304,755		$	~~304,755~~$	855,457		$	~~855,457~~$	961,731		$	~~961,731~~$	994,956
Operating expenses:
Cost of revenues	~~150,537~~	145,129			~~145,129~~	87,788			~~87,788~~	133,512			~~133,512~~	356,404			~~356,404~~	394,496			~~394,496~~	391,184
Sales and marketing	~~54,580~~	56,390			~~56,390~~	36,200			~~36,200~~	53,657			~~53,657~~	147,446			~~147,446~~	165,240			~~165,240~~	170,667
Product development	~~31,367~~	30,917			~~30,917~~	19,659			~~19,659~~	31,417			~~31,417~~	83,304			~~83,304~~	102,573			~~102,573~~	104,696
General and administrative	~~26,227~~	28,116			~~28,116~~	21,519			~~21,519~~	27,611			~~27,611~~	75,702			~~75,702~~	76,580			~~76,580~~	70,469
Depreciation and amortization	~~38,613~~	39,611			~~39,611~~	25,322			~~25,322~~	50,716			~~50,716~~	138,985			~~138,985~~	160,865			~~160,865~~	183,131
Impairment to goodwill	107,000				—				—				—				—				—
Acquisition-related costs		2,862				16,846				42,581				8,845				8,561				8,780
Acquisition-related costs	378				2,862				16,846				42,581				8,845				8,561
Restructuring costs		2,981				27				11,049				4,776				4,890				3,896
Restructuring costs	4,342				2,981				27				11,049				4,776				4,890
Total operating expenses		306,006				207,361				350,543				815,462				913,205				932,823
Total operating expenses	413,044				306,006				207,361				350,543				815,462				913,205
Operating income (loss)		63,216				19,969				(45,788		)		39,995				48,526				62,133
Operating income (loss)	(45,306		)		63,216				19,969				(45,788		)		39,995				48,526
Interest expense		(30,427		)		(33,069		)		(36,643		)		(90,483		)		(92,669		)		(87,108		)
Interest expense	(40,400		)		(30,427		)		(33,069		)		(36,643		)		(90,483		)		(92,669		)
Other income (expense), net		(101		)		223				(257		)		(133		)		(992		)		(911		)
Gain on retirement of debt	18,958				—				—				—				—				—
Income (loss) from continuing operations before income taxes		32,688				(12,877		)		(82,688		)		(50,621		)		(45,135		)		(25,886		)
Other income (expense), net	(992		)		(101		)		223				(257		)		(133		)		(992		)
Income tax expense (benefit)		13,948				(4,488		)		(27,543		)		(8,735		)		(13,177		)		(5,037		)
Income (loss) from continuing operations before income taxes	(67,740		)		32,688				(12,877		)		(82,688		)		(50,621		)		(45,135		)
Income (loss) from continuing operations		18,740				(8,389		)		(55,145		)		(41,886		)		(31,958		)		(20,849		)
Income tax expense (benefit)	20,120				13,948				(4,488		)		(26,720		)		(11,535		)		(4,762		)
Loss from discontinued operations, net of income taxes		(357		)		—				—				—				—				—
Income (loss) from continuing operations	(87,860		)		18,740				(8,389		)		(55,968		)		(39,086		)		(40,373		)
Gain from sale of discontinued operations, net of income taxes		6,178				—				—				—				—				—
Loss from discontinued operations, net of income taxes	(4,175		)		(357		)		—				—				—				—
Net income (loss)		$	24,561			$	(8,389	)		$	(55,145	)		$	(41,886	)		$	(31,958	)		$	(20,849	)
Gain from sale of discontinued operations, net of income taxes	—				6,178				—				—				—				—
Other Financial Data:
Net income (loss)	$	(92,035	)		$	24,561			$	(8,389	)		$	(55,968	)		$	(39,086	)		$	(40,373	)
Ratio of Earnings to Fixed Charges (1)		2.04x				N/A				N/A				N/A				N/A				N/A
Other Financial Data:
Ratio of Earnings to Fixed Charges (1)	N/A				2.04x				N/A				N/A				N/A				N/A

	Predecessor
	As of September 30,				As of September 30,		~~As of September 30,~~
(in thousands)	~~2009~~	2010		~~2010~~	2011		~~2011~~	2012		~~2012~~	2013		~~2013~~	2014
Selected Balance Sheet Data:
					(Restated)			(Restated)			(Restated)
Cash and cash equivalents	$	44,573		$	74,290		$	44,796		$	130,676		$	82,902
Selected Balance Sheet Data:
Total assets	851,278			851,906			2,469,989			2,430,084			2,429,942
Cash and cash equivalents		$	74,290		$	44,796		$	130,676		$	82,902		$	130,359
Total debt, including current maturities	522,895			499,395			1,324,259			1,316,578			1,312,383
Total assets		851,906			2,468,652			2,426,327			2,429,012			2,284,596
Stockholder's equity	166,530			196,862			587,716			552,764			511,809
Total debt, including current maturities		499,395			1,324,259			1,316,578			1,312,383			1,277,927
Stockholder's equity		196,862			588,539			550,787			518,247			457,889
Cash dividends declared and paid		—			—			—			—			36,500

(1) For purposes of computing the ratio of earnings to fixed charges, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of interest expense, amortization of deferred issuance costs, a portion of rental expense that management believes is representative of the interest component of rental expense, and interest related to uncertain tax positions. For periods in which income (loss) from continuing operations is a loss, the Ratio of Earnings to Fixed Charges is not applicable (N/A).

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positions. For periods in which income (loss) from continuing operations is a loss, the Ratio of Earnings to Fixed Charges is not applicable (N/A).

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with the audited consolidated financial statements and related notes thereto appearing elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those set forth under “Risk Factors” in Part I, section IA. Unless the context requires otherwise, references to “we,” “our,” “us”, "Epicor" and “the Company” are to Epicor Software Corporation and its consolidated subsidiaries~~, after the consummation of the Acquisitions~~. Unless the context requires otherwise, references to "Solarsoft" refer to the business of Solarsoft Business Systems, ~~Inc.,~~ which we acquired in October 2012 and whose results are included in our results subsequent to the date we acquired ~~them~~it. ~~Unless~~ the context requires otherwise, references to “Legacy Epicor” refer to legacy Epicor Software Corporation and its consolidated subsidiaries prior to the Acquisitions and references to “Activant” or “Predecessor” refer to Activant Solutions Inc. and its consolidated subsidiaries.

Overview

WeEpicor ~~are~~is a leading global provider of enterprise application software and services focused on small and mid-sized companies and the divisions and subsidiaries of Global 1000 enterprises. We provide industry-specific solutions to the manufacturing, distribution, retail and services sectors. Our fully integrated solutions, which primarily include ~~license~~software, professional services and support services and may include hardware products, are considered “mission critical” to many of our customers, as they manage the flow of information across the core ~~business~~ functions, operations and resources of their ~~enterprises.~~businesses Byand ~~enabling~~ultimately ~~our~~to their customers and suppliers. By enabling companies to automate and integrate information and critical business processes throughout their enterprise, as well as across their supply chain and distribution networks, our customers can increase their efficiency and productivity, ~~resulting~~which may result in higher revenues, increased profitability and improved ~~working~~customer ~~capital~~loyalty.

Our fully integrated systems and services include one or more of the following software applications: inventory and production management, supply chain management (“SCM”), manufacturing execution systems (“"MES”"), order management, point-of-sale (“POS”) and retail management, accounting and financial management, customer relationship management (“CRM”), human capital management (“HCM”) and service management, among others. Our solutions also respond to our customers'’ need for increased supply chain visibility and transparency by offering ~~multichannel~~omni-channel ~~eCommerce~~commerce and collaborative capabilities that allow enterprises to extend their business and more fully integrate their operations with those of their customers, suppliers and ~~channel~~ partners. We believe this collaborative approach distinguishes us from most of the conventional enterprise resource planning (“ERP”) vendors, whose primary focus is predominately on internal processes and efficiencies within a single plant, facility or business. For this reason, we believe our products and services are deeply embedded in our customers’ businesses and are a critical component to their success.

We have a global customer footprint across more than 150 countries and have a strong presence in both mature and emerging markets in North America, South America, Europe, Africa, Asia and Australia/New Zealand, with ~~over~~approximately 4,~~600~~500 employees worldwide as of September 30, ~~2013~~2014. Our software is available in more than 30 languages and we continue to translate and localize our systems to enter new geographical markets. In addition, we have a growing network of over 400 global partners, value-added resellers and systems integrators ~~that~~providing ~~provide~~ a comprehensive range of solutions and services based on our software. This worldwide coverage provides us with economies of scale, higher capital productivity through lower cost offshore operations, the ability to support increasingly global businesses and to more effectively deliver our systems and services to high-growth emerging markets~~, and to support increasingly global businesses~~.

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~~During the fourth quarter of fiscal 2012~~conditions, weeach ~~changed the composition~~ of ~~our~~which ~~reportable~~may ~~segments~~result byin ~~dividing~~reassessing ~~our~~specific ~~Retail reportable segment into two separate reportable~~ segments, ~~Retail Solutions~~ and ~~Retail Distribution. We have reclassified~~ the ~~revenues~~elements ~~and~~included ~~contribution~~within ~~margin~~each of ~~prior~~those ~~periods to conform to the new reportable segment structure~~segments. We ~~specialize~~Future ~~in and target three application software segments: ERP~~events, ~~Retail~~including ~~Solutions~~changes ~~and Retail Distribution, which we consider our segments for reporting purposes. These segments are determined~~ in ~~accordance with how~~ our senior management, ~~views~~may ~~and~~affect ~~evaluates our business and based on~~ the ~~criteria~~manner ~~as outlined~~ in ~~authoritative~~which ~~accounting~~we ~~guidance~~present ~~regarding~~ segments. ~~The Predecessor had two reporting segments: Wholesale Distribution Group, which is now included~~ in ~~our ERP segment, and Retail Distribution Group, which is now included in our Retail Distribution segment. The prior periods of~~ the ~~Predecessor have been reclassified to conform to the current period presentation~~future.

~~Because~~Beginning ~~these~~in ~~segments~~fiscal ~~reflect~~2014, the ~~manner~~Company inelected ~~which~~to ~~our~~change ~~management~~the ~~views~~presentation ~~our~~of ~~business,~~the ~~they~~revenues ~~necessarily~~and ~~involve~~cost ~~judgments~~of ~~that~~revenues ~~our~~sections ~~management~~of ~~believes~~our ~~are~~consolidated ~~reasonable~~statements ~~in light~~ of ~~the~~comprehensive ~~circumstances~~loss ~~under~~to ~~which~~better ~~they~~align ~~are~~our ~~made.~~presentation ~~These~~with ~~judgments~~other ~~may~~companies ~~change~~in ~~over~~our ~~time~~industry orand ~~may be modified~~ to ~~reflect~~enhance ~~new~~comparability. ~~facts~~Beginning orin ~~circumstances.~~fiscal ~~Segments~~2014, ~~may~~within ~~also~~revenues beand ~~changed~~cost orof ~~modified~~revenues, towe ~~reflect~~present ~~technologies~~software and ~~applications~~software ~~that~~related ~~are~~services, ~~newly~~professional ~~created,~~services ~~change~~and ~~over~~hardware ~~time,~~and orother. Prior ~~evolve~~periods ~~based~~have onbeen ~~business~~reclassified ~~conditions,~~to ~~each~~conform ofto ~~which~~the ~~may~~current ~~result~~period inpresentation. The ~~reassessing~~change ~~specific~~in ~~segments~~presentation ~~and~~had ~~the~~no ~~elements~~effect ~~included~~on ~~within~~the ~~each~~total amount of ~~those~~revenues ~~segments.~~or ~~Future~~cost ~~events,~~of ~~including~~revenues ~~changes~~and inno ~~our~~change ~~senior~~has ~~management,~~been ~~may~~made ~~affect~~to the ~~manner~~Company’s inreporting ~~which we present~~ segments ~~in the future~~.

~~The~~Corporate ~~Transactions~~Background

OnAs ~~March~~a ~~25,~~result ~~2011~~of ~~(“Inception”),~~a ~~Eagle~~series ~~Parent, Inc. (“Eagle”) was formed under Delaware law at the direction~~ of ~~funds~~mergers ~~advised~~completed byin ~~Apax~~May ~~Partners~~2011, ~~L.P.~~we ~~and~~became ~~Apax Partners, LLP, together referred to as "Apax", solely for~~ the ~~purpose~~parent company of ~~acquiring~~ Activant Group Inc. (“AGI”), the parent company of Activant Solutions Inc., ~~the~~our Predecessor for reporting purposes, (the “Predecessor” or “Activant”), and the former Epicor Software Corporation (“Legacy Epicor”). ~~Activant~~In ~~was~~December determined to be the Predecessor for financial reporting purposes due to its relative total asset size to Legacy Epicor. Further, the majority of Named Executive Officers and other executive officers of the Company were employees of Activant at the time of the Acquisitions. On May 16, 2011, ~~Eagle~~we ~~consummated~~changed ~~the~~our ~~acquisitions~~name ofto ~~AGI, Activant and Legacy~~ Epicor, ~~following~~Software ~~which,~~Corporation ~~Legacy~~in ~~Epicor,~~connection ~~AGI~~with ~~and Activant became wholly-owned subsidiaries of Eagle. These acquisitions and~~ the ~~related~~merger ~~transactions are referred to collectively as the “Acquisition” or “Acquisitions.” Effective as~~ of ~~December 31, 2011,~~ Legacy Epicor, AGI and Activant ~~were merged~~ with and into ~~Eagle~~us under Delaware law ~~(the “Reorganization”)~~. Funds Inadvised ~~connection~~by ~~with~~Apax ~~the~~Partners ~~Reorganization, Eagle changed its name to Epicor Software Corporation~~L. ~~Unless~~P. ~~explicitly~~and ~~stated~~Apax ~~otherwise~~Partners, ~~references~~LLP in(together ~~this~~referred ~~report~~ to ~~“we,”~~as “~~our,~~Apax”) ~~“us”~~ and ~~the “Company” refer to Epicor Software Corporation and its consolidated subsidiaries. Funds advised by Apax and~~ certain of our employees indirectly own all of the outstanding shares of the Company.

General Business Trends

Demand for our product offerings has generally been correlated with macroeconomic and business conditions. During our fiscal 2014, the economy showed signs of continued improvement. While the outlook for growth remains positive, concern remains regarding the overall strength of the recovery. We continue to evaluate the economic situation, the business environment and our outlook for changes. We believe that our customers and prospective customers will invest in IT products and services that deliver value, reduce their operating costs and achieve strong return on investment and we believe that our product and service offerings position us to remain competitive.

In fiscal 2014, our revenues grew approximately 3.5% as compared to the prior year. The increase in revenues was due to strong growth in software license, Software as a Service ("SaaS"), payment exchange, software support and hosting and managed services revenues. These increases offset decreases in professional services revenues while our hardware and other revenues were relatively flat. Cost of revenues in total and as a percentage of revenues were lower year over year primarily as a result of a mix shift to higher software and software related services revenues and hosting and managed services revenues as well as lower hardware equipment costs due to a favorable mix of hardware products sold in the current fiscal year. Other operating expenses increased primarily due to an increase in depreciation and amortization expense. As a result of the increase in revenues and corresponding increase in gross margins, partially offset by higher other operating expenses, our operating income in fiscal 2014 increased $14.0 million compared to the prior year. Our operating income margin increased to 6.2% in fiscal 2014 compared to 5.0% in the prior year.

Our ERP segment delivered solid growth in revenues and contribution margin in fiscal 2014, primarily driven by growth in revenues from software licenses, SaaS, software support and professional services in our America’s (North, Central and South America) region and software support revenues in our EMEA (Europe, Middle East and Africa) region and software license revenues in our APAC (Asia Pacific) region, partially offset by lower professional services revenues in our APAC and EMEA regions due to lower professional services backlog. Our Retail Distribution segment also contributed solid revenue and contribution margin growth in fiscal 2014, driven by increased software license, payment exchange and hardware equipment revenues which have been favorably impacted by improvements in consumer confidence, the residential housing market recovery and a beneficial hardware refresh cycle as several customers have updated their hardware platforms. Our Retail Solutions segment performance continues to be affected by lower software license sales to existing customers, longer sales cycles, as well as by the number and timing of large strategic deals. Lower software license revenues in Retail Solutions in fiscal 2014 have contributed to lower professional services revenues, which have resulted in lower contribution margin in the current fiscal year. Additionally, Retail Solutions hardware and other revenues have been lower in the current fiscal year due to a lower number of strategic roll outs as a result of lower software license revenues.

Over the last year we have enhanced our capabilities and marketplace experience with additions to our management team. In October 2013, Joseph L. Cowan became our President and Chief Executive Officer. Additionally, Janie West was appointed as Chief Product Officer and Mark Mincin was appointed Chief Information Officer during fiscal 2014.

Components of Operations

The key components of our results of operations are as follows:

Revenues

Our revenues are primarily derived from sales of our systems and services to customers that operate in three segments - ERP, Retail Solutions and Retail Distribution.

• ERP segment - The ERP segment provides (1) distribution solutions designed to meet the expanding requirement to support a demand driven supply network by increasing focus on the customer and providing a more seamless order-to-shipment cycle for a wide range of vertical markets including electrical supply, plumbing, medical supply, heating and air conditioning, tile, industrial machinery and equipment, industrial supplies, building supplies, fluid power, janitorial and sanitation, medical, value-added fulfillment, food and beverage, redistribution and general distribution; (2) manufacturing solutions designed for discrete, process and mixed-mode manufacturers with batch, lean and “to-order” manufacturing in a range of verticals including industrial machinery, instrumentation and controls, food and beverage, medical devices, printing, packaging, automotive, aerospace and defense, energy and high tech; and (3) financial management and professional services solutions designed to provide the project accounting, time and expense management, and financial analysis and reporting necessary to support the complex requirements of serviced-based companies in the consulting, banking, financial services, not-for-profit and software sectors.

• Retail Solutions segment - The Retail Solutions segment supports (1) large, distributed retail environments that require a comprehensive multichannel retail solution including POS store operations, cross-channel order management, CRM, loyalty management, merchandising, planning and assortment planning, business intelligence and audit and operations

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~~management~~The ~~capabilities~~key ~~and~~components ~~(2)~~of ~~small- to mid-sized retailers with~~ our ~~Epicor~~results ~~Software~~of asoperations aare Service for retail which provides a preconfigured, full suite retail solution, including the infrastructure for the host and store hardware, ongoing solution updates, monitoring, maintenance and support, as ~~a subscription service. Our Retail Solutions segment caters to the general merchandise, specialty retail, apparel and footwear, sporting goods and department store verticals.~~follows:

• Retail Distribution segment - The Retail Distribution segment supports small- to mid-sized, independent or affiliated retailers that require integrated POS or ERP offerings. Our Retail Distribution segment primarily supports independent hardware retailers, lumber and home centers, lawn and garden centers, farm and agriculture retailers, retail pharmacies, sporting goods, and other specialty hardlines retailers, as well as customers involved in the manufacture, distribution, sale and installation of new and remanufactured parts used in the maintenance and repair of automobiles and light trucks primarily in North America as well as the United Kingdom and Ireland, including several retail chains in North America.Revenues

~~Within~~Our ~~each~~revenues ~~segment,~~are weprimarily ~~generate~~derived ~~revenues~~ from ~~systems~~sales of our software and software related services, professional services and hardware and other to customers that are categorized into one of our three segments - ERP, Retail Solutions and Retail Distribution.

~~Systems~~• ~~revenues~~ERP ~~are~~segment ~~comprised~~- ~~primarily~~Our ERP segment provides (1) distribution solutions designed to meet the expanding requirement to support a demand driven supply network by increasing focus on the customer and providing a more seamless order-to-shipment cycle for a wide range of: vertical markets including electrical supply, plumbing, medical supply, heating and air conditioning, tile, industrial machinery and equipment, industrial supplies, building supplies, fluid power, janitorial and sanitation, medical, value-added fulfillment, redistribution and general distribution; (2) manufacturing solutions designed for discrete, process and mixed-mode manufacturers with batch, lean and “to-order” manufacturing in a range of verticals including industrial machinery, instrumentation and controls, medical devices, rubber and plastics, food and beverage, aerospace and defense, electronics and high tech, and automotive; and (3) financial management and professional services solutions designed to provide the project accounting, time and expense management, and financial analytics and reporting necessary to support the complex requirements of serviced-based companies in the business services, consulting, financial services, not-for-profit and technology services sectors.

• ~~License~~Retail ~~revenues~~Solutions segment - ~~Represent~~Our ~~revenues~~Retail ~~from~~Solutions ~~the~~segment ~~sale~~supports orboth ~~license~~(1) ofdistributed ~~software~~retail environments that require comprehensive omni-channel retail solutions including POS store operations, mobility, cross-channel order management, customer relationship management ("CRM"), loyalty management, merchandising, planning and assortment planning, business intelligence and audit and operations management capabilities and (2) retailers seeking to ~~customers.~~leverage Athe ~~substantial~~cloud ~~amount~~and ofon-demand computing with our ~~new~~subscription ~~license~~based ~~revenue~~Epicor isRetail ~~characterized~~SaaS byoffering ~~long~~that ~~sales~~includes ~~cycles~~a preconfigured, full suite retail solution, the infrastructure for the host and isstore ~~therefore~~hardware, ongoing solution updates, monitoring, maintenance and support. Retailers can also choose a ~~somewhat~~hosted ~~less~~option ~~predictable~~that ~~revenue~~provides ~~stream~~a licensed, customizable solution with complete delivery, management, and support of the infrastructure and applications in ~~nature~~the cloud. ~~License~~Our ~~revenues~~Retail ~~are~~Solutions ~~heavily~~segment ~~affected~~caters byto the general ~~economic~~merchandise, ~~conditions~~specialty retail, apparel and ~~our~~footwear, ~~competitive~~sporting ~~position~~goods inand ~~the~~department ~~marketplace~~store verticals.

• ~~Professional~~Retail ~~services~~Distribution ~~revenues~~segment - ~~Consist~~Our ~~primarily~~Retail ofDistribution ~~revenues~~segment ~~generated~~supports ~~from~~small ~~implementation~~to ~~contracts~~mid-sized, toindependent ~~install~~or ~~and~~affiliated ~~configure~~retailers ~~our~~that ~~software~~require ~~products~~integrated POS and ERP offerings. ~~Additionally,~~Customers wein ~~generate~~this ~~revenues~~segment ~~from~~are ~~consulting,~~primarily ~~custom~~independent ~~modification~~hardware retailers, lumber and ~~training~~home centers, lawn and ~~educational~~garden ~~services~~centers, tofarm ~~our~~and ~~customers~~agriculture ~~regarding~~retailers, ~~the~~retail ~~use~~pharmacies, ofsporting ~~our~~goods, ~~software~~and ~~products~~other specialty retailers. Our ~~consulting~~Retail ~~revenues~~Distribution ~~are~~segment ~~dependent~~also ~~upon~~supports ~~general~~customers ~~economic~~involved ~~conditions,~~in the ~~level~~manufacture, distribution, sale and installation of ~~our~~new ~~license~~and ~~revenues,~~remanufactured asparts ~~well~~used asin ~~ongoing~~the ~~purchases~~maintenance and repair of ~~services~~automobiles byand ~~our~~light ~~existing~~trucks ~~customer~~primarily ~~base~~in North America.

•Within ~~Hardware~~each ~~and~~segment, ~~other~~we generate revenues -from ~~Consist~~software ~~primarily of server, POS~~ and ~~storage~~software ~~product~~related ~~offerings~~services, ~~installation~~professional ofservices, ~~hardware products~~ and ~~sales of business products. Our~~ hardware and other ~~systems~~products ~~revenues are dependent upon general economic conditions, the level of our license revenues,~~ as ~~well~~described ~~as on going purchases from our existing customer base~~below.

~~Our~~Software ~~services are specific to the markets we serve~~ and ~~can~~Software ~~complement~~Related ~~our software product offerings. We generally provide services on a subscription basis, and accordingly these revenues are generally recurring in nature. Our service revenues consist primarily of~~Services:

• ~~Maintenance~~Software ~~services~~license revenues - ~~Consist~~Revenues ~~primarily~~from ofthe ~~customer~~granting ~~support~~of ~~activities,~~perpetual ~~including~~licenses ~~software,~~to ~~hardware~~customers ~~and~~to ~~network~~use ~~support through~~ our ~~help desk, web help,~~ software ~~updates, preventive~~ and ~~remedial~~application ~~on-site maintenance and depot repair services~~offerings.

• ~~Content~~Software and ~~supply~~cloud ~~chain~~subscriptions ~~services~~revenues -– ~~Consist~~Recurring ~~primarily~~fees ofearned ~~proprietary~~from ~~catalogs,~~granting ~~data~~customers ~~warehouses,~~access ~~electronic~~to ~~data~~a ~~interchange,~~broad ~~data~~range ~~management~~of ~~products,~~our ~~hosting,~~software ~~Software~~and asapplication offerings on a ~~Service~~subscription ~~(“SaaS”)~~basis. ~~and~~These ~~managed~~offerings ~~services.~~consist Weprimarily ~~provide~~of ~~comprehensive~~software ~~automotive~~application ~~parts~~modules ~~catalogs~~and suites, ~~industry-specific~~proprietary ~~analytics~~catalogs, ecommerce and ~~database~~electronic ~~services~~data ~~related~~interchange, todata ~~point-of-sale~~warehouses ~~transaction~~and ~~activity~~other ordata ~~parts~~management ~~information~~products inand ~~other~~all ~~core~~software ~~verticals,~~accessed asor ~~well~~managed ~~as,~~on-demand ~~eCommerce~~over ~~connectivity~~the ~~offerings,~~Internet ~~hosting,~~through ~~networking~~a ~~and~~Software ~~security~~as ~~monitoring~~a ~~management~~Service ~~solutions~~(“SaaS”) model.

~~Operating~~• ~~Expenses~~Software support revenues – Revenues earned primarily for providing customers with technical support services, as well as unspecified software upgrades (when and if available) and release updates and patches.

~~Our~~Professional operating expenses consist primarily of cost of systems revenues, cost of services revenues, sales and marketing, product development, general and administrative expenses, acquisition-related costs and restructuring costs as well as non-cash expenses, including depreciation and amortization. We allocate overhead expenses including facilities and information technology costs to all departments based on headcount. As such, overhead expenses are included in cost of revenues and each operating expense category. All operating expenses are allocated to segments, except as otherwise noted below.Services:

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•Consist ~~Cost~~primarily of ~~systems~~ revenues -generated ~~Cost~~from ofimplementation ~~systems~~contracts ~~revenues~~to ~~consists~~install ~~primarily~~(software ofand ~~direct~~hardware), ~~costs~~configure ofand deploy our software ~~duplication~~products. ~~and~~Our ~~delivery,~~professional ~~third-party~~services ~~royalty~~revenues ~~fees,~~also ~~salary~~include ~~related~~business and ~~third~~technical ~~party~~ consulting, ~~costs~~integration ofservices, ~~providing~~custom ~~customers'~~software ~~system~~development ~~installation~~ and ~~integration~~product training and ~~custom~~educational ~~modification~~services ~~and~~regarding ~~training~~the ~~services,~~use ~~travel~~of ~~costs~~our software products. Additionally, we provide managed services for customers hosted at our ~~logistics~~data ~~organization~~center facilities, ~~cost~~partner ofdata ~~hardware,~~centers ~~and~~or ~~allocated~~physically ~~overhead~~on-premise ~~expenses~~at customer facilities.

•Hardware ~~Cost of services revenues - Cost of services revenues consists primarily of salary related costs, third party maintenance costs, channel partner referral fees~~ and other costs associated with product updates and providing support services, material and production costs associated with our automotive catalog and other content offerings and allocated overhead expenses.Other:

Consist primarily of revenues generated from the re-sale of servers, POS and storage product offerings, hardware maintenance fees and the sale of business products.

Operating Expenses

Our operating expenses consist primarily of cost of software and software related services revenues, cost of professional services revenues, cost of hardware and other revenues, sales and marketing, product development, general and administrative expenses, acquisition-related costs and restructuring costs as well as non-cash expenses, including depreciation and amortization. We allocate overhead expenses including facilities and information technology costs to all departments based on headcount. As such, overhead expenses are included in cost of revenues and each operating expense category. All operating expenses are allocated to segments, except as otherwise noted below.

•

Cost of software and software related services revenues - Cost of software and software related services revenues consists primarily of direct costs of software duplication and delivery, third-party royalty fees, channel partner referral fees, third party maintenance costs, salary related costs and other costs associated with product updates and providing support services, as well as material and production costs associated with our automotive catalog and other software and cloud subscription and allocated overhead expenses.

•

Cost of professional services revenues - Cost of professional services revenues consists primarily of salary related costs, third party consulting fees, travel costs and allocated overhead expenses associated with providing customers' system installation and integration, custom modification and training services. Additionally the cost of professional services includes salary related costs, outside services costs, travel costs and allocated overhead expenses associated with providing our hosting and managed services offerings.


•	Cost of hardware and other revenues - Cost of hardware and other revenues consists primarily of hardware equipment costs, our logistics organization, third party hardware maintenance contracts and the cost of business products.


•	Sales and marketing - Sales and marketing expense consists primarily of salaries and bonuses, commissions, share-based compensation expense, employee benefits, travel, marketing promotional expenses and allocated overhead expenses. Corporate marketing expenses are not allocated to our segments.

We• ~~sell,~~Product ~~market~~development ~~and~~- ~~distribute~~Product ~~our~~development ~~products~~expense ~~and~~consists ~~services worldwide,~~ primarily ~~through~~of asalaries ~~direct sales force~~ and ~~internal telesales~~bonuses, as well as through an indirect channel including a network of VARs, distributors, national account groups and referral partners who market our products on a predominately nonexclusive basis. Our marketing approach includes developing strategic relationships with many of the wellshare-~~known~~based ~~and~~compensation ~~influential market participants in the vertical markets that we serve. In addition to obtaining endorsements~~expense, ~~referrals~~employee ~~and references~~benefits, weoutside ~~have~~services ~~data licensing~~ and ~~supply~~allocated ~~chain~~overhead ~~service agreements with many of these businesses that we believe are influential~~expenses. The goal of these programs is to enhance the productivity of the field and inside sales teams and to create leveraged selling opportunities, as well as offering increased benefits to our customers by providing access to common industry business processes and best practices.

Incentive pay is a significant portion of the total compensation package for all sales representatives and sales managers. Our field sales teams are generally organized by new account sales, which focuses on identifying and selling to new customers and teams focused on existing customers including those migrating from one of our legacy systems to one of our new solution offerings. We also have dedicated inside sales teams that focus on selling upgrades and new software applications to our installed base of customers.

In recognition of global opportunities for our software products, we have committed resources to a global sales and marketing effort. We have established offices worldwide to further such sales and marketing efforts. We sell our products in the Americas, EMEA and APAC through a mix of direct operations, VARs and certain third-party distributors. We translate and localize certain products directly or on occasion through outside contractors, for sale in Europe, the Middle East, Africa, Latin America and Asia Pacific.

• Product development - Product development expense consists primarily of salaries and bonuses, share-based compensation expense, employee benefits, outside services and allocated overhead expenses. Our product development strategy combines innovative new software capabilities and technology architectures with our commitment to the long-term support of our products to meet the unique needs of our customers and vertical industries we serve. We seek to enhance our existing product lines, offer streamlined upgrade and migration options for our existing customers and develop compelling new products for our existing customer base and prospective new customers.

•

General and administrative - General and administrative expense primarily consists of salaries and bonuses, share-based compensation expense, employee benefits, outside services, and facility and information technology allocations for the executive, finance and accounting, human resources and legal support functions. Bad debt expenses and legal settlement fees are allocated to our segments and the remaining general and administrative expenses are not allocated.


•	Depreciation and amortization - Depreciation and amortization expense primarily consists of depreciation attributable to our fixed assets and amortization attributable to our intangible assets acquired in acquisitions. Depreciation and amortization are not allocated to our segments.

• Acquisition-related costs - Acquisition-related costs consists primarily of ~~sponsor arrangement fees,~~ legal fees, investment banker fees, ~~bond breakage fees,~~ due diligence fees, costs to integrate acquired companies, and costs related to contemplated business combinations and acquisitions. Acquisition-related costs are not allocated to our segments.


•	Restructuring costs - Restructuring costs relate to management approved restructuring actions to eliminate certain employee positions and to consolidate certain excess facilities with the intent to integrate acquisitions and streamline

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~~• Restructuring costs - Restructuring costs relate to management approved restructuring actions to eliminate certain employee positions~~ and ~~to consolidate certain excess facilities with the intent to integrate acquisitions and streamline and~~ focus our operations to properly align our cost structure with our projected revenue streams. Restructuring costs are not allocated to our segments.

Non-Operating Expenses

Our non-operating expenses consist of the following:

• Interest expense - Interest expense represents interest ~~and~~on our outstanding debt, amortization of our original issue discount and deferred financing fees related to our outstanding debt and interest recorded for our interest rate swap.

• Other income (expense), net - Other income (expense), net consists primarily of interest income, ~~equity in earnings of equity method investees,~~ other non-income based taxes, loss on extinguishment of debt, foreign currency gains or losses and gains or losses on marketable securities.


•	Income tax expense (benefit) - Income tax expense (benefit) is based on federal, state and foreign taxes owed in these jurisdictions in accordance with current enacted laws and tax rates. Our income tax provision includes current and deferred taxes for these jurisdictions, as well as the impact of uncertain tax benefits for the estimated tax positions taken on tax returns.

General Business Trends

Demand for our systems and services offerings has generally been correlated with the overall macroeconomic conditions. The global economic outlook still remains uncertain. We expect these conditions will lead to continued IT spending weakness in Europe into 2014, and these conditions could continue to have a negative impact on IT spending in the U.S. as well.

We continue to evaluate the economic situation, the business environment and our outlook for changes. While we anticipate that the global economic environment will remain challenging, we believe that our customers and prospective customers will invest in IT products and services that deliver value, reduce their operating costs and achieve strong return on investment. We believe that our product and service offerings position us to remain competitive in the current challenging economic environment. Additionally, we continue ongoing management of our cost structure.

All of our reporting segments continue to see strong customer retention rates. However, uncertainty surrounding the U.S. economy and ongoing weakness in the EU has adversely impacted our ability to close new customer business in our ERP segment and we expect this market to continue to be challenging for at least the short term period. Our Retail Solutions segment performance continues to be driven by longer sales cycles as well as by the number and timing of large strategic deals. Our Retail Distribution segment systems revenue performance has been impacted both favorably by improvements in consumer confidence and the residential housing market recovery, as well as unfavorably by the recent macroeconomic uncertainty caused by the U.S. government fiscal issues.

Recently we have enhanced our capabilities and marketplace experience with recent additions to our management team. In October 2013, we added Joseph L. Cowan as our new Chief Executive Officer. Additionally, during the fourth quarter of fiscal 2013, we added Noel Goggin as General Manager of Retail Solutions, and we added Donna Troy as General Manager of ERP Americas.

On October 12, 2012, we acquired 100% of the equity of Solarsoft. The Solarsoft discrete manufacturing, process manufacturing, packaging and wholesale and distribution verticals are reported in our ERP segment. The Solarsoft North America lumber and building materials verticals are reported in our Retail Distribution segment. Solarsoft results are included in our results from the date of acquisition and we have indicated the impact of Solarsoft on our results below.

Results of Operations

Year Ended September 30, ~~2013~~2014 Compared to the year ended September 30, ~~2012~~2013

Total revenues

Our total revenues were $995.0 million and $961.7 million for the year ended September 30, 2014 and 2013, respectively. Total revenues increased by $33.3 million, or 3%, for the year ended September 30, 2014 as compared to the year ended September 30, 2013. The increase was primarily due to growth in software license, SaaS, payment exchange and software support revenues as well as a $5.7 million decrease in deferred revenue purchase accounting adjustments as described in more detail below.

The following table sets forth our segment revenues by software and software related services, professional services and hardware and other for the periods indicated and the variance thereof:

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Our total revenues were $961.7 million for the year ended September 30, 2013 as compared to $855.5 million for the year ended September 30, 2012. Total revenues increased by $106.3 million, or 12%, for the year ended September 30, 2013 as compared to the year ended September 30, 2012. The increase was due primarily to the inclusion of $77.4 million (net of $5.0 million of deferred revenue purchase accounting adjustments) of revenue from Solarsoft products, a $14.4 million decrease in deferred revenue purchase accounting adjustments related to the Acquisitions and growth in services revenues as described in more detail below.



	Year Ended September 30,
(in thousands, except percentages)	2014		2013		Variance $			Variance %
ERP revenues:
Software and software related services:
Software license	$	115,531	$	105,971	$	9,560		9	%
Software and cloud subscriptions	21,581		18,481		3,100			17	%
Software support	312,516		296,788		15,728			5	%
Total software and software related services	449,628		421,240		28,388			7	%
Professional services	159,959		158,118		1,841			1	%
Hardware and other	17,339		19,111		(1,772		)	(9	)%
Total ERP revenues	626,926		598,469		28,457			5	%

Retail Solutions revenues:
Software and software related services:
Software license	13,351		14,907		(1,556		)	(10	)%
Software and cloud subscriptions	8,945		7,829		1,116			14	%
Software support	42,065		41,067		998			2	%
Total software and software related services	64,361		63,803		558			1	%
Professional services	45,073		49,603		(4,530		)	(9	)%
Hardware and other	24,396		28,751		(4,355		)	(15	)%
Total Retail Solutions revenues	133,830		142,157		(8,327		)	(6	)%

Retail Distribution revenues:
Software and software related services:
Software license	24,009		20,644		3,365			16	%
Software and cloud subscriptions	57,065		55,242		1,823			3	%
Software support	77,668		76,995		673			1	%
Total software and software related services	158,742		152,881		5,861			4	%
Professional services	28,358		26,883		1,475			5	%
Hardware and other	47,100		41,341		5,759			14	%
Total Retail Distribution revenues	234,200		221,105		13,095			6	%



Total revenues:
Software and software related services:
Software license	152,891		141,522		11,369			8	%
Software and cloud subscriptions	87,591		81,552		6,039			7	%
Software support	432,249		414,850		17,399			4	%
Total software and software related services	672,731		637,924		34,807			5	%
Professional services	233,390		234,604		(1,214		)	(1	)%
Hardware and other	88,835		89,203		(368		)	—	%
Total revenues	$	994,956	$	961,731	$	33,225		3	%

Our ERP, Retail Solutions and Retail Distribution segments accounted for approximately 63%, 13% and 24%, respectively, of our revenues during the year ended September 30, 2014. This compares to the year ended September 30, 2013, in which our ERP, Retail Solutions and Retail Distribution segments accounted for approximately 62%, 15% and 23%, respectively, of our revenues.

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As a result of purchase accounting, deferred revenue of acquired companies is reduced to reflect the cost of the related work to be performed plus a reasonable profit margin. These adjustments decrease over time as acquired contracts are completed. The following table sets forth, for the periods indicated, our Non-GAAP segment revenues by ~~systems~~software and software related services, professional services and hardware and other excluding the ~~variance~~impact ~~thereof:~~of deferred revenue purchase accounting adjustments. Non-GAAP segment revenues, which exclude the impact of deferred revenue purchase accounting adjustments, do not represent GAAP revenues for our segments and should not be viewed as alternatives for GAAP revenues. We use segment revenues excluding the impact of deferred revenue purchase accounting adjustments in order to compare the results of our segments on a comparable basis.

	Year Ended		Year Ended
	Year Ended September 30,								Year Ended September 30,
(in thousands, except percentages)	September 30, 2013		September 30, 2012			Variance $			Variance %
(in thousands)	2014								2013
ERP revenues:
	Non-GAAP		Purchase Accounting Adjustment			GAAP			Non-GAAP		Purchase Accounting Adjustment			GAAP
Systems:
ERP revenues:
License	$	105,971	$	100,395		$	5,576		6	%
Software and software related services	$	449,713	$	(85	)	$	449,628		$	424,505	$	(3,265	)	$	421,240
Professional services	~~146~~159,~~370~~962		~~128,712~~(3		)	17159,~~658~~959			14158,234	%	(116		)	158,118
Hardware and other	1517,~~873~~339		~~15,993~~—			~~(120~~17,339		)	(119,111	)%	—			19,111
Total systems	268,214		245,100			23,114			9	%
Total ERP revenues	627,014		(88		)	626,926			601,850		(3,381		)	598,469
Services	330,255		270,100			60,155			22	%
Retail Solutions revenues:
Total ERP revenues	598,469		515,200			83,269			16	%
Software and software related services	64,361		—			64,361			63,816		(13		)	63,803
Retail Solutions revenues:
Professional services	45,343		(270		)	45,073			50,079		(476		)	49,603
Systems:
Hardware and other	24,396		—			24,396			28,751		—			28,751
License	14,907		20,698			(5,791		)	(28	)%
Total Retail Solutions revenues	134,100		(270		)	133,830			142,646		(489		)	142,157
Professional services	36,510		36,334			176			—	%
Retail Distribution revenues:
Hardware and other	25,347		19,708			5,639			29	%
Software and software related services	158,804		(62		)	158,742			154,786		(1,905		)	152,881
Total systems	76,764		76,740			24			—	%
Professional services	28,358		—			28,358			27,024		(141		)	26,883
Services	65,393		61,374			4,019			7	%
Hardware and other	47,315		(215		)	47,100			41,755		(414		)	41,341
Total Retail Solutions revenues	142,157		138,114			4,043			3	%
Total Retail Distribution revenues	234,477		(277		)	234,200			223,565		(2,460		)	221,105
Retail Distribution revenues:
Total revenues:
Systems:
Software and software related services	672,878		(147		)	672,731			643,107		(5,183		)	637,924
License	20,644		18,078			2,566			14	%
Professional services	233,663		(273		)	233,390			235,337		(733		)	234,604
Professional services	18,229		12,821			5,408			42	%
Hardware and other	89,050		(215		)	88,835			89,617		(414		)	89,203
Hardware and other	24,336		22,748			1,588			7	%
Total revenues	$	995,591	$	(635	)	$	994,956		$	968,061	$	(6,330	)	$	961,731
Total systems	63,209		53,647			9,562			18	%
Services	157,896		148,496			9,400			6	%
Total Retail Distribution revenues	221,105		202,143			18,962			9	%
Total revenues:
Systems:
License	141,522		139,171			2,351			2	%
Professional services	201,109		177,867			23,242			13	%
Hardware and other	65,556		58,449			7,107			12	%
Total systems	408,187		375,487			32,700			9	%
Services	553,544		479,970			73,574			15	%
Total revenues	$	961,731	$	855,457		$	106,274		12	%

Our ERP, Retail Solutions and Retail Distribution segments accounted for approximately 62%, 15% and 23%, respectively, of our revenues during the year ended September 30, 2013. This compares to the year ended September 30, 2012, in which our ERP, Retail Solutions and Retail Distribution segments accounted for approximately 60%, 16% and 24%, respectively, of our revenues.

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The following ~~table~~discussion ~~sets~~is ~~forth,~~based ~~for~~upon ~~the periods indicated,~~ our ~~Non-~~GAAP segment revenues by systems and services excluding the impact of deferred revenue purchase accounting adjustments. Segment revenues excluding the impact of deferred revenue purchase accounting adjustments do not represent GAAP revenues for our segments and should not be viewed as alternatives for GAAP revenues. We use segment revenues excluding the impact of deferred revenue purchase accounting adjustments in order to compare the results of ~~our segments on a comparable basis~~operations.

	Year Ended			Year Ended
(in thousands, except percentages)	September 30, 2013			September 30, 2012			Variance $			Variance %
Systems revenues:
ERP	$	268,229		$	245,521		$	22,708		9	%
Retail Solutions	77,240			77,384			(144		)	—	%
Retail Distribution	64,394			54,151			10,243			19	%
Deferred revenue purchase accounting adjustment	(1,676		)	(1,569		)	(107		)	7	%
Total systems revenues	408,187			375,487			32,700			9	%
Services revenues:
ERP	333,621			282,843			50,778			18	%
Retail Solutions	65,406			62,497			2,909			5	%
Retail Distribution	159,171			148,850			10,321			7	%
Deferred revenue purchase accounting adjustment	(4,654		)	(14,220		)	9,566			(67	)%
Total services revenues	553,544			479,970			73,574			15	%
Total revenues:
ERP	601,850			528,364			73,486			14	%
Retail Solutions	142,646			139,881			2,765			2	%
Retail Distribution	223,565			203,001			20,564			10	%
Deferred revenue purchase accounting adjustment	(6,330		)	(15,789		)	9,459			(60	)%
Total revenues	$	961,731		$	855,457		$	106,274		12	%


•	ERP revenues - ERP revenues increased by $28.5 million, or 5%, for the year ended September 30, 2014 compared to the year ended September 30, 2013.

◦ ERP software and software related services revenues increased by $28.4 million, or 7%, for the year ended September 30, 2014 compared to the year ended September 30, 2013. The ~~following~~increase ~~amounts~~was ~~are~~primarily ~~stated~~as ~~net~~a result of a $15.7 million increase in software support revenues (which consisted of $12.5 million attributable to the addition of new customer software support contracts and support price increases partially offset by attrition, as well as a $3.2 million decrease in deferred revenue purchase accounting adjustments) as well as a $9.6 million increase in software license revenues led by our Americas region which grew year over year software license revenues as a result of revenues from large strategic sales transactions. Additionally, software and cloud subscriptions revenues increased by $3.1 million primarily due to growth in SaaS revenues.

•◦ ERP ~~revenues~~professional -services ~~ERP~~ revenues ~~were~~increased by $~~598~~1.58 million, or 1%, for the year ended September 30, ~~2013~~2014 as compared to ~~$515.2 million for~~ the year ended September 30, ~~2012.~~2013 ~~ERP~~driven ~~revenues increased~~ by ~~$83.3~~an ~~million,~~increase orin ~~16%,~~our ~~for~~Americas ~~the~~region ~~year~~due ~~ended~~to ~~September~~growth ~~30,~~software ~~2013~~license ~~compared~~revenues toin the ~~year~~preceding ~~ended~~years, ~~September~~which ~~30,~~positively ~~2012.~~affects Offollow-on ~~this~~professional ~~increase~~services implementation revenues, ~~$62.3~~partially ~~million~~offset ~~was~~by ~~attributable~~decreases toin ~~revenue~~our ~~from~~APAC ~~Solarsoft~~and ~~products~~EMEA regions.

◦ ERP ~~systems~~hardware ~~revenues~~and ~~for~~other ~~the year ended September 30, 2013 were $268.2 million compared to $245.1 million for the year ended September 30, 2012. ERP systems~~ revenues ~~increased~~decreased by $~~23.~~1.7 million, or 9%, for the year ended September 30, ~~2013.~~2014 ~~Revenue~~compared ~~from Solarsoft products contributed $28.5 million, which was partially offset by a $5.4 million decrease due primarily~~ to athe ~~$3.8~~year ~~million~~ended ~~decrease~~September ~~in hardware and other revenues and a $2.5 million decrease in license revenue~~30, ~~partially offset by a $0~~2013.9 ~~million increase in professional services revenues. Hardware and other revenues decreased primarily as a result of a lower mix of systems sold with hardware.~~ The ~~license revenue~~ decrease was primarily ~~driven~~attributable ~~by a change in a portion of our sales teams compensation plans from a December~~ to alower ~~September~~hardware ~~year~~equipment ~~end in the current fiscal year (effectively creating two~~ sales ~~year ends in the prior year for a portion of our sales team which has the tendency~~ to ~~incentivize our sales team to close a higher percentage of opportunities in~~ the ~~sales~~manufacturing ~~pipeline)~~sector ~~as well as an increase~~ in the amount of license revenue deferred at the current year end period. Professional services revenues increased primarily as a result of having a full year of revenue from Cogita Business Services International Ltd. ("Cogita"), which was acquired in the third quarter of fiscal 2012. Systems revenues in our Americas' region ~~have been adversely impacted by the macroeconomic uncertainty that existed in the U~~.~~S., while international systems revenues increased despite the ongoing weak economic conditions in Europe.~~

◦• ~~ERP~~Retail ~~services~~Solutions revenues ~~were~~- Retail Solutions revenues decreased by $~~330~~8.3 million, or 6%, for the year ended September 30, ~~2013~~2014 compared to ~~$270.1 million for~~ the year ended September 30, ~~2012~~2013. ~~ERP~~Professional services revenues ~~increased~~decreased by $604.25 million primarily due to lower software license revenues in fiscal year 2014 and 2013, orwhich ~~22%~~adversely ~~for~~affected follow-on professional services implementation revenues. Hardware and other revenues decreased by $4.4 million primarily due to large strategic sales transactions in the prior year. ~~ended~~Software ~~September~~and 30software related services revenues increased by $0.6 million. The increase in software and software related services revenues was primarily attributable to a $1.1 million increase in software and cloud subscriptions revenues, ~~2013~~due primarily to increased SaaS revenues, as well as a $1.0 ~~Revenue~~million ~~from~~increase ~~Solarsoft~~in ~~products~~software ~~contributed~~support revenues primarily as a result of the addition of new customer software support contracts and support price increases partially offset by customer attrition and a $331.85 million ~~(net~~decrease in software license revenues due to a lower level of sales to existing customers in the current year.

•

Retail Distributions revenues - Retail Distribution revenues increased by $13.1 million, or 6%, for the year ended September 30, 2014 as compared to the year ended September 30, 2013. Software and software related services revenues increased by $5.9 million. The increase in software and software related services revenues was driven by a $3.4 million increase in software license revenues as a result of increased revenues from new customers and existing customers (including a $0.8 million decrease in deferred revenue purchase accounting adjustments), a $1.8 million increase in software and cloud subscriptions revenues due primarily to increased payment exchange revenues partially offset by lower catalog revenues and a $0.7 million increase in software support revenues (driven primarily by a $1.0 million decrease in deferred revenue purchase accounting adjustments which was partially offset by customer attrition). Professional services revenues increased by $1.5 million due to increases in hosting, network support and implementation revenues. Hardware and other revenues increased by $5.7 million primarily due to increased demand from existing customers to refresh their hardware equipment.

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$3.1 million of deferred revenue purchase accounting adjustments). Additionally our services revenues increased by $26.4 million which was the result of a $22.1 million increase in support revenues primarily as a result of a $12.5 million reduction in deferred revenue purchase accounting adjustments as well as the addition of new customer software maintenance and support price increases partially offset by legacy platform attrition, as well as a $4.3 million increase in content and connectivity revenues which was primarily attributed to increased SaaS revenues.

• Retail Solutions revenues - Retail Solutions revenues were $142.2 million for the year ended September 30, 2013 as compared to $138.1 million for the year ended September 30, 2012. Retail Solutions revenues increased by $4.0 million, or 3%, for the year ended September 30, 2013 compared to the year ended September 30, 2012. Retail Solutions systems revenues increased by less than $0.1 million and Retail Solutions services revenues increased by $4.0 million. The slight increase in systems revenue was predominantly attributable to a $5.6 million increase in hardware and other revenues as a result of large follow-on strategic hardware sales transactions as well as a $0.2 million increase in professional services revenues, primarily offset by a $5.8 million decrease in license revenues due to a lower level of strategic sales transactions in the current year as well as a change in the sales teams compensation plans from a December to a September year end in the current fiscal year (effectively creating two sales year ends in the prior year which has the tendency to incentivize our sales team to close a higher percentage of opportunities in the sales pipeline). The $4.0 million increase in services revenues was primarily due to $1.9 million increase in content and connectivity revenues driven by SaaS and hosted revenues, a $1.0 million increase in support revenues due to support price increases partially offset by legacy platform attrition as well as a $1.1 million decrease in deferred revenue purchase accounting adjustments.

• Retail Distribution revenues - Retail Distribution revenues were $221.1 million for the year ended September 30, 2013 compared to $202.1 million for the year ended September 30, 2012. Retail Distribution revenues increased by $19.0 million, or 9%, for the year ended September 30, 2013 compared to the year ended September 30, 2012. Revenue from Solarsoft products contributed $15.1 million (net of $1.9 million of deferred revenue purchase accounting adjustments), and the remaining $3.9 million was primarily a result of $1.1 million increase in systems revenues and a $2.7 million increase in services revenues. Retail Distribution systems revenues increased by $9.6 million primarily due to the inclusion of $8.4 million (net of $0.8 million of deferred revenue purchase accounting adjustments) of systems revenue related to Solarsoft products and a $1.4 million increase in hardware and other revenues primarily due to higher mix of customer add-on orders as well as a $0.2 million increase in professional services revenues, partially offset by a $0.5 million decrease in license revenues as a result of lower license revenue sales to new customers. Retail Distribution services revenues increased by $9.4 million primarily due to the inclusion of $6.7 million (net of $1.1 million of deferred revenue purchase accounting adjustments) of revenue from Solarsoft products, $1.8 million as a result of our acquisition of Internet AutoParts, Inc. ("Internet AutoParts") as well as a $1.7 million increase in content and connectivity revenues, partially offset by a $0.8 million decrease in customer support revenues as a result of legacy platform attrition.

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Total operating and other expenses

The following table sets forth our operating and other expenses for the periods indicated and the variance thereof:

	Year Ended			Year Ended
	Year Ended September 30,
(in thousands, except percentages)	~~September 30, 2013~~2014			~~September 30, 2012~~2013			Variance $			Variance %
Cost of systems revenues	$	231,337		$	211,814		$	19,523		9	%
				(Restated)
Cost of services revenues	163,159			144,590			18,569			13	%
Cost of software and software related services revenues	$	147,709		$	144,748		$	2,961		2	%
Total cost of revenues	394,496			356,404			38,092			11	%
Cost of professional services revenues	177,974			180,129			(2,155		)	(1	)%
Sales and marketing	165,240			147,446			17,794			12	%
Cost of hardware and other revenues	65,501			69,619			(4,118		)	(6	)%
Product development	102,573			83,304			19,269			23	%
Sales and marketing	170,667			165,240			5,427			3	%
General and administrative	76,580			75,702			878			1	%
Product development	104,696			102,573			2,123			2	%
Depreciation and amortization	160,865			138,985			21,880			16	%
General and administrative	70,469			76,580			(6,111		)	(8	)%
Acquisition-related costs	8,561			8,845			(284		)	(3	)%
Depreciation and amortization	183,131			160,865			22,266			14	%
Restructuring costs	4,890			4,776			114			2	%
Acquisition-related costs	8,780			8,561			219			3	%
Total other operating expenses	518,709			459,058			59,651			13	%
Restructuring costs	3,896			4,890			(994		)	(20	)%
Interest expense	(92,669		)	(90,483		)	(2,186		)	2	%
Total operating expenses	932,823			913,205			19,618			2	%
Other expense, net	(992		)	(133		)	(859		)	646	%
Interest expense	(87,108		)	(92,669		)	5,561			(6	)%
Income tax benefit	(4,762		)	(11,535		)	6,773			(59	)%
Other expense, net	(911		)	(992		)	81			(8	)%
Income tax benefit	(5,037		)	(13,177		)	8,140			(62	)%

• Cost of ~~systems~~software ~~revenues~~and -software ~~Cost~~related ofservices ~~systems~~ revenues ~~was~~- ~~$231.3~~Cost ~~million~~of ~~for~~software ~~the~~and ~~year~~software ~~ended~~related ~~September~~services ~~30, 2013 as compared to $211.8 million for the year ended September 30, 2012. Cost of systems~~ revenues increased by $193.50 million, or 92%, for the year ended September 30, ~~2013~~2014 compared to the year ended September 30, ~~2012~~2013. The increase was primarily attributable to ~~the~~a ~~inclusion of~~ $193.61 million ofincrease ~~Solarsoft~~in ~~cost~~software ofand ~~systems~~cloud ~~revenues~~subscriptions ~~during~~cost ~~the~~of ~~year~~revenues ~~ended September 30, 2013~~ as ~~well as~~ a ~~$1.7~~result ~~million~~of ~~increase~~increased inSaaS ~~hardware~~ and ~~other~~payment ~~costs~~exchange ~~due~~cost toof ~~higher~~revenues ~~hardware~~driven ~~and~~by ~~other~~increased revenues, as well as a $1.0.2 million increase in ~~professional~~software ~~services~~license ~~costs,~~cost ~~partially~~of ~~offset~~sales byprimarily as a ~~$2.8~~result ~~million~~of ~~decrease~~increased inroyalty ~~license~~ costs asdue ato ~~result~~increased ofsoftware ~~lower~~license ~~third~~revenues, ~~party~~partially ~~software~~offset ~~costs~~by ~~due~~a to$0.3 ~~lower~~million ~~license~~decrease ~~revenue~~in software support costs.

• Cost of professional services revenues - Cost of ~~services~~professional ~~revenues was $163.2 million for the year ended September 30, 2013 compared to $144.6 million for the year ended September 30, 2012. Cost of~~ services revenues ~~increased~~decreased by $182.62 million, or 131%, for the year ended September 30, ~~2013~~2014 compared to the year ended September 30, ~~2012~~2013. The ~~increase~~decrease was primarily ~~attributable~~due to ~~the~~reduced ~~inclusion~~employee ofrelated ~~$16.3 million of Solarsoft cost of services revenues during the year ended September 30, 2013, as well as a $1.8 million increase in salary~~ expenses as a result of ~~increased~~lower ~~headcount~~professional ~~and merit adjustments and $1.9 million as a result of increased medical benefit costs, partially offset by a $1.3 million decrease in outside~~ services ~~costs~~revenues.

~~Total~~• Cost of hardware and other ~~operating~~revenues ~~expenses~~- ~~were~~Cost of hardware and other revenues decreased by $~~518~~4.71 million, or 6%, for the year ended September 30, ~~2013~~2014 as compared to ~~$459.1 million for~~ the year ended September 30, ~~2012~~2013. ~~Total~~ ~~other~~The ~~operating~~decrease ~~expenses~~was ~~increased~~primarily byattributable ~~$59.7~~to ~~million,~~a ordecrease ~~13%,~~in ~~for~~hardware ~~the~~equipment ~~year~~costs ~~ended~~driven ~~September 30,~~by ~~2013~~lower ~~compared~~hardware toequipment ~~the~~revenues ~~year~~in ~~ended~~our ~~September~~Retail 30Solutions segment, ~~2012. The~~a ~~increase~~mix ~~was~~shift ~~primarily~~of ~~attributable~~hardware toequipment ~~the~~sold ~~inclusion~~in ofour anERP ~~aggregate~~and ofRetail ~~$44.8~~Distribution ~~million~~segments ofto ~~Solarsoft~~products ~~total~~with ~~other~~lower ~~operating~~costs ~~expenses~~than our ordinary mix of hardware as well as alower ~~$14~~third party maintenance costs.8 ~~million~~These decreases were partially offset by an increase asin ~~described~~hardware equipment costs in ~~more~~our ~~detail~~Retail ~~below~~Distribution segment attributed to higher hardware equipment revenues. Additionally, third party hardware maintenance costs decreased driven by lower revenues.

• Sales and marketing - Sales and marketing expenses ~~were $165.2 million for the year ended September 30, 2013 as compared to $147.4 million for the year ended September 30, 2012. Sales and marketing expenses~~ increased by $175.84 million, or 123%, for the year ended September 30, ~~2013~~2014 as compared to the year ended September 30, ~~2012~~2013. The increase was primarily the result of ~~the~~a ~~inclusion of~~ $123.03 million ofincrease ~~Solarsoft~~in ~~expenses~~commissions asdue ~~well~~to asincreased software license revenues and a $34.79 million increase in employee related costs due primarily to ~~higher~~increased ~~headcount~~incentive bonus, travel and salary and wages costs, partially offset by a $1.65 million ~~increase~~decrease in sales conference ~~costs~~expenses, a $0.87 million ~~increase~~decrease in referral fees, a $0.73 million ofdecrease ~~allocated~~in ~~expenses~~marketing ~~due~~related toexpenses, ~~higher~~a ~~headcount and~~ $0.42 million ofdecrease ~~marketing~~in ~~expenses~~outside ~~partially~~services ~~offset~~and by a $10.81 million decrease in ~~commission~~allocated ~~expenses~~IT and facilities costs.

• Product development - Product development expenses ~~were~~increased by $~~102~~2.61 million, or 2%, for the year ended September 30, ~~2013,~~2014 as compared to ~~$83.3 million for~~ the year ended September 30, ~~2012~~2013. ~~Product~~The ~~development~~increase ~~expenses~~was ~~increased~~primarily bythe result of a $191.37 million, orincrease ~~23%~~in incentive compensation expense, ~~for~~a ~~the~~$0.7 ~~year~~million ~~ended~~increase ~~September~~in ~~30,~~other ~~2013~~employee ~~compared~~related tocosts ~~the~~and ~~year~~a ~~ended~~$0.5 ~~September~~million 30increase in allocated costs, ~~2012~~partially offset by a $0.5 ~~The~~million increase in capitalized software costs and a $0.3 million decrease in outside services costs.

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~~increase~~• General and administrative - General and administrative expenses decreased by $6.1 million, or 8%, for the year ended September 30, 2014 compared to the year ended September 30, 2013. The decrease was primarily the result of a $10.1 million year over year reduction in expenses related to the ~~inclusion~~shareholder oflitigation ($98.9 million of ~~Solarsoft~~charges ~~expenses~~were ~~for~~recorded during the year ended September 30, 2013, including a $7.8 million settlement and $1.1 million of legal fees, while during the year ended September 30, 2014 we recorded a $1.2 million legal fee insurance recovery), as well as a $52.52 million ~~increase~~sales and use tax benefit for recoveries and adjustments to reserves related to the Solarsoft acquisition, a $1.4 million decrease in ~~employee~~other salary related ~~costs~~expenses, a $1.2 million decrease in bad debt expense, a $0.7 million decrease in financing related fees and a $40.6 million decrease in outside services expenses, partially offset by a $2.5 million increase in ~~allocated~~severance costs ~~due~~(including a one-time $2.0 million severance cost related to ~~higher~~the ~~headcount~~departure of our former President and CEO), ~~partially~~a ~~offset~~$2.3 bymillion increase in incentive compensation expense, a $02.1 million increase in share based compensation expense, a $1.7 million increase in ~~capitalized~~legal ~~software~~fees ~~costs~~as a result of an intellectual property litigation proceeding we have initiated against Alternative during the year ended September 30, 2014 and a $1.5 million favorable one-time payroll tax adjustment related to purchase accounting reserves that occurred during the year ended September 30, 2013.

• ~~General~~Depreciation and ~~administrative~~amortization - ~~General~~Depreciation and ~~administrative~~amortization ~~expenses~~expense ~~were~~was $76183.61 million for the year ended September 30, ~~2013~~2014 as compared to $75160.79 million for the year ended September 30, ~~2012.~~2013, ~~General~~an ~~and~~increase ~~administrative~~of ~~expenses increased by~~ $022.92 million,. orThe ~~1%,~~increase ~~for~~was primarily the ~~year~~result ~~ended~~of ~~September~~a ~~30,~~$9.0 ~~2013~~million ~~compared~~impairment recorded to reduce the ~~year~~carrying ~~ended~~value ~~September~~of ~~30,~~our ~~2012.~~facility ~~The~~in ~~increase~~Montreal, ~~was~~Canada ~~primarily~~to ~~the~~its ~~result~~fair ofvalue, a $74.86 million ~~charge~~impairment recorded for ~~the~~leasehold ~~estimated~~improvements ~~settlement~~and offurniture ~~our~~and ~~shareholder~~equipment ~~litigation,~~which anthe ~~$0.8~~Company ~~million~~plans ~~increase~~to abandon in ~~benefits~~connection ~~costs~~with exiting leased facilities, as well as ~~the inclusion of~~ $43.14 million of ~~Solarsoft~~increased ~~expenses,~~amortization ~~partially~~recorded ~~offset~~on bydevelopment acosts placed in service, $54.90 million ~~reduction~~of inincreased ~~bad~~depreciation ~~debt~~related ~~expense,~~to afacility ~~$2.6~~leasehold ~~million~~improvements ~~reduction~~costs inand ~~share~~capitalized ~~based~~IT ~~compensation~~equipment ~~expense,~~costs aand $21.51 million ~~reduction~~of inincreased ~~legal~~amortization ~~costs,~~of ~~and~~acquired aintangible $1assets.0 ~~million~~See ~~decrease~~Note 3 - Property and Equipment in ~~other~~our ~~employee~~audited ~~related~~consolidated ~~costs~~financial statements.

• ~~Depreciation~~Acquisition-related ~~and~~costs ~~amortization~~- Acquisition-related ~~Depreciation~~costs ~~and~~were ~~amortization expense was~~ $~~160~~8.98 million for the year ended September 30, ~~2013~~2014 compared to $~~139~~8.06 million for the year ended September 30, ~~2012~~2013. Acquisition-related costs for the year ended September 30, an2014 ~~increase~~consisted primarily of ~~$21.9~~costs ~~million.~~for ~~The~~integration ~~increase~~activities, ~~was~~such ~~primarily~~as consolidating the ~~result~~Company's ofinformation ~~$14.4~~systems ~~million~~and ~~additional~~accounting ~~depreciation~~back ~~and~~office ~~amortization~~functions, ~~due~~as well as fees incurred relating to the legal entity consolidations of the Solarsoft acquisition. asThe ~~well~~acquisition ascosts ~~$3.6~~for ~~million~~the ofyear ~~increased~~ended ~~depreciation~~September ~~related~~30, to2013 ~~facility~~consisted ~~leasehold~~primarily ~~improvements~~of costs ~~and~~for ~~capitalized~~integration ITactivities, ~~equipment~~such ~~costs~~as consolidating the Company's information systems and ~~$3.5~~the ~~million~~accounting ofback ~~increased~~office ~~amortization~~functions, ~~recorded~~as onwell ~~development~~as costs ~~placed~~relating into ~~service~~the acquisition of Solarsoft.

• ~~Acquisition-related~~Restructuring costs - ~~Acquisition-related~~During ~~costs were $8.6 million for~~ the year ended September 30, ~~2013~~2014, ~~compared~~we toincurred $83.89 million ~~for~~of ~~the year ended September 30, 2012. Acquisition~~management-~~related~~approved ~~costs~~restructuring ~~for the year ended September 30~~costs, ~~2013 consisted~~ primarily ofseverance ~~acquisition~~ costs ~~for~~to ~~integration~~eliminate ~~activities,~~certain ~~such~~employee aspositions ~~consolidating the Company's information systems~~ and ~~the~~lease ~~accounting~~termination ~~back office functions, as well as legal, tax~~ and ~~accounting~~restructuring ~~fees~~costs ~~relating~~ to ~~the~~exit ~~acquisition~~certain ofleased ~~Solarsoft~~facilities. ~~Acquisition-related~~During ~~costs for~~ the year ended September 30, ~~2012~~2013, ~~consisted~~we ~~primarily~~incurred of $4.9 million of ~~integration~~management-approved ~~activities~~restructuring ~~due~~costs toas ~~the~~a ~~Acquisitions~~result ~~and $3.9 million~~ of ~~acquisition~~our ~~costs~~restructuring actions primarily ~~consisting of costs~~ related to ~~the~~eliminating ~~integration~~certain ~~related~~employee ~~activities~~positions ~~due~~as toa ~~the~~result ~~Acquisitions~~of ~~such~~prior asacquisitions. ~~consolidating~~We ~~the~~expect ~~Company's~~to ~~information~~incur ~~systems~~additional asrestructuring ~~well~~charges asto ~~due~~exit ~~diligence~~certain ~~fees~~identified ~~and~~facilities ~~legal~~during ~~fees~~fiscal ~~related~~2015. toSee ~~the~~Note ~~acquisition~~11 of- ~~SolarSoft,~~Restructuring ~~which~~Costs ~~was consummated~~ in ~~the~~our ~~first~~audited ~~quarter~~consolidated offinancial ~~our fiscal 2013~~statements.

• Restructuring costs - During the year ended September 30, 2013, we incurred $4.9 million of management-approved restructuring costs, primarily as a result of the acquisition of Solarsoft, to eliminate certain employee positions and to consolidate certain excess facilities. During the year ended September 30, 2012, we incurred $4.8 million of management approved restructuring costs, primarily as a result of the Acquisitions, to eliminate certain employee positions and to consolidate certain excess facilities with the intent to integrate acquisitions and streamline and focus our operations to properly align our cost structure with our projected revenue streams.

Interest expense

Interest expense for the year ended September 30, ~~2013~~2014 was $9287.71 million compared to $9092.57 million for the year ended September 30, ~~2012~~2013. The ~~year~~$5.6 ~~over~~million ~~year~~decrease ~~increase~~ in ~~our~~interest ~~debt~~expense ~~level~~was ~~related~~attributed primarily to ~~the~~a ~~October~~$5.8 ~~2012~~million ~~draw~~decrease onin our ~~revolving~~2011 ~~credit~~Credit ~~facility~~Agreement term loan interest expense due to ~~finance~~interest ~~the~~rate ~~Solarsoft~~reductions ~~acquisition,~~as ~~during~~a ~~the~~result ~~year~~of ~~ended~~refinancing ~~September~~amendments ~~30,~~in March 2013 ~~resulting~~and inJanuary ~~increased~~2014 ~~interest~~and ~~expense~~lower ofoutstanding ~~approximately~~principal balances and a $1.7 million~~. Additionally,~~ wedecrease ~~reclassified~~due ~~$1.9~~to ~~million~~decreased ofborrowings ~~other~~against ~~comprehensive~~our ~~loss~~revolving oncredit ~~our~~facility, ~~interest~~partially ~~rate~~offset ~~swap~~by ~~into~~a $1.4 million increase in interest expense~~. These~~ ~~increases~~reclassified ~~were~~from ~~partially~~accumulated ~~offset~~other bycomprehensive aloss ~~0.5%~~related to our interest rate ~~reduction~~swap asand a ~~result~~$0.5 ofmillion ~~refinancing~~increase ~~the~~in ~~term~~other ~~loan~~fees inand ~~March 2013~~expenses. See Note 6 - Debt, and Note 16 - Accumulated Other Comprehensive Loss in our audited consolidated financial statements.

Other expense, net

Other expense, net was $0.9 million for the year ended September 30, ~~2013~~2014 ~~was $1.0 million~~ compared to $0.1.0 million for the year ended September 30, ~~2012~~2013. ~~Other~~The ~~expense for the~~ year ended September 30, ~~2013~~2014 ~~included~~amount consisted primarily of $1.30 million of foreign exchange losses, ~~partially~~as ~~offset~~well byas a $0.35 million loss on extinguishment of ~~interest~~debt ~~income. Other~~recorded ~~expense,~~in ~~net~~connection ~~for~~with the ~~year~~refinancing ~~ended~~of ~~September~~our ~~30,~~term ~~2012~~loan ~~included~~in January 2014 partially offset by $0.85 million of ~~foreign~~interest ~~exchange~~income ~~losses,~~and a $0.71 million of sales tax ~~assessment~~refunds. The ~~and~~year aended ~~loss~~September on30, ~~disposal~~2013 ofamount ~~fixed~~consisted ~~assets~~primarily of $01.53 million ~~partially offset by $0.9 million~~ of ~~earnings~~foreign ~~from~~exchange ~~our~~losses, ~~previous~~partially ~~minority~~offset ~~interest~~by ~~in Internet AutoParts and~~ $0.73 million of interest income.

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Income tax benefit

We ~~recognized~~recorded an income tax benefit of $45.80 million, or ~~10.6~~20% of pre-tax loss, ~~for~~during the year ended September 30, ~~2013~~2014, compared to an income tax benefit of $1113.52 million, or ~~22.8~~29% of pre-tax loss, ~~for~~during the year ended September 30, ~~2012~~2013. Our income tax rate for the year ended September 30, ~~2013~~2014, differed from the federal statutory rate primarily due to ~~non-deductible~~changes ~~expenses~~in foreign and state tax rates on our deferred tax liabilities, foreign earnings that are currently taxed in the ~~U.S.~~US under the Controlled Foreign Corporation ~~regime~~Regime set forth in ~~the~~ IRC ~~Sec~~Section 951 through ~~960~~965 ("“Income Inclusion"”), ~~return~~share-based tocompensation, ~~provision~~other ~~adjustments~~non-deductible ~~and~~expenses, lower tax rates in foreign jurisdictions where earnings are deemed permanently reinvested, and changes in our liabilities for uncertain tax positions (FIN 48).

~~For~~Our income tax rate for the year ended September 30, ~~2012~~2013, ~~our income tax rate~~ differed from the federal statutory rate primarily due to ~~tax~~non-deductible ~~benefits~~expenses, ~~related~~earnings tothat ~~income~~are ~~tax~~currently ~~returns~~taxed ~~filed~~in ~~during~~ the ~~year~~U.S. ~~and~~under the ~~impact~~Controlled ofForeign ~~changes~~Corporation regime set forth in ~~foreign~~the ~~exchange~~IRC ~~rates~~Sec on951 ~~deferred~~through ~~income~~965 ~~taxes~~("Income Inclusion"), reconciliation ~~offset~~adjustments bymade ~~non-deductible~~to ~~expenses~~our ~~including~~income ~~share-based~~tax ~~compensation~~payables, changes in ~~our~~foreign ~~reserve~~and ~~for~~state ~~uncertain~~ tax ~~positions,~~rates ~~and~~as applied to our deferred liability balances, lower tax rates in ~~foreign~~ jurisdictions where earnings are deemed permanently reinvested and share-based compensation.

We ~~have~~are ~~permanently~~included ~~reinvested~~in ~~certain~~the ~~earnings~~consolidated atfederal income tax return of our ~~foreign~~indirect ~~subsidiaries~~parent ~~and~~company, asEGL ~~such,~~Midco. We weprovide dofor ~~not~~income ~~plan~~taxes tounder ~~repatriate~~the ~~these~~separate ~~earnings~~return tomethod, ~~the~~by ~~U.S. See~~which ~~Liquidity~~Epicor and ~~Capital~~its ~~Resources~~domestic ~~for~~subsidiaries acompute ~~discussion~~tax ofexpense ~~management's~~as ~~plans~~though tothey ~~permanently~~file ~~reinvest~~a ~~certain~~separate ~~foreign~~federal ~~earnings~~income tax return. Under the separate company method, ~~and~~our income tax expense/(benefit) does not account for the ~~impact~~taxable income or expense at EGL Midco, which primarily is comprised of ~~those~~Midco ~~plans~~Notes oninterest ~~our~~expense ~~liquidity~~(“Midco ~~position~~Interest ~~and~~Expense”). The onMidco Interest Expense is included in our consolidated federal income tax ~~provision~~return when filed. We have not entered into a tax sharing agreement with EGL Midco. We may enter into an EGL Midco tax sharing agreement with EGL Midco in the future.

See Note 9 - Income Taxes in our audited consolidated financial statements for additional information about income taxes.

Contribution margin

Our management measures the performance of each of our segments based on several metrics, including contribution margin, which is a Non-GAAP financial measure. Segment contribution margin includes all segment revenues less the related cost of sales, direct marketing, sales, and product development expenses as well as certain general and administrative expenses, including bad debt expenses and direct legal costs. A significant portion of each segment’s expenses arises from shared services and centrally managed infrastructure support costs that we allocate to the segments to determine segment contribution margin. These expenses primarily include information technology services, facilities, and telecommunications costs. Certain operating expenses are not allocated to segments because they are separately managed at the corporate level and are excluded from the calculation of contribution margin for each segment.

See Note 13 - Segment Reporting toin our audited consolidated financial statements ~~included in Part II - Item 8 of this filing~~ for a more detailed description of contribution margin, the reasons why we believe contribution margin provides useful information to investors, the limitations surrounding the use of contribution margin, and a reconciliation of contribution margin to loss before income taxes.

Contribution margin for the ~~years~~year ended September 30, ~~2013~~2014 and ~~2012~~2013 is as follows:

Year Ended

Year Ended September 30,

(in thousands, except percentages)

~~September 30, 2013~~2014

~~September 30, 2012~~2013

Variance $

Variance %

ERP

~~194~~218,~~096~~378

~~154~~194,~~127~~096

3924,~~969~~282

2613

Retail Solutions

4339,~~217~~429

4743,~~042~~217

(3,~~825~~788

)

(89

Retail Distribution

7080,~~082~~948

6570,~~787~~082

410,~~295~~866

716

Total segment contribution margin

~~307~~338,~~395~~755

~~266~~307,~~956~~395

4031,~~439~~360

1510

• ERP contribution margin - ~~ERP~~Contribution ~~contribution~~ margin for ~~the year ended September 30, 2013 was $194.1 million as compared to $154.1 million for the year ended September 30, 2012. The contribution margin for~~ ERP increased by $4024.03 million, or 2613%, for the year ended September 30, ~~2013~~2014 compared to the year ended September 30, ~~2012~~2013. ~~Solarsoft~~Software ~~contributed~~and ~~$16.1~~software ~~million~~related ofservices ~~contribution~~margins ~~margin~~increased ~~for~~by ~~the year ended September 30, 2013~~$25.0 ~~Additionally,~~million ~~contribution~~as ~~margin~~a ~~increased~~result ~~due~~of to a $249.80 million increase in ~~support~~software license margins ~~(as~~due ato ~~result~~increased ofsoftware license revenues, a $1214.5 million ~~decrease~~increase in ~~deferred~~software ~~revenue~~support ~~purchase~~margins ~~accounting~~(attributable ~~adjustments~~to ~~and~~an a $1211.3 million increase infrom ~~support~~new ~~margins~~customer ~~driven~~software by support ~~and~~revenues ~~SaaS revenue growth~~ and support price increases, partially offset by ~~legacy platform~~ attrition), asand ~~well as~~ a $3.92 million reduction in ~~legal~~the ~~fees,~~deferred arevenue ~~$4.9~~purchase ~~million~~accounting ~~reduction~~adjustments) ~~in bad debt expense~~ and a $1.~~4 million reduction in commissions, partially offset by a $~~5.9 million increase in ~~sales~~software and ~~marketing~~cloud ~~and~~subscriptions ~~product~~margins ~~development~~primarily ~~employee~~due ~~related~~to ~~expenses as a result of~~ increased ~~headcount,~~SaaS ~~a $2.7 million increase in allocated expenses as a result of increased sales~~ and ~~marketing~~electronic ~~and~~data ~~product~~interchange ~~development headcount, a $0~~revenues.9 ~~million~~Professional increase in sales conference costs, a $0.9 million increase in channel partner referral fees, a $0.5 million increase in marketing related expenses and a $0.2 million decrease in systems revenue margins due to a decrease in license revenues.services

• Retail Solutions contribution margin - Retail Solutions contribution margin for the year ended September 30, 2013 was $43.2 million as compared to $47.0 million for the year ended September 30, 2012. Contribution margin for Retail Solutions decreased by $3.8 million, or 8%, for the year ended September 30, 2013 as compared to the year ended September 30, 2012. The decrease was primarily as a result of a $4.9 million reduction in systems margins as a result of a lower license revenues and a higher mix of hardware revenues in the current year, a $2.6 million increase in41

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~~sales~~margins ~~and~~increased ~~marketing~~by $2.7 million driven by increased hosting and ~~product~~managed ~~development~~services revenues as well as lower employee salary and benefit related costs. Hardware asand other margins increased by $1.3 million due to a ~~result~~favorable mix of ~~increased~~hardware ~~headcount~~equipment assold. Additionally, ~~well~~ERP ascontribution margin was positively impacted by a $0.8 million ~~increase~~decrease in ofbad ~~allocated~~debt ~~expenses~~expense, ~~partially offset by~~ a $10.37 million ~~reduction~~decrease in ~~sales~~outside ~~commissions~~services ascosts, a ~~result~~$0.8 ofmillion ~~lower~~decrease ~~systems~~in ~~revenues,~~sales conference expense and a $0.97 million ~~reduction~~decrease in ~~bad~~referral ~~debt~~fees. These ~~expense~~increases asin ~~well~~ERP ascontribution margin were offset by a $24.52 million increase in ~~support~~sales ~~margins~~and ~~(driven~~marketing byand product development employee related and allocated expenses, a $1.19 million ~~decrease~~increase in ~~deferred~~commission ~~revenue~~expense ~~purchase~~as ~~accounting~~a ~~adjustments~~result ~~and~~of ~~support~~increased ~~revenue~~software ~~growth,~~license ~~partially~~revenues ~~offset~~and bya ~~legacy~~$1.5 ~~platform~~million ~~attrition)~~increase in legal expenses.

• Retail ~~Distribution~~Solutions contribution margin - ~~Retail Distribution contribution margin for the year ended September 30, 2013 was $70.1 million as compared to $65.8 million for the year ended September 30, 2012.~~ Contribution margin for Retail ~~Distribution~~Solutions ~~increased~~decreased by $4.3.8 million, or 79%, for the year ended September 30, ~~2013~~2014 as compared to the year ended September 30, ~~2012. Solarsoft contributed $2.2 million of contribution margin for the year ended September 30,~~ 2013. ~~Additionally~~The ~~contribution~~decrease ~~margin~~was ~~increased~~primarily as a result of a $13.14 million ~~increase~~decrease in ~~systems~~professional ~~revenue~~services margins ~~driven by higher systems revenues and favorable inventory adjustments, a $3.8 million increase in support margins primarily~~ due to ~~the~~lower ~~full~~professional ~~year~~services ~~impact of the Internet AutoParts acquisition and increased~~ revenues ~~from other content and connectivity offerings as well as support price increases~~, ~~and~~ a $0.72 million ~~increase~~decrease in ~~capitalized~~hardware ~~software~~ and ~~database~~other ~~costs.~~margins ~~These~~due ~~increases~~to ~~were~~lower ~~partially~~hardware ~~offset~~equipment byrevenues aand ~~$0.9 million increase in commission expense,~~ a $1.14 million increase in sales and marketing and product development employee related expenses, aspartially aoffset ~~result~~by ~~of increased headcount,~~ a $01.90 million increase in ~~allocated~~software ~~expenses~~and assoftware arelated ~~result~~services ofmargins ~~increased~~due ~~sales~~to ~~and~~higher ~~marketing~~SaaS and ~~product~~software ~~development~~support ~~headcount and a $0~~revenues.~~8 million increase in sales conference costs.~~

~~Year~~• ~~Ended~~Retail Distribution contribution margin - Contribution margin for Retail Distribution increased by $10.9 million, or 16%, for the year ended September 30, ~~2012~~2014 ~~Compared~~compared to the ~~period~~year ~~from~~ended ~~Inception~~September 30, 2013. Software and software related services margins increased by $5.8 million (including a $1.8 million decrease in deferred revenue purchase accounting adjustments) driven by higher software license and payment exchange revenues as well as higher software support margins. Hardware and other margins increased by $2.7 million as a result of increased hardware equipment revenues and higher margins on the equipment sold. Professional services margins increased by $1.2 million due to ~~September 30~~higher hosting and professional services revenues. Additionally, ~~2011~~Retail Distribution contribution margin was positively impacted by a $0.6 million decrease in sales conference expenses, a $0.5 million decrease in sales and marketing and product development employee related costs, a $0.5 million increase in capitalized software costs, a $0.4 million reduction in bad debt expense and a $0.3 million decrease in supplies and materials expense. These increases in contribution margin were offset by a $1.4 million increase in sales commission expenses due to higher software license revenues.

Year Ended September 30, 2013 Compared to the year ended September 30, 2012

Total revenues

Our total revenues were $~~855~~961.57 million for the year ended September 30, ~~2012~~2013 as compared to $~~304~~855.85 million for the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011~~2012. Total revenues increased by $~~550~~106.73 million, or ~~181~~12%, for the year ended September 30, ~~2012~~2013 as compared to the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011~~2012. The increase was due primarily ~~attributable~~ to the ~~comparison~~inclusion of a$77.4 ~~twelve~~million ~~month~~(net ~~period~~of ~~with~~$5.0 amillion ~~four~~of ~~and~~deferred ~~one~~revenue ~~half~~purchase ~~month~~accounting ~~period~~adjustments) asof ~~well~~revenue asfrom Solarsoft products, a $1314.54 million decrease in deferred revenue purchase accounting adjustments, ~~partially~~related ~~offset~~to byprior ~~the~~acquisitions ~~seasonally~~and ~~high~~growth ~~systems~~in ~~revenues~~software ~~for~~and ~~the~~software ~~period~~related ~~from Inception to September 30~~services, ~~2011~~professional ~~which~~services ~~was~~and ~~primarily~~hardware ~~comprised~~and ofother ~~our~~revenues ~~fiscal~~as ~~fourth~~described ~~quarter~~in ~~which~~more ~~typically~~detail ~~has the highest license and hardware revenue of any quarter~~below.

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The following table sets forth our segment revenues by software and software related services, professional services and hardware and other for the periods indicated and the variance thereof:



	Year Ended September 30,
(in thousands, except percentages)	2013		2012		Variance $			Variance %
ERP revenues:
Software and software related services:
Software license	$	105,971	$	100,395	$	5,576		6	%
Software and cloud subscriptions	18,481		11,652		6,829			59	%
Software support	296,788		247,752		49,036			20	%
Total software and software related services	421,240		359,799		61,441			17	%
Professional services	158,118		138,417		19,701			14	%
Hardware and other	19,111		16,984		2,127			13	%
Total ERP revenues	598,469		515,200		83,269			16	%

Retail Solutions revenues:
Software and software related services:
Software license	14,907		20,698		(5,791		)	(28	)%
Software and cloud subscriptions	7,829		6,323		1,506			24	%
Software support	41,067		39,035		2,032			5	%
Total software and software related services	63,803		66,056		(2,253		)	(3	)%
Professional services	49,603		48,614		989			2	%
Hardware and other	28,751		23,444		5,307			23	%
Total Retail Solutions revenues	142,157		138,114		4,043			3	%

Retail Distribution revenues:
Software and software related services:
Software license	20,644		18,078		2,566			14	%
Software and cloud subscriptions	55,242		52,302		2,940			6	%
Software support	76,995		73,152		3,843			5	%
Total software and software related services	152,881		143,532		9,349			7	%
Professional services	26,883		18,564		8,319			45	%
Hardware and other	41,341		40,047		1,294			3	%
Total Retail Distribution revenues	221,105		202,143		18,962			9	%



Total revenues:
Software and software related services:
Software license	141,522		139,171		2,351			2	%
Software and cloud subscriptions	81,552		70,277		11,275			16	%
Software support	414,850		359,939		54,911			15	%
Total software and software related services	637,924		569,387		68,537			12	%
Professional services	234,604		205,595		29,009			14	%
Hardware and other	89,203		80,475		8,728			11	%
Total revenues	$	961,731	$	855,457	$	106,274		12	%

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~~The~~Our ~~following~~ERP, ~~table~~Retail ~~sets~~Solutions ~~forth,~~and Retail Distribution segments accounted for ~~the~~approximately ~~periods~~62%, ~~indicated~~15% and 23%, ~~our~~respectively, ~~segment~~of our revenues byduring ~~systems~~the year ended September 30, 2013. This compares to the year ended September 30, 2012, in which our ERP, Retail Solutions and ~~services~~Retail Distribution segments accounted for approximately 60%, 16% and ~~the~~24%, ~~variance~~respectively, ~~thereof:~~of our revenues.

	Year Ended		Inception to
(in thousands, except percentages)	September 30, 2012		September 30, 2011		Variance $		Variance %
ERP revenues:
Systems:
License	$	100,395	$	46,796	$	53,599	115	%
Professional services	128,712		48,457		80,255		166	%
Hardware and other	15,993		6,098		9,895		162	%
Total systems	245,100		101,351		143,749		142	%
Services	270,100		77,567		192,533		248	%
Total ERP revenues	515,200		178,918		336,282		188	%
Retail Solutions revenues:
Systems:
License	20,698		6,310		14,388		228	%
Professional services	36,334		13,836		22,498		163	%
Hardware and other	19,708		8,785		10,923		124	%
Total systems	76,740		28,931		47,809		165	%
Services	61,374		23,437		37,937		162	%
Total Retail Solutions revenues	138,114		52,368		85,746		164	%
Retail Distribution revenues:
Systems:
License	18,078		5,930		12,148		205	%
Professional services	12,821		4,016		8,805		219	%
Hardware and other	22,748		9,938		12,810		129	%
Total systems	53,647		19,884		33,763		170	%
Services	148,496		53,585		94,911		177	%
Total Retail Distribution revenues	202,143		73,469		128,674		175	%
Total revenues:
Systems:
License	139,171		59,036		80,135		136	%
Professional services	177,867		66,309		111,558		168	%
Hardware and other	58,449		24,821		33,628		135	%
Total systems	375,487		150,166		225,321		150	%
Services	479,970		154,589		325,381		210	%
Total revenues	$	855,457	$	304,755	$	550,702	181	%

As a result of purchase accounting, deferred revenue of acquired companies is reduced to reflect the cost of the related work to be performed plus a reasonable profit margin. These adjustments decrease over time as acquired contracts are completed. The following table sets forth, for the periods indicated, our Non-GAAP segment revenues by software and software related services, professional services and hardware and other excluding the impact of deferred revenue purchase accounting adjustments. Non-GAAP segment revenues, which exclude the impact of deferred revenue purchase accounting adjustments, do not represent GAAP revenues for our segments and should not be viewed as alternatives for GAAP revenues. We use segment revenues excluding the impact of deferred revenue purchase accounting adjustments in order to compare the results of our segments on a comparable basis.

Our ERP, Retail Solutions and Retail Distribution segments accounted for approximately 60%, 16% and 24%, respectively, of our revenues during the year ended September 30, 2012. This compares to the period from Inception to September 30, 2011, in which our ERP, Retail Solutions and Retail Distribution segments accounted for approximately 59%, 17% and 24%, respectively, of our revenues.



	Year Ended September 30,							Year Ended September 30,
(in thousands)	2013							2012
	Non-GAAP		Purchase Accounting Adjustment			GAAP		Non-GAAP		Purchase Accounting Adjustment			GAAP
ERP revenues:
Software and software related services	$	424,505	$	(3,265	)	$	421,240	$	372,818	$	(13,019	)	$	359,799
Professional services	158,234		(116		)	158,118		138,562		(145		)	138,417
Hardware and other	19,111		—			19,111		16,984		—			16,984
Total ERP revenues	601,850		(3,381		)	598,469		528,364		(13,164		)	515,200

Retail Solutions revenues:
Software and software related services	63,816		(13		)	63,803		67,178		(1,122		)	66,056
Professional services	50,079		(476		)	49,603		49,259		(645		)	48,614
Hardware and other	28,751		—			28,751		23,444		—			23,444
Total Retail Solutions revenues	142,646		(489		)	142,157		139,881		(1,767		)	138,114

Retail Distribution revenues:
Software and software related services	154,786		(1,905		)	152,881		143,946		(414		)	143,532
Professional services	27,024		(141		)	26,883		18,564		—			18,564
Hardware and other	41,755		(414		)	41,341		40,491		(444		)	40,047
Total Retail Distribution revenues	223,565		(2,460		)	221,105		203,001		(858		)	202,143



Total revenues:
Software and software related services	643,107		(5,183		)	637,924		583,942		(14,555		)	569,387
Professional services	235,337		(733		)	234,604		206,385		(790		)	205,595
Hardware and other	89,617		(414		)	89,203		80,919		(444		)	80,475
Total revenues	$	968,061	$	(6,330	)	$	961,731	$	871,246	$	(15,789	)	$	855,457

Table of Contents

	Year Ended			Inception to
(in thousands, except percentages)	September 30, 2012			September 30, 2011			Variance $		Variance %
Systems revenues:
ERP	$	245,521		$	102,651		$	142,870	139	%
Retail Solutions	77,384			28,931			48,453		167	%
Retail Distribution	54,151			21,091			33,060		157	%
Deferred revenue purchase accounting adjustment	(1,569		)	(2,507		)	938		(37	)%
Total systems revenues	375,487			150,166			225,321		150	%
Services revenues:
ERP	282,843			103,035			179,808		175	%
Retail Solutions	62,497			23,437			39,060		167	%
Retail Distribution	148,850			54,883			93,967		171	%
Deferred revenue purchase accounting adjustment	(14,220		)	(26,766		)	12,546		(47	)%
Total services revenues	479,970			154,589			325,381		210	%
Total revenues:
ERP	528,364			205,686			322,678		157	%
Retail Solutions	139,881			52,368			87,513		167	%
Retail Distribution	203,001			75,974			127,027		167	%
Deferred revenue purchase accounting adjustment	(15,789		)	(29,273		)	13,484		(46	)%
Total revenues	$	855,457		$	304,755		$	550,702	181	%


•	ERP revenues - ERP revenues increased by $83.3 million, or 16%, for the year ended September 30, 2013 as compared to the year ended September 30, 2012. Of this increase, $62.3 million was attributable to revenues from Solarsoft products (net of $3.1 million of deferred revenue purchase accounting adjustments).

◦ ERP software and software related services revenues increased by $61.5 million, or 17%, for the year ended September 30, 2013 compared to the year ended September 30, 2012. Revenue from Solarsoft products contributed $37.4 million and the remaining $24.1 million was due primarily to a $22.0 million increase in software support revenues and a $4.5 million increase in software and cloud subscriptions revenues, partially offset by a $2.4 million decrease in software license revenues. The ~~following~~increase ~~amounts~~in ~~are~~software ~~stated~~support ~~net~~revenues ofwas primarily due to a $12.5 million decrease in deferred revenue purchase accounting adjustments as well as the addition of new customer software support contracts and support price increases partially offset by attrition. The increase in software and cloud subscriptions revenues was primarily attributable to growth in SaaS revenues. The decrease in software license revenues was primarily driven by a change in a portion of our sales teams compensation plans from a December to a September year end in fiscal year 2012 (effectively creating two sales year ends in the prior year for a portion of our sales team which has the tendency to incentivize our sales team to close a higher percentage of opportunities in the sales pipeline) as well as an increase in the amount of software license revenue deferred as of September 30, 2013.

•◦ ERP ~~revenues~~professional -services ~~ERP~~ revenues ~~were~~increased by $~~515~~19.27 million, or 14%, for the year ended September 30, ~~2012~~2013 as compared to ~~$178.9 million for~~ the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011~~2012. ~~ERP~~Revenue ~~revenues~~from ~~increased~~Solarsoft byproducts contributed $~~336~~19.35 million, orand ~~188%,~~the ~~for~~remainder of the ~~year~~increase ~~ended~~was ~~September~~primarily ~~30,~~attributable ~~2012~~to ~~compared~~having toa ~~the~~full ~~period~~year of revenue from ~~Inception~~Cogita toBusiness ~~September~~Services ~~30,~~International ~~2011~~Ltd. ~~The~~("Cogita"), ~~increase~~which was ~~primarily~~acquired ~~attributable~~in to the ~~comparison~~third quarter of afiscal ~~twelve~~2012 ~~month period with a four and one half month period~~ as well as a $130.51 million decrease in deferred revenue purchase accounting adjustments~~, partially offset by seasonally higher fiscal fourth quarter systems revenues for the period from Inception to September 30, 2011~~.

◦ ERP ~~systems~~hardware ~~revenues~~and ~~for~~other ~~the year ended September 30, 2012 were $245.1 million compared to $101.4 million for the period from Inception to September 30, 2011. ERP systems~~ revenues increased by $~~143~~2.71 million, or ~~142~~13%, ~~primarily~~for ~~as a result of~~ the ~~comparison~~year ofended aSeptember ~~twelve~~30, ~~month~~2013 ~~period~~compared ~~with~~to athe ~~four~~year ~~and~~ended ~~one~~September ~~half~~30, ~~month~~2012. ~~period~~Revenue asfrom ~~well~~Solarsoft asproducts acontributed $05.94 million, ~~decrease~~which inwas ~~deferred revenue purchase accounting adjustments,~~ partially offset by ~~higher~~a ~~fiscal~~$3.3 ~~fourth~~million ~~quarter~~decrease ~~license~~due ~~revenues~~to ~~and~~a ~~higher~~lower ~~hardware~~mix ~~and~~of ~~other~~systems ~~revenues~~sold ~~for~~with ~~the period from Inception to September 30, 2011~~hardware.

◦• ~~ERP~~Retail ~~services~~Solutions revenues ~~were~~- Retail Solutions revenues increased by $~~270~~4.10 million, or 3%, for the year ended September 30, ~~2012~~2013 compared to the year ended September 30, 2012. The increase in Retail Solutions revenues was driven primarily by a $775.63 million ~~for~~increase ~~the~~in ~~period~~hardware ~~from~~and ~~Inception~~other revenues as a result of large follow-on strategic hardware sales transactions as well as a $1.0 million increase in professional services revenues primarily due to a large professional services backlog entering into fiscal year 2013 following strong software license revenues in the year ended September 30, ~~2011~~2012 as well as a $0.2 ~~ERP~~million ~~services~~decrease ~~revenues~~in ~~increased~~deferred revenue purchase accounting adjustments, partially offset by a $~~192~~2.53 million, ordecrease ~~248%,~~in software and software related services revenues. The decrease in software and software related services revenues was primarily asattributable to a ~~result~~$5.8 ofmillion ~~the~~decrease ~~comparison~~in ofsoftware license revenues due to a ~~twelve~~lower ~~month~~level ~~period~~of ~~with~~strategic asales ~~four~~transactions ~~and~~in ~~one~~the ~~half~~year ~~month~~ended ~~period~~September 30, 2013 as well as a change in the sales compensation plans from a December to a September year end in fiscal year 2012 (effectively creating two sales year ends in the prior year which has the tendency to incentivize our sales team to close a higher percentage of opportunities in the sales pipeline). The decrease in software license revenues was partially offset by a $122.50 million increase in software support revenues due to a $1.1 million decrease in deferred revenue purchase accounting adjustments and a $0.9 million increase in software support ~~prices~~revenues due to the addition of new customer software support contracts and support price increases, partially offset by legacy platform attrition and a $1.5 million increase in software and cloud subscriptions revenues due primarily to increased SaaS revenues.

• Retail ~~Solutions~~Distributions revenues - Retail ~~Solutions~~Distribution revenues ~~were~~increased by $~~138~~19.10 million, or 9%, for the year ended September 30, ~~2012~~2013 as compared to the year ended September 30, 2012. Revenue from Solarsoft products contributed $5215.41 million ~~for~~(net of $1.9 million of deferred revenue purchase accounting adjustments), and the ~~period~~remaining ~~from~~$3.9 ~~Inception~~million toincrease ~~September~~was 30primarily the result of a $1.4 million increase in software and software related services revenues, ~~2011~~a $1.4 ~~Retail~~million ~~Solutions~~increase in professional services revenues and a $1.1 million increase in hardware and other revenues. Software and software related services revenues increased by $859.74 million, orprimarily ~~164%,~~due ~~for~~to the ~~year~~inclusion ~~ended~~of ~~September~~$8.0 ~~30,~~million ~~2012~~(net ~~compared~~of to$1.8 ~~the~~million ~~period~~of ~~from~~deferred ~~Inception~~revenue purchase accounting adjustments) of revenues related to ~~September~~Solarsoft 30products, ~~2011,~~a ~~primarily~~$1.8 million increase as a result of ~~the~~our ~~comparison~~acquisition of aInternet ~~twelve~~AutoParts, ~~month~~Inc. ~~period~~("Internet ~~with~~AutoParts") as well as a ~~four~~$1.0 ~~and~~million ~~one~~increase ~~half~~in ~~month~~payment ~~period~~exchange revenue, partially offset by a $0.9 ~~Retail~~million ~~Solutions~~decrease ~~systems~~in software support revenues ~~increased~~as bya result of legacy platform attrition and a $470.85 million, ordecrease ~~165%,~~in ~~primarily~~software license revenues as a result of ~~the~~

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~~comparison~~lower ofsoftware alicense ~~twelve~~revenue ~~month~~from ~~period~~new tocustomers. Professional aservices ~~four~~revenues ~~and~~increased ~~one~~by ~~half month period~~$8. ~~Additionally~~3 wemillion ~~recognized~~primarily adue ~~higher~~to ~~mix~~the inclusion of ~~license~~$6.9 ~~revenues~~million ~~and~~(net ~~lower~~of ~~mix~~$0.1 million of ~~hardware~~deferred revenue inpurchase ~~the~~accounting ~~year~~adjustments) ~~ended~~of ~~September~~revenues 30related to Solarsoft products, ~~2012~~a ~~due~~$0.8 tomillion ~~large~~increase ~~strategic~~in ~~deals~~hosting and managed services revenues and a $0. ~~Retail~~6 ~~Solutions~~million increase in professional services consulting revenues. Hardware and other revenues increased by $371.93 million, ordue ~~162%,~~to ~~primarily~~the asinclusion aof ~~result~~$0.2 million of ~~the~~revenues ~~comparison~~related ofto Solarsoft products as well as a ~~twelve~~$1.1 ~~month~~million ~~period~~increase ~~with~~due primarily to a ~~four~~higher ~~and~~mix ~~one~~of ~~half~~customer ~~month~~add-on ~~period~~orders.

• Retail Distribution revenues - Retail Distribution revenues were $202.1 million for the year ended September 30, 2012 compared to $73.5 million for the period from Inception to September 30, 2011. Retail Distribution revenues increased by $128.6 million, or 175%, for the year ended September 30, 2012 compared to the period from Inception to September 30, 2011, primarily as a result of the comparison of a twelve month period with a four and one half month period as well as a $1.9 million increase as a result of our acquisition of Internet AutoParts. Retail Distribution systems revenues increased by $33.7 million, or 170%, primarily as a result of the comparison of a twelve month period with a four and one half month period. Retail Distribution services revenues increased by $94.9 million, or 177%, primarily as a result of the comparison of a twelve month period with a four and one half month period as well as a $1.9 million increase as a result of our acquisition of Internet AutoParts and support price increase partially offset by legacy platform attrition.

Total operating and other expenses

The following table sets forth our operating and other expenses for the periods indicated and the variance thereof:

	Year Ended			Inception to
	Year Ended September 30,
(in thousands, except percentages)	~~September 30, 2012~~2013			~~September 30, 2011~~2012			Variance $			Variance %
Cost of systems revenues	$	211,814		$	81,272		$	130,542		161	%
	(Restated)			(Restated)
Cost of services revenues	144,590			52,240			92,350			177	%
Cost of software and software related services revenues	$	144,748		$	130,010		$	14,738		11	%
Total cost of revenues	356,404			133,512			222,892			167	%
Cost of professional services revenues	180,129			161,618			18,511			11	%
Sales and marketing	147,446			53,657			93,789			175	%
Cost of hardware and other revenues	69,619			64,776			4,843			7	%
Product development	83,304			31,417			51,887			165	%
Sales and marketing	165,240			147,446			17,794			12	%
General and administrative	75,702			27,611			48,091			174	%
Product development	102,573			83,304			19,269			23	%
Depreciation and amortization	138,985			50,716			88,269			174	%
General and administrative	76,580			75,702			878			1	%
Acquisition-related costs	8,845			42,581			(33,736		)	(79	)%
Depreciation and amortization	160,865			138,985			21,880			16	%
Restructuring costs	4,776			11,049			(6,273		)	(57	)%
Acquisition-related costs	8,561			8,845			(284		)	(3	)%
Total other operating expenses	459,058			217,031			242,027			112	%
Restructuring costs	4,890			4,776			114			2	%
Interest expense	(90,483		)	(36,643		)	(53,840		)	147	%
Total operating expenses	913,205			815,462			97,743			12	%
Other expense, net	(133		)	(257		)	124			(48	)%
Interest expense	(92,669		)	(90,483		)	(2,186		)	2	%
Income tax benefit	(11,535		)	(26,720		)	15,185			(57	)%
Other expense, net	(992		)	(133		)	(859		)	646	%
Income tax benefit	(13,177		)	(8,735		)	(4,442		)	51	%

• Cost of ~~systems~~software and software related services revenues - Cost of ~~systems~~software and software related services revenues ~~was~~increased by $~~211~~14.87 million, or 11%, for the year ended September 30, ~~2012~~2013 as compared to ~~$81.3 million for~~ the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011~~2012. Cost of ~~systems~~software and software related services revenues ~~increased~~from bySolarsoft products contributed $~~130~~14.57 million,. orCost ~~161%,~~of ~~for~~software ~~the~~license ~~year~~revenues ~~ended~~decreased ~~September~~by ~~30,~~$2.8 ~~2012~~million ~~compared~~as toa ~~the~~result ~~period~~of ~~from~~lower ~~Inception~~third toparty ~~September~~software ~~30,~~costs ~~2011~~due ~~primarily~~to aslower asoftware ~~result~~license ofrevenues, ~~the~~which ~~comparison~~was ofoffset aby ~~twelve~~cost ~~month~~of ~~period~~software ~~with~~and asoftware ~~four~~related ~~and~~services ~~one~~which ~~half~~increased ~~month~~by ~~period,~~$2.5 ~~partially~~million ~~offset~~primarily byas ~~higher~~a ~~cost~~result of ~~systems~~increased ~~revenues~~SaaS ~~due~~costs todriven ~~seasonally~~by ~~higher~~increased ~~fiscal~~SaaS ~~fourth~~revenues ~~quarter~~as ~~systems~~well ~~revenues~~as ~~for~~a ~~the~~$0.3 ~~period~~million ~~from~~increase ~~Inception~~in tosoftware ~~September~~support ~~30, 2011~~costs.

• Cost of professional services revenues - Cost of ~~services~~professional ~~revenues was $144.6 million for the year ended September 30, 2012 compared to $52.2 million for the period from Inception to September 30, 2011. Cost of~~ services revenues increased by $9218.45 million, or ~~177~~11%, for the year ended September 30, ~~2012~~2013 compared to the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011,~~2012. ~~primarily~~Cost asof aprofessional ~~result~~services ofrevenues ~~the~~related ~~comparison~~to ofSolarsoft aproducts ~~twelve~~contributed ~~month~~$17.6 ~~period~~million ~~with~~of athe ~~four~~increase, and ~~one~~the ~~half~~remaining ~~month~~$0.9 ~~period,~~million aswas ~~well~~due asprimarily to an increase in ~~the run rate of~~ employee related expenses ~~predominantly~~as ~~relating~~a toresult ~~benefits~~of ~~and~~higher ~~incentive~~professional ~~compensation~~services revenues.

~~Total~~• Cost of hardware and other ~~operating~~revenues ~~expenses~~- ~~were~~Cost of hardware and other revenues increased by $~~459~~4.18 million, or 7%, for the year ended September 30, ~~2012~~2013 as compared to ~~$217.0 million for~~ the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011~~2012. ~~Total~~ Cost of hardware and other ~~operating~~revenues ~~expenses~~related ~~increased~~to bySolarsoft products contributed $~~242~~3.06 million, orof ~~112%, for~~ the ~~year ended September 30~~increase, ~~2012~~and ~~compared to~~ the ~~period~~remaining ~~from Inception to September 30, 2011~~$1. ~~The~~2 ~~increase~~million was due primarily ~~attributable~~ to ~~the~~a ~~comparison~~$1.8 ofmillion aincrease ~~twelve~~in ~~month~~hardware ~~period~~equipment ~~with~~costs as a ~~four~~result ~~and~~of ~~one~~higher ~~half~~hardware ~~month~~equipment ~~period~~revenues, partially offset by ~~decreases~~a in$0.6 ~~acquisition-related~~million ~~costs~~decrease ~~and~~in ~~restructuring~~hardware maintenance costs.

•

Sales and marketing - Sales and marketing expenses increased by $17.8 million, or 12%, for the year ended September 30, 2013 as compared to the year ended September 30, 2012. The increase was primarily the result of the inclusion of $12.0 million of Solarsoft expenses as well as a $3.7 million increase in employee related costs due to higher headcount, a $1.6 million increase in sales conference costs, a $0.8 million increase in referral fees, $0.7 million of allocated expenses due to higher headcount and $0.4 million of marketing expenses partially offset by a $1.8 million decrease in commission expenses.

Table of Contents

• ~~Sales~~Product ~~and~~development ~~marketing~~ - ~~Sales~~Product ~~and~~development ~~marketing~~ expenses ~~were $147.4 million for the year ended September 30, 2012 as compared to $53.7 million for the period from Inception to September 30, 2011. Sales and marketing expenses~~ increased by $9319.83 million, or ~~175~~23%, for the year ended September 30, ~~2012~~2013 as compared to the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011~~2012. The increase was primarily ~~attributable~~the toresult of the ~~comparison~~inclusion of a$9.9 ~~twelve~~million ~~month~~of ~~period~~Solarsoft ~~with~~expenses afor ~~four~~the ~~and~~year ~~one~~ended ~~half~~September ~~month~~30, ~~period~~2013, as well as a $25.15 million increase in ~~share-based~~employee ~~compensation~~related ~~expense~~costs, and ~~approximately~~ a $34.2 million ~~dollar~~ increase in ~~the~~allocated ~~run~~costs ~~rate~~due ofto ~~other~~higher ~~employee~~headcount, ~~related~~partially offset by a $0.7 million increase in capitalized software costs.

• ~~Product~~General ~~development~~and administrative - ~~Product~~General ~~development~~and administrative expenses ~~were~~increased by $830.39 million, or 1%, for the year ended September 30, ~~2012,~~2013 as compared to ~~$31.4 million for~~ the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011~~2012. ~~Product~~The ~~development~~increase ~~expenses~~was ~~increased~~primarily bythe result of a $517.98 million, orcharge ~~165%,~~ for the ~~year~~estimated ~~ended~~settlement ~~September~~of ~~30,~~our ~~2012~~shareholder ~~compared~~litigation, toan ~~the~~$0.8 ~~period~~million ~~from~~increase ~~Inception~~in tobenefits ~~September 30~~costs, ~~2011.~~as ~~The~~well ~~increase~~as ~~was~~the ~~primarily~~inclusion aof ~~result~~$4.1 million of ~~the~~Solarsoft ~~comparison~~expenses, ofpartially offset by a ~~twelve~~$5.9 ~~month~~million ~~period~~reduction ~~with~~in bad debt expense, a ~~four~~$2.6 ~~and~~million ~~one~~reduction ~~half~~in ~~month~~share ~~period~~based compensation expense, asa ~~well~~$2.5 asmillion ~~approximately~~reduction in legal costs, and a $1.10 million ~~increase~~decrease in ~~share-based~~other ~~compensation~~employee ~~expense~~related costs.

• ~~General~~Depreciation and ~~administrative~~amortization - ~~General~~Depreciation and ~~administrative~~amortization ~~expenses~~expense ~~were~~was $75160.79 million for the year ended September 30, ~~2012~~2013 as compared to $27139.60 million for the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011.~~2012, ~~General~~an ~~and~~increase ~~administrative~~of ~~expenses increased by~~ $4821.19 million,. orThe ~~174%,~~increase ~~for~~was primarily the ~~year~~result ~~ended~~of ~~September~~$14.4 ~~30,~~million ~~2012~~additional ~~compared~~depreciation toand ~~the~~amortization ~~period~~due ~~from Inception~~ to ~~September~~the ~~30,~~Solarsoft ~~2011.~~acquisition ~~The~~as ~~increase~~well ~~was~~as ~~primarily~~$3.6 amillion ~~result~~ of ~~the~~increased ~~comparison~~depreciation ofrelated ato ~~twelve~~facility ~~month~~leasehold ~~period~~improvements ~~with~~costs ~~a four~~ and ~~one~~capitalized ~~half~~IT ~~month~~equipment ~~period,~~costs asand ~~well as a~~ $43.65 million ~~increase~~of inincreased ~~share-based~~amortization ~~compensation~~recorded ~~costs~~on ~~and~~development ~~higher~~costs ~~run~~placed ~~rate~~in ~~of legal related costs~~service.

• ~~Depreciation~~Acquisition-related ~~and~~costs ~~amortization~~- Acquisition-related ~~Depreciation~~costs ~~and~~were ~~amortization expense was~~ $~~139~~8.06 million for the year ended September 30, ~~2012~~2013 compared to $508.78 million for the ~~period~~year ~~from~~ended ~~Inception~~September to30, 2012. Acquisition-related costs for the year ended September 30, ~~2011~~2013 consisted primarily of acquisition costs for integration activities, such as consolidating the Company's information systems and the accounting back office functions, as well as legal, tax and accounting fees relating to the acquisition of Solarsoft. ~~The~~Acquisition-related ~~increase~~costs ~~was~~for the year ended September 30, 2012 consisted primarily ~~the~~of ~~result~~$4.9 million of integration activities due to the ~~comparison~~Acquisitions and $3.9 million of aacquisition ~~twelve~~costs ~~month~~primarily ~~period~~consisting ~~with~~of acosts ~~four~~related to the integration related activities due to the Acquisitions such as consolidating the Company's information systems as well as due diligence fees and ~~one~~legal ~~half~~fees ~~month~~related ~~period~~to the acquisition of Solarsoft, which was consummated in the first quarter of our fiscal 2013.

• ~~Acquisition-related~~Restructuring costs - ~~Acquisition-related~~During ~~costs were $8.8 million for~~ the year ended September 30, ~~2012~~2013, ~~compared~~we toincurred $424.69 million ~~for~~of ~~the~~management-approved ~~period~~restructuring ~~from Inception to September 30~~costs, ~~2011.~~primarily ~~Acquisition-related~~as ~~costs~~a ~~for~~result of the ~~year~~acquisition ~~ended~~of ~~September 30~~Solarsoft, ~~2012~~including ~~consisted~~severance ~~primarily~~costs ofto ~~$4.9~~eliminate ~~million~~certain ofemployee ~~integration~~positions ~~activities~~and ~~due~~lease totermination ~~the Acquisitions~~ and ~~$3.9~~restructuring ~~million~~costs ofto ~~acquisition~~consolidate ~~costs~~certain ~~primarily~~excess ~~consisting~~facilities. ofDuring ~~due~~the ~~diligence~~year ~~fees~~ended ~~and~~September ~~legal~~30, ~~fees~~2012, ~~related~~we toincurred ~~the~~$4.8 ~~acquisition~~million of ~~SolarSoft,~~management ~~which~~approved ~~was~~restructuring ~~consummated~~costs, inprimarily ~~the~~as ~~first~~a ~~quarter~~result of ~~our~~the ~~fiscal~~Acquisitions, ~~2013.~~to ~~Acquisition-related~~eliminate ~~costs~~certain ~~for~~employee ~~the~~positions ~~period~~and ~~from Inception~~ to ~~September~~consolidate ~~30,~~certain ~~2011~~excess ~~included~~facilities ~~sponsor~~with ~~arrangement~~the ~~fees,~~intent ~~legal~~to ~~fees,~~integrate ~~investment~~acquisitions ~~banker~~and ~~fees,~~streamline ~~bond~~and ~~breakage~~focus ~~fees,~~our ~~due~~operations ~~diligence fees, costs~~ to ~~integrate~~properly ~~acquired~~align ~~companies,~~our ~~and~~cost ~~costs~~structure ~~related~~with toour ~~the~~projected ~~Acquisitions~~revenue ~~completed in May 2011~~streams.

• Restructuring costs - During the year ended September 30, 2012, we incurred $4.8 million of management approved restructuring costs primarily as a result of the Acquisitions to eliminate certain employee positions and to consolidate certain excess facilities with the intent to integrate acquisitions and streamline and focus our operations to properly align our cost structure with our projected revenue streams. During the period from Inception to September 30, 2011, we incurred $11.0 million of restructuring costs, primarily as a result of eliminating certain employee positions as a result of the Acquisitions with the intent to streamline and focus our operations and more properly align our cost structure with our projected revenue streams. Restructuring costs decreased primarily as a result of the timing of the restructuring actions taken as a result of the Acquisitions.

Interest expense

Interest expense for the year ended September 30, ~~2012~~2013 was $9092.57 million compared to $3690.65 million for the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011~~2012. The year over year increase in our outstanding debt related to the October 2012 draw on our revolving credit facility to finance the Solarsoft acquisition, during the year ended September 30, 2013 resulting in increased interest expense ~~was~~of ~~primarily~~approximately $1.7 million. Additionally, we reclassified $1.9 million of other comprehensive loss on our interest rate swap into interest expense. These increases were partially offset by a 0.5% interest rate reduction as a result of refinancing the ~~comparison~~term ofloan ain ~~twelve~~March ~~month~~2013. See ~~period~~Note ~~with~~6 a- ~~four~~Debt ~~and~~in ~~one~~our ~~half~~audited ~~month~~consolidated ~~period~~financial statements.

Other expense, net

Other expense for the year ended September 30, ~~2012~~2013 was $0.1.0 million compared to $0.31 million for the ~~period~~year ~~from~~ended ~~Inception~~September to30, 2012. Other expense for the year ended September 30, ~~2011~~2013 included $1.3 million of foreign exchange losses, partially offset by $0.3 million of interest income. Other expense, net for the year ended September 30, 2012 included $0.8 million of foreign exchange losses, a $0.7 million sales tax assessment and a loss on disposal of fixed assets of $0.5 million partially offset by $0.9 million of earnings from our previous minority interest in Internet AutoParts and $0.7 million of interest income. ~~The period from Inception to September 30, 2011 included $0.5 million of foreign exchange losses, partially offset by $0.2 million of interest income.~~

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Income tax benefit

We recognized an income tax benefit of $1113.52 million, or ~~22.8~~29% of pre-tax loss, for the year ended September 30, ~~2012~~2013, compared to an income tax benefit of $268.7 million, or ~~32.3~~17% of pre-tax loss, for the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011~~2012. Our income tax rate for the year ended September 30, ~~2012~~2013, differed from the federal statutory rate primarily due to ~~tax~~non-deductible ~~benefits~~expenses, ~~related~~earnings tothat ~~income~~are ~~tax~~currently ~~returns~~taxed ~~filed~~in ~~during~~ the ~~year~~U.S. ~~and~~under the ~~impact~~Controlled ofForeign ~~changes~~Corporation regime set forth in ~~foreign~~the ~~exchange~~IRC ~~rates~~Sec on951 ~~deferred~~through ~~income~~965 ~~taxes~~("Income Inclusion"), reconciliation ~~offset~~adjustments bymade ~~non-deductible~~to ~~expenses~~our ~~including~~income ~~restricted~~tax ~~unit compensation~~payables, changes in ~~our~~foreign ~~reserve for uncertain tax positions,~~ and ~~lower~~state tax rates inas ~~foreign~~applied ~~jurisdictions. In~~to ~~the~~our ~~period~~deferred ~~from~~liability ~~Inception to September 30~~balances, ~~2011,~~lower ~~the~~ tax ~~rate~~rates ~~was~~in ~~lower~~jurisdictions ~~than~~where ~~the~~earnings ~~federal~~are ~~statutory~~deemed ~~rate~~permanently ~~primarily~~reinvested ~~due~~and ~~to non~~share-~~deductible~~based ~~transaction costs~~compensation.

For the year ended September 30, 2012, our income tax rate differed from the federal statutory rate primarily due earnings that are currently taxed in the U.S. under the Controlled Foreign Corporation regime set forth in the IRC Sec 951 through 965 ("Income Inclusion") , share-based compensation, lower tax rates in jurisdictions where earnings are deemed permanently reinvested, the impact of foreign exchange rates on our deferred tax assets and liabilities, and adjustments to our deferred tax liabilities.

Contribution margin

Our management measures the performance of each of our segments based on several metrics, including contribution margin, which is a ~~non~~Non-GAAP financial measure. ~~See~~Segment ~~Note~~contribution 13margin -includes ~~Segment~~all ~~Reporting~~segment torevenues ~~our~~less ~~audited~~the ~~financial~~related ~~statements~~cost ~~included~~of insales, ~~Part~~direct IImarketing, -sales, ~~Item~~and 8product ofdevelopment ~~this~~expenses ~~filing~~as ~~for~~well aas ~~description~~certain ofgeneral ~~contribution~~and ~~margin~~administrative expenses, ~~the~~including ~~reasons~~bad ~~why~~debt weexpenses ~~believe~~and ~~contribution~~direct ~~margin~~legal ~~provides~~costs. ~~useful~~A ~~information~~significant toportion ~~investors,~~of ~~the~~each ~~limitations~~segment’s ~~surrounding~~expenses arises from shared services and centrally managed infrastructure support costs that we allocate to the ~~use~~segments ofto determine segment contribution margin,. ~~and~~These aexpenses ~~reconciliation~~primarily ~~contribution~~include ~~margin~~information totechnology ~~loss~~services, ~~before~~facilities ~~income~~and ~~taxes~~telecommunications costs.

~~Contribution~~See ~~margin~~Note 13 - Segment Reporting in our audited consolidated financial statements included in Part II - Item 8 of this filing for a description of contribution margin, the ~~year~~reasons ~~ended~~why ~~September~~we 30believe contribution margin provides useful information to investors, ~~2012~~the ~~and~~limitations surrounding the ~~period~~use ~~from~~of ~~Inception~~contribution tomargin ~~September~~and ~~30,~~a ~~2011~~reconciliation iscontribution asmargin ~~follows:~~to loss before income taxes.

	Year Ended		Inception to
(in thousands, except percentages)	September 30, 2012		September 30, 2011		Variance $		Variance %
ERP	$	154,127	$	40,787	$	113,340	278	%
Retail Solutions	47,042		16,959		30,083		177	%
Retail Distribution	65,787		24,190		41,597		172	%
Total segment contribution margin	$	266,956	$	81,936	$	185,020	226	%

Contribution margin for the years ended September 30, 2013 and 2012 is as follows:

• ERP contribution margin - ERP contribution margin for the year ended September 30, 2012 was $154.1 million as compared to $40.8 million for the period from Inception to September 30, 2011. The contribution margin for ERP increased by $113.3 million, or 278%, for the year ended September 30, 2012 compared to the period from Inception to September 30, 2011. The increase was primarily attributable to the comparison of a twelve month period with a four and one half month period and lower deferred revenue purchase accounting adjustments partially offset by the seasonality of higher fiscal fourth quarter systems revenues included in the period from Inception to September 30, 2011.



	Year Ended September 30,
(in thousands, except percentages)	2013		2012		Variance $			Variance %
ERP	$	194,096	$	154,127	$	39,969		26	%
Retail Solutions	43,217		47,042		(3,825		)	(8	)%
Retail Distribution	70,082		65,787		4,295			7	%
Total segment contribution margin	$	307,395	$	266,956	$	40,439		15	%

• ~~Retail~~ERP ~~Solutions~~ contribution margin - ~~Retail~~Contribution ~~Solutions~~margin ~~contribution~~for ~~margin~~ERP increased by $40.0 million, or 26%, for the year ended September 30, ~~2012~~2013 ~~was~~compared ~~$47.1~~to ~~million~~the asyear ~~compared~~ended toSeptember 30, 2012. Solarsoft contributed $1716.01 million ~~for~~of ~~the~~contribution ~~period~~margin ~~from~~for ~~Inception~~the toyear ended September 30, ~~2011~~2013. ~~The~~Software ~~contribution~~and ~~margin~~software ~~for~~related ~~Retail~~services ~~Solutions~~margins increased by $3023.19 million, or(including ~~177%,~~a ~~for~~$12.7 ~~the~~million ~~year~~decrease ~~ended~~in ~~September~~deferred ~~30,~~revenue ~~2012~~purchase ~~compared~~accounting adjustments) attributable to ~~the~~a ~~period~~$20.4 million increase in customer support margins as a result of a $7.9 million increase from ~~Inception~~new tocustomer ~~September~~software 30support revenues and support price increases partially offset by customer attrition and a $12.5 million reduction in the deferred revenue purchase accounting adjustments, ~~2011~~a $3.7 ~~The~~million increase ~~was~~in software and cloud subscriptions margins primarily ~~attributable~~due to ~~the~~increased ~~comparison~~SaaS ofrevenues and a ~~twelve~~$0.2 ~~month~~million ~~period~~decrease ~~with~~in software license margins due to lower software license revenues. Professional services margins increased by $1.0 million driven by higher hosting and consulting revenues. Additionally there was a ~~four~~$3.9 million reduction in legal fees, a $4.6 million reduction in bad debt expense and ~~one~~a ~~half~~$1.4 ~~month~~million ~~period~~reduction asin ~~well~~commissions, aspartially offset by a ~~higher~~$5.9 ~~mix~~million ofincrease ~~license~~in ~~revenue~~sales and ~~lower~~marketing ~~mix~~and product development employee related expenses as a result of ~~hardware~~increased ~~revenue~~headcount, a $2.7 million increase in ~~the~~allocated ~~year~~expenses ~~ended~~as ~~September~~a 30result of increased sales and marketing and product development headcount, ~~2012~~a ~~due~~$0.9 tomillion ~~large~~increase ~~strategic~~in ~~deals~~sales conference costs, a $0.9 million increase in channel partner referral fees and a $0.5 million increase in marketing related expenses.

• Retail ~~Distribution~~Solutions contribution margin - ~~Retail~~Contribution ~~Distribution contribution~~ margin for ~~the year ended September 30, 2012 was $65.8 million as compared to $24.2 million for the period from Inception to September 30, 2011. The contribution margin for~~ Retail ~~Distribution~~Solutions ~~increased~~decreased by $413.68 million, or ~~172~~8%, for the year ended September 30, ~~2012~~2013 as compared to the ~~period~~year ~~from~~ended ~~Inception to~~ September 30, ~~2011~~2012. The ~~increase~~decrease was primarily ~~attributable~~a toresult ~~the comparison~~ of a ~~twelve~~$2.4 ~~month~~million ~~period~~decrease ~~with~~in asoftware ~~four~~ and ~~one~~software ~~half~~related ~~month~~services ~~period,~~margins asattributable ~~well~~to asa ~~higher~~$5.1 ~~support~~million ~~revenues~~decrease ~~driven~~in bysoftware ~~the~~license ~~Internet~~margins ~~AutoParts~~due ~~acquisition~~to ~~and~~lower ~~support~~software ~~price~~license ~~increases~~revenues partially offset by a $2.3 million increase

Year Ended September 30, 2012 Compared to the period from October 1, 2010 to May 15, 2011 (Predecessor)

Total revenues

Our total revenues were $855.5 million for the year ended September 30, 2012 as compared to $227.3 million for the period from October 1, 2010 to May 15, 2011. Total revenues increased by $628.1 million, or 276%, for the year ended September 30, 2012 as compared to the period October 1, 2010 to May 15, 2011. The increase in total revenues was primarily

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~~attributable~~in tocustomer ansupport ~~incremental~~margins ($~~479~~1.42 million ofincrease from new customer software support revenues ~~from~~and ~~Legacy~~support ~~Epicor~~price increases partially offset by customer attrition and a $1.1 million reduction in the deferred revenue purchase accounting adjustments), a $0.4 million increase in software and cloud subscriptions margins primarily due to increased SaaS revenues. Professional services margins decreased by $0.9 million primarily as ~~well~~a result of increased hosting and managed services costs. Additionally there was a $2.6 million increase in sales and marketing and product development employee related costs as a result of increased headcount and a $~~148~~0.78 million increase in ~~Predecessor~~allocated ~~revenues~~expenses. These ~~attributable~~increases towere ~~the~~partially ~~comparison~~offset by a $1.3 million reduction in sales commissions as a result of lower software license revenues, a ~~twelve~~$0.9 ~~month~~million ~~period~~reduction ~~with~~in bad debt expense and a ~~seven~~$1.0 million increase in hardware and ~~one~~other ~~half~~margins ~~month~~driven ~~period~~by increased hardware and other revenues.

~~The~~• ~~following~~Retail ~~table~~Distribution ~~sets~~contribution ~~forth~~margin - Contribution margin for Retail Distribution increased by $4.3 million, or 7%, for the ~~periods~~year ~~indicated~~ended September 30, ~~our~~2013 ~~segment~~as compared to the year ended September 30, 2012. Solarsoft contributed $2.2 million of contribution margin for the year ended September 30, 2013. Contribution margin increased as a result of a $1.7 million increase in software and software related services margins primarily due to a $2.1 million increase in software and cloud subscriptions margins driven by a $1.4 million increase due to the full year impact of the Internet AutoParts acquisition and a $0.8 million increase in payment exchange margins due to revenue growth, partially offset by a $0.5 million decrease in software license margins as a result of lower software license revenues. Professional services margins increased by ~~systems~~$1.8 million due to increased network support and consulting services revenues. Hardware and other margins increased by $1.4 million as a result of increased hardware equipment revenues and higher margins on the ~~variance~~equipment ~~thereof:~~sold. Additionally, there was a $0.7 million increase in capitalized software and database costs. These increases were partially offset by a $0.9 million increase in commission expense, a $1.1 million increase in sales and marketing and product development employee related expenses as a result of increased headcount, a $0.9 million increase in allocated expenses as a result of increased sales and marketing and product development headcount and a $0.8 million increase in sales conference costs.

			Predecessor
	Year Ended		October 1, 2010 to
(in thousands, except percentages)	September 30, 2012		May 15, 2011		Variance $		Variance %
ERP revenues:
Systems:
License	$	100,395	$	17,037	$	83,358	489	%
Professional services	128,712		13,765		114,947		835	%
Hardware and other	15,993		6,342		9,651		152	%
Total systems	245,100		37,144		207,956		560	%
Services	270,100		63,571		206,529		325	%
Total ERP revenues	515,200		100,715		414,485		412	%
Retail Solutions revenues:
Systems:
License	20,698		—		20,698		—
Professional services	36,334		—		36,334		—
Hardware and other	19,708		—		19,708		—
Total systems	76,740		—		76,740		—
Services	61,374		—		61,374		—
Total Retail Solutions revenues	138,114		—		138,114		—
Retail Distribution revenues:
Systems:
License	18,078		11,155		6,923		62	%
Professional services	12,821		9,106		3,715		41	%
Hardware and other	22,748		16,344		6,404		39	%
Total systems	53,647		36,605		17,042		47	%
Services	148,496		90,010		58,486		65	%
Total Retail Distribution revenues	202,143		126,615		75,528		60	%
Total revenues:
Systems:
License	139,171		28,192		110,979		394	%
Professional services	177,867		22,871		154,996		678	%
Hardware and other	58,449		22,686		35,763		158	%
Total systems	375,487		73,749		301,738		409	%
Services	479,970		153,581		326,389		213	%
Total revenues	$	855,457	$	227,330	$	628,127	276	%

Liquidity and Capital Resources

Our ~~ERP,~~primary ~~Retail~~sources ~~Solutions~~of liquidity are cash flows provided by operating activities and ~~Retail~~borrowings ~~Distribution~~under ~~segments~~our ~~accounted~~2011 ~~for~~Senior ~~approximately~~Secured ~~60%~~Credit Agreement (as amended, ~~16%~~the "2011 Credit Agreement") and ~~24%,~~Senior ~~respectively,~~Notes. ofWe believe that the predictable revenue stream generated by our support revenues ~~during~~as ~~the~~well ~~year~~as ~~ended~~other ~~September 30~~cash flows from operations, ~~2012~~and the $103.0 ~~This~~million ~~compares~~of toborrowing capacity available on the ~~period~~revolving ~~from~~credit ~~October~~facility 1,contained ~~2010~~in our 2011 Credit Agreement will be sufficient to ~~May~~cover ~~15,~~our ~~2011~~liquidity needs required for us to meet our working capital, incapital ~~which~~expenditure and other cash requirements for the ~~Predecessor's~~next ~~ERP~~twelve months. We believe that the costs associated with implementing our business strategy will not materially impact our liquidity. We are dependent upon our future financial performance, ~~Solutions~~which is subject to many economic, commercial, financial and ~~Retail~~other ~~Distribution~~factors ~~segments~~that ~~accounted~~are ~~for~~beyond ~~approximately~~our ~~44%~~control. If those factors significantly change, 0%our business may not be able to generate sufficient cash flow from operations or additional capital may not be available to meet our liquidity needs. We anticipate that to the extent that we require additional liquidity as a result of these factors or in order to execute our strategy, ~~and~~it ~~56%~~would be financed either by borrowings under our 2011 Credit Agreement, ~~respectively~~by other indebtedness, additional equity financings or a combination of ~~its~~the ~~revenues~~foregoing. We may be unable to obtain any such additional financing on terms acceptable to us or at all.

As a result of prior acquisitions, we have significant indebtedness. As of September 30, 2014, our total indebtedness was $1,283.8 million ($1,277.9 million, net of original issue discount). We also had additional availability under our revolving credit facility of $103.0 million. Our cash requirements are, and will continue to be, significant, primarily due to our debt service requirements. Our interest expense for the year ended September 30, 2014 was $87.1 million. In addition to servicing our debt, in December 2013 and June 2014, we paid dividends of $18.5 million and $18.0 million, respectively, to our indirect parent company, Eagle Midco, Inc. ("EGL Midco"), to fund the December 2013 and June 2014 interest payments on $400 million in principal amount of Senior PIK Toggle Notes issued by EGL Midco (the "Midco Notes") which mature in June 2018. If EGL Midco pays all interest on the Midco Notes in cash, we anticipate that our voluntary dividend payments to EGL Midco will be approximately $36 million per year from fiscal 2015 through 2018. See "Parent Company PIK Toggle Notes" below for further information regarding the Midco Notes.

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The following table sets forth, for the periods indicated, our Non-GAAP segment revenues by systems and services excluding the impact of deferred revenue purchase accounting adjustments. Segment revenues excluding the impact of deferred revenue purchase accounting adjustments do not represent GAAP revenues for our segments and should not be viewed as alternatives for GAAP revenues. We use segment revenues excluding the impact of deferred revenue purchase accounting adjustments in order to compare the results of our segments on a comparable basis.

				Predecessor
	Year Ended			October 1, 2010 to
(in thousands, except percentages)	September 30, 2012			May 15, 2011		Variance $			Variance %
Systems revenues:
ERP	$	245,521		$	37,144	$	208,377		561	%
Retail Solutions	77,384			—		77,384			—
Retail Distribution	54,151			36,605		17,546			48	%
Deferred revenue purchase accounting adjustment	(1,569		)	—		(1,569		)	—
Total systems revenues	375,487			73,749		301,738			409	%
Services revenues:
ERP	282,843			63,571		219,272			345	%
Retail Solutions	62,497			—		62,497			—
Retail Distribution	148,850			90,010		58,840			65	%
Deferred revenue purchase accounting adjustment	(14,220		)	—		(14,220		)	—
Total services revenues	479,970			153,581		326,389			213	%
Total revenues:
ERP	528,364			100,715		427,649			425	%
Retail Solutions	139,881			—		139,881			—
Retail Distribution	203,001			126,615		76,386			60	%
Deferred revenue purchase accounting adjustment	(15,789		)	—		(15,789		)	—
Total revenues	$	855,457		$	227,330	$	628,127		276	%

The following amounts are stated net of deferred revenue purchase accounting adjustments.

• ERP revenues - ERP revenues were $515.2 million for the year ended September 30, 2012 as compared to $100.7 million for the period from October 1, 2010 to May 15, 2011. ERP revenues increased by $414.5 million, or 412%, for the year ended September 30, 2012 compared to the period from October 1, 2010 to May 15, 2011, primarily as a result of an incremental $341.3 million of ERP revenues from Legacy Epicor, as well as an increase in Predecessor ERP revenues of $73.2 million (net of a $2.4 million deferred revenue purchase accounting adjustment) which was primarily attributable to the comparison of a twelve month period with a seven and one half month period as well as an increase in the number of strategic deals in the year ended September 30, 2012.

◦ ERP systems revenues for the year ended September 30, 2012 were $245.1 million compared to $37.1 million for the period from October 1, 2010 to May 15, 2011. ERP systems revenues increased by $208.0 million, or 560%, due to an incremental $176.0 million of ERP systems revenue from Legacy Epicor, as well as an increase in Predecessor ERP systems revenue of $32.0 million which was primarily attributable to the comparison of a twelve month period with a seven and one half month period as well as an increase in the number of strategic deals in the year ended September 30, 2012.

◦ ERP services revenues were $270.1 million for the year ended September 30, 2012 compared to $63.6 million for the period from October 1, 2010 to May 15, 2011. ERP services revenues increased by $206.5 million, or 325%, due to an incremental $165.3 million of ERP services revenues from Legacy Epicor, as well as an increase in Predecessor ERP services revenues of $41.2 million (net of a $2.3 million deferred revenue purchase accounting adjustment) which was primarily attributable to the comparison of a twelve

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month period with a seven and one half month period and support price increases, partially offset by legacy platform attrition.

• Retail Solutions revenues - Retail Solutions revenues were $138.1 million for the year ended September 30, 2012. The Retail Solutions segment originated in Legacy Epicor, and as such, for the period from October 1, 2010 to May 15, 2011, the Predecessor's results do not include revenues from the Retail Solutions segment. Retail Solutions systems and services revenues were $76.7 million and $61.4 million, respectively, in the year ended September 30, 2012.

• Retail Distribution revenues - Retail Distribution revenues were $202.1 million for the year ended September 30, 2012 compared to $126.6 million for the period from October 1, 2010 to May 15, 2011. Retail Distribution revenues increased by $75.5 million or 60%, for the year ended September 30, 2012 compared to the period from October 1, 2010 to May 15, 2011, primarily as a result of the comparison of a twelve month period with a seven and one half month period. Retail Distribution systems revenues increased by $17.0 million (net of a $0.5 million deferred revenue purchase accounting adjustment), or 47%, primarily as a result of the comparison of a twelve month period with a seven and one half month period, partially offset by a lower run rate of hardware and other revenues due to a higher level of hardware upgrades in the period from October 1, 2010 to May 15, 2011. Retail Distribution services revenues increased by $58.5 million (net of a $0.4 million deferred revenue purchase accounting adjustment), or 65%, primarily as a result of the comparison of a twelve month period with a seven and one half month period, as well as a $1.9 million increase due to the Internet AutoParts acquisition and support price increases, partially offset by legacy platform attrition.

Total operating and other expenses

The following table sets forth our operating and other expenses for the periods indicated and the variance thereof:

				Predecessor
	Year Ended			October 1, 2010 to
(in thousands, except percentages)	September 30, 2012			May 15, 2011			Variance $			Variance %
Cost of systems revenues	$	211,814		$	39,922		$	171,892		431	%
Cost of services revenues	144,590			47,866			96,724			202	%
Total cost of revenues	356,404			87,788			268,616			306	%
Sales and marketing	147,446			36,200			111,246			307	%
Product development	83,304			19,659			63,645			324	%
General and administrative	75,702			21,519			54,183			252	%
Depreciation and amortization	138,985			25,322			113,663			449	%
Acquisition-related costs	8,845			16,846			(8,001		)	(47	)%
Restructuring costs	4,776			27			4,749			17,589	%
Total other operating expenses	459,058			119,573			339,485			284	%
Interest expense	(90,483		)	(33,069		)	(57,414		)	174	%
Other income (expense), net	(133		)	223			(356		)	(160	)%
Income tax benefit	(11,535		)	(4,488		)	(7,047		)	157	%

• Cost of systems revenues - Cost of systems revenues was $211.8 million for the year ended September 30, 2012 as compared to $39.9 million for the period from October 1, 2010 to May 15, 2011. Cost of systems revenues increased by $171.9 million, or 431%, for the year ended September 30, 2012 compared to the period from October 1, 2010 to May 15, 2011, primarily as a result of an incremental $149.1 million of cost of systems revenues from Legacy Epicor, as well as a $22.8 million increase in Predecessor cost of systems revenues which was primarily attributable to the comparison of a twelve month period with a seven and one half month period.

• Cost of services revenues - Cost of services revenues was $144.6 million for the year ended September 30, 2012 compared to $47.9 million for the period from October 1, 2010 to May 15, 2011. Cost of services revenues increased by $96.7 million, or 202%, for the year ended September 30, 2012 compared to the period from October 1, 2010 to May 15, 2011, primarily as a result of an incremental $68.7 million of cost of services revenues from Legacy Epicor, as well as a $28.0 million increase in Predecessor cost of services revenues which was primarily attributable to the

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comparison of a twelve month period with a seven and one half month period as well as approximately a one million dollar lower run rate of employee related expenses.

Total other operating expenses were $459.1 million for the year ended September 30, 2012 as compared to $119.6 million for the period from October 1, 2010 to May 15, 2011. Total other operating expenses increased by $339.5 million, or 284%, for the year ended September 30, 2012 compared to the period from October 1, 2010 to May 15, 2011. The increase was primarily attributable to incremental operating expenses from Legacy Epicor, as well as an increase in Predecessor other operating expenses which was primarily attributable to the comparison of a twelve month period with a seven and one half month period.

• Sales and marketing - Sales and marketing expenses were $147.4 million for the year ended September 30, 2012 as compared to $36.2 million for the period from October 1, 2010 to May 15, 2011. Sales and marketing expenses increased by $111.2 million, or 307%, for the year ended September 30, 2012 compared to the period from October 1, 2010 to May 15, 2011. The increase was primarily attributable to an incremental $92.8 million of sales and marketing expenses from Legacy Epicor, as well as an $18.4 million increase in Predecessor sales and marketing expenses which was primarily attributable to the comparison of a twelve month period with a seven and one half month period, partially offset by approximately a three million dollar decrease in the run rate of Predecessor employee related expenses primarily due to lower share based compensation costs.

• Product development - Product development expenses were $83.3 million for the year ended September 30, 2012, as compared to $19.7 million for the period from October 1, 2010 to May 15, 2011. Product development expenses increased by $63.6 million, or 324%, for the year ended September 30, 2012 compared to the period from October 1, 2010 to May 15, 2011. The increase was primarily a result of an incremental $52.9 million of product development expenses from Legacy Epicor, as well as a $10.7 million increase in Predecessor product development expenses which was primarily attributable to the comparison of a twelve month period with a seven and one half month period, partially offset by approximately a one and a half million dollar decrease in the run rate of Predecessor employee related expenses primarily due to a lower run rate of incentive bonus expenses.

• General and administrative - General and administrative expenses were $75.7 million for the year ended September 30, 2012 as compared to $21.5 million for the period from October 1, 2010 to May 15, 2011. General and administrative expenses increased by $54.2 million, or 252%, for the year ended September 30, 2012 compared to the period from October 1, 2010 to May 15, 2011. The increase was primarily a result of an incremental $37.3 million of general and administrative expenses from Legacy Epicor, as well as a $16.9 million increase in Predecessor general and administrative expenses which was primarily attributable to the comparison of a twelve month period with a seven and one half month period as well as approximately a one million dollar increase in the run rate of Predecessor employee related expenses primarily due to higher share based compensation costs.

• Depreciation and amortization - Depreciation and amortization expense was $139.0 million for the year ended September 30, 2012 compared to $25.3 million for the period from October 1, 2010 to May 15, 2011. The increase was primarily the result of additional amortization on increased intangible assets due to the Acquisitions as well as the comparison of a twelve month period with a seven and one half month period.

• Acquisition-related costs - Acquisition-related costs were $8.8 million for the year ended September 30, 2012, compared to $16.8 million for the period from October 1, 2010 to May 15, 2011. Acquisition-related costs for the year ended September 30, 2012 consisted primarily of $4.9 million of integration activities due to the Acquisitions and $3.9 million of acquisition costs primarily consisting of due diligence fees and legal fees related to the acquisition of SolarSoft, which was consummated in the first quarter of our fiscal 2013. Acquisition-related costs for the period from October 1, 2010 to May 15, 2011 included the Predecessor's acquisition costs incurred prior to the Acquisitions.

Interest expense

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Interest expense for the year ended September 30, 2012 was $90.5 million compared to $33.1 million for the period from October 1, 2010 to May 15, 2011. The increase in interest expense was primarily a result of increased debt levels after the Acquisitions, as well as the comparison of a twelve month period with a seven and one half month period partially offset by the 2011 write-off of deferred financing fees of approximately $7.8 million for retired debt instruments of the Predecessor.

Other income (expense), net

Other income (expense), net for the year ended September 30, 2012 was $0.1 million of expense compared to $0.2 million of income for the period from October 1, 2010 to May 15, 2011. Other income (expense), net for the year ended September 30, 2012 included $0.8 million of foreign exchange losses, a $0.7 million sales tax assessment and a loss on disposal of fixed assets of $0.5 million partially offset by $0.9 million of earnings from our previous minority interest in Internet AutoParts and $0.7 million of interest income. The period from October 1, 2010 to May 15, 2011 included $1.4 million of earnings from our previous minority interest in Internet AutoParts as well as $0.3 million of foreign exchange gains, partially offset by a loss on disposal of fixed assets of $1.5 million.

Income tax benefit

We recognized an income tax benefit of $11.5 million, or 22.8% of pre-tax loss, for the year ended September 30, 2012 compared to an income tax benefit of $4.5 million, or 34.9% of pre-tax loss, in the period from October 1, 2010 to May 15, 2011. Our income tax rate for the year ended September 30, 2012 differed from the federal statutory rate primarily due to tax benefits related to income tax returns filed during the year and the impact of changes in the foreign exchange on deferred income taxes, offset by non-deductible expenses including share-based compensation, changes in our reserve for uncertain tax positions, and lower tax rates in foreign jurisdictions. The Predecessor’s effective tax rate for the period from October 1, 2010 to May 15, 2011 differed from the statutory rate primarily due to non-deductible transaction costs and the tax cost of foreign earnings subject to U.S. taxation under the Controlled Foreign Corporation Regime set forth in the Internal Revenue Code sections 951 through 960.

Contribution margin

Our management measures the performance of each of our segments based on several metrics, including contribution margin, which is a Non-GAAP financial measure. See Note 13 - Segment Reporting to our audited financial statements included in Part II - Item 8 of this filing for a description of contribution margin, the reasons why we believe contribution margin provides useful information to investors, the limitations surrounding the use of contribution margin, and a reconciliation contribution margin to loss before income taxes.

Contribution margin for the year ended September 30, 2012 and the period October 1, 2010 to May 15, 2011 (Predecessor) is as follows:

			Predecessor
	Year Ended		October 1, 2010 to
(in thousands, except percentages)	September 30, 2012		May 15, 2011		Variance $		Variance %
ERP	$	154,127	$	44,049	$	110,078	250	%
Retail Solutions	47,042		—		47,042		—
Retail Distribution	65,787		40,981		24,806		61	%
Total segment contribution margin	$	266,956	$	85,030	$	181,926	214	%

• ERP contribution margin - ERP contribution margin for the year ended September 30, 2012 was $154.1 million as compared to $44.0 million for the period from October 1, 2010 to May 15, 2011. The contribution margin for ERP increased by $110.1 million, or 250%, for the year ended September 30, 2012 compared to the period from October 1, 2010 to May 15, 2011. The increase was primarily attributable to $67.2 million of incremental contribution margin from Legacy Epicor, as well as $42.9 million of increased Predecessor ERP contribution margin primarily due the comparison of a twelve month period with a seven and one half month period as well as an increased run rate of Predecessor’s license and professional services gross margins due to an increase in the number of strategic deals and a lower run rate for employee related expenses in sales and marketing and product development in the year ended September 30, 2012.

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• Retail Solutions contribution margin - The contribution margin for Retail Solutions was $47.0 million for the year ended September 30, 2012. The Retail Solutions segment originated in Legacy Epicor. As such, the Predecessor's results for the period from October 1, 2010 to May 15, 2011 did not include contribution margin from Retail Solutions.

• Retail Distribution contribution margin - Retail Distribution contribution margin for the year ended September 30, 2012 was $65.8 million as compared to $41.0 million for the period from October 1, 2010 to May 15, 2011. The contribution margin for Retail Distribution increased by $24.8 million, or 61%, for the year ended September 30, 2012 compared to the period from October 1, 2010 to May 15, 2011. The increase was primarily attributable to the comparison of a twelve month period with a seven and one half month period as well as a $1.9 million increase services revenues as a result of the Internet AutoParts acquisition, a higher run rate for support revenues due to support prices increase which was partially offset by a lower systems gross margins as a result of lower hardware gross margins due to lower hardware revenue on a run rate basis as a result of a large number of hardware upgrades that occurred during the period of October 1, 2010 to May 15, 2011.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following unaudited pro forma condensed combined statement of operations has been developed by

applying pro forma adjustments to our and the Predecessor’s audited consolidated statement of comprehensive loss, included elsewhere in this filing, and to Legacy Epicor’s unaudited condensed consolidated statement of operations from October 1, 2010 to May 15, 2011, not included elsewhere. The unaudited pro forma condensed combined financial statements for the fiscal year ended September 30, 2011 give effect to the Acquisitions as if they had occurred on October 1, 2010. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined statements of operations.

Summary Historical Condensed Consolidated Financial Data and Unaudited Pro Forma Condensed

Combined Financial Data

The unaudited pro forma adjustments are based on available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma condensed combined statement of operations is presented for informational purposes only. The unaudited pro forma condensed combined statement of operations do not purport to represent what our results of operations would have been had the Acquisitions actually occurred on the date indicated, nor do they purport to project our results of operations for any future period or as of any future date. The unaudited pro forma condensed combined statement of operations should be read in conjunction with the information included under the headings “Unaudited Pro Forma Condensed Combined Financial Data,” “The Transactions,” “Selected Historical Consolidated Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the audited consolidated financial statements of the Predecessor included in our Form S-4/A filed with the Securities and Exchange Commission on February 10, 2012. All pro forma adjustments and their underlying assumptions are described more fully in the notes to our unaudited pro forma condensed combined statement of operations.

The unaudited pro forma condensed combined statement of operations is prepared in conformity with GAAP and is based on the Predecessor’s historical audited financial statements from the period of October 1, 2010 to May 15, 2011 and Legacy Epicor’s historical unaudited financial statements from the period of October 1, 2010 through May 15, 2011 and the consolidated results of our operations for the period from Inception to September 30, 2011. The unaudited pro forma condensed combined statements of operations include the results of the Predecessor during the period from October 1, 2010 to May 15, 2011 as included in our Report on Form 10-K filed with the Securities and Exchange Commission on December 12, 2012 and the results of Legacy Epicor during the period from October 1, 2010 to May 15, 2011 ($285.1 million in total revenues and a net loss of $55.2 million).

The unaudited pro forma condensed combined statements of operations do not include the following non-recurring items: (i) transaction costs associated with the Acquisitions and other costs associated with the issuance of the notes; (ii) the write-off of previous debt issuance costs; and (iii) the additional expense associated with accelerated vesting of share-based arrangements.

The Acquisitions have been accounted for using the acquisition method of accounting in accordance with the accounting guidance for business combinations and non-controlling interests which requires recognition and measurement of all identifiable assets acquired and liabilities assumed at their full fair value as of the date control is obtained.

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Unaudited Pro Forma Condensed Combined Statement of Operations

for the Fiscal Year Ended September 30, 2011

							Inception to
	October 1, 2010 to May 15, 2011						September 30, 2011
(in thousands)	Predecessor (a)			Legacy Epicor (b)			Successor			Pro Forma Adj.				Pro Forma
Total revenues	$	227,330		$	285,064		$	304,755		$	(40,094	)	(h)	$	777,055
Operating expenses:
Cost of revenues	87,788			133,571			133,512			(348		)	(e)	354,523
Sales and marketing	36,200			62,855			53,657			(1,923		)	(e)	150,789
Product development	19,659			36,182			31,417			(13		)	(e)	87,245
General and administrative	21,519			34,131			27,611			(1,953		)	(e)	82,536
										1,228			(f)
Depreciation and amortization	25,322			20,275			50,716			36,043			(c)	132,356
Acquisition-related costs	16,846			45,712			42,581			(103,851		)	(e)	1,288
Restructuring costs	27			2,889			11,049			—				13,965
Total operating expenses	207,361			335,615			350,543			(70,817		)		822,702
Operating income (loss)	19,969			(50,551		)	(45,788		)	30,723				(45,647		)
Interest expense	(33,069		)	(15,112		)	(36,643		)	(8,038		)	(d)	(92,862		)
Other income (expense), net	223			445			(257		)	—				411
Loss before income taxes	(12,877		)	(65,218		)	(82,688		)	22,685				(138,098		)
Income tax benefit	(4,488		)	(10,048		)	(26,720		)	8,477			(g)	(32,779		)
Net loss	$	(8,389	)	$	(55,170	)	$	(55,968	)	$	14,208			$	(105,319	)

See accompanying notes to the unaudited pro forma condensed combined statement of operations.

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Notes to unaudited pro forma condensed combined statement of operations

(a) Represents the Predecessor’s consolidated results of operations for the period from October 1, 2010 to May 15, 2011 derived from the audited financial statements included in our Form 10-K filed with the Securities and Exchange Commission on December 12, 2012.

(b) Represents Legacy Epicor’s unaudited consolidated results of operations for the period from October 1, 2010 to May 15, 2011.

Adjustments (c) through (d) to the pro forma condensed combined statement of operations for the year ended September 30, 2011, include pro forma adjustments to changes in fair value of the assets acquired along with pro forma adjustments to related financing activities including the Senior Notes and the 2011 Credit Agreement.

(c) Represents the net adjustment to depreciation and amortization expense related to the change in the estimated fair value of the property and equipment and intangible assets acquired in the acquisitions. The revised depreciation expense was calculated using the remaining estimated useful lives as determined by management. The revised amortization expense was calculated using the range of estimated useful lives of 1 to 10 years. The amounts allocated to property and equipment and identifiable intangible assets and the estimated useful lives are based on preliminary fair value estimates under the guidance of ASC 805—Business Combinations. The calculation of the net adjustment to depreciation and amortization expense is as follows:

(in thousands)
New depreciation expense for property and equipment	$	6,390
New amortization expense for intangible assets	75,250
Elimination of Activant's pre-acquisition depreciation and amortization expense, excluding database and software amortization expense	(25,322		)
Elimination of Legacy Epicor's pre-acquisition depreciation and amortization expense	(20,275		)
Net adjustments	$	36,043

(d) Represents the net adjustment to interest expense related to the Senior Notes and the 2011 Credit Agreement, calculated as follows:

(in thousands)
Interest expense on Senior Notes (i)	$	(25,066	)
Interest expense on term loan included in 2011 Credit Agreement (ii)	(27,173		)
Interest expense on revolver	(495		)
Amortization of debt issuance costs related to the notes (iii)	(1,065		)
Amortization of debt issuance costs related to the 2011 Credit Agreement (iii)	(2,169		)
Amortization of debt issuance costs related to the revolver	(234		)
Amortization of the original issue discount related to the 2011 Credit Agreement	(824		)
Non-refinanced interest expense	(625		)
Legacy Epicor interest on convertible debt	527
Activant interest on subordinated notes	905
Pro forma interest expense	(56,219		)
Elimination of Activant's pre-acquisition interest expense	33,069
Elimination of Legacy Epicor's pre-acquisition interest expense	15,112
Net adjustments	$	(8,038	)

(i) Represents the interest expense for twelve months related to the Senior Notes in an aggregate principal amount of $465.0 million, bearing an interest rate of 8 5/8% per annum.

(ii) Represents the interest expense for twelve months related to the term loan included in the 2011 Credit Agreement in an aggregate principal amount of $870.0 million, bearing a variable interest rate of LIBOR rate plus 375 basis points per annum (5%). The adjustment assumes a LIBOR floor of 1.25%. Once the LIBOR floor is exceeded, each 1/8% fluctuation

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in the term loan interest rate and a 1% fluctuation in the original issue discount would change pro forma interest expense by approximately $1.1 million per annum.

(iii) Represents the straight-line amortization (which approximates the effective interest method) of debt issuance costs related to the Senior Notes over an 8 year period, the term loan over a 7 year period and revolving credit facility over a 5 year period.

(e) Represents historical non-recurring expenses directly attributable to the Acquisitions, including the acceleration of stock-based compensation as a result of the immediate vesting of unvested shares upon change of control.

(f) Represents the advisory fee we are required to pay to Apax Partners, L.P. subsequent to the Acquisitions, calculated on an annual basis at a rate of 0.30% of equity investment.

(g) Represents the adjustment to income taxes to reflect the unaudited pro forma adjustments at a blended statutory rate of 38%, which is comparable to the Company’s overall effective tax rate.

(h) Represents purchase accounting deferred revenue valuation adjustment.

Results of Operations Supplement

Year Ended September 30, 2012 Compared to the Year Ended September 30, 2011 (Pro-Forma)

The following discussion compares our results of operations for the year ended September 30, 2012 to our unaudited Pro Forma condensed combined statement of operations for the year ended September 30, 2011. See "Unaudited Pro Forma Condensed Combined Financial Data" for more information on the preparation of the Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended September 30, 2011. For purposes of this discussion, references to the year ended September 30, 2011 refer to the Pro Forma amounts included in the Unaudited Pro Forma Condensed Combined Statement of Operations for that period.

The following table compares our results of operations for the year ended September 30, 2012 to our Pro Forma results of operations for the year ended September 30, 2011.

				Pro-Forma
	Year Ended			Year Ended
(in thousands, except percentages)	September 30, 2012			September 30, 2011			Variance ($)			Variance (%)
Total revenues	$	855,457		$	777,055		$	78,402		10	%
Operating expenses:
Cost of revenues	356,404			354,523			1,881			1	%
Sales and marketing	147,446			150,789			(3,343		)	(2	)%
Product development	83,304			87,245			(3,941		)	(5	)%
General and administrative	75,702			82,536			(6,834		)	(8	)%
Depreciation and amortization	138,985			132,356			6,629			5	%
Acquisition-related costs	8,845			1,288			7,557			587	%
Restructuring costs	4,776			13,965			(9,189		)	(66	)%
Total operating expenses	815,462			822,702			(7,240		)	(1	)%
Operating income (loss)	39,995			(45,647		)	85,642			(188	)%
Interest expense	(90,483		)	(92,862		)	2,379			(3	)%
Other income (expense), net	(133		)	411			(544		)	(132	)%
Loss before income taxes	(50,621		)	(138,098		)	87,477			(63	)%
Income tax benefit	(11,535		)	(32,779		)	21,244			(65	)%
Net loss	$	(39,086	)	$	(105,319	)	$	66,233		(63	)%

Total revenues

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Our total revenues were $855.5 million for the year ended September 30, 2012 as compared to $777.1 million for the year ended September 30, 2011. Total revenues increased by $78.4 million, or 10%, for the year ended September 30, 2012 as compared to the year ended September 30, 2011. The increase was primarily attributable to a $54.4 million reduction in deferred revenue purchase accounting adjustments, an approximately $19.0 million increase in services revenues primarily as a result of revenue from new customers and support price increases, partially offset by legacy platform attrition, as well as an approximately $5.0 million increase in systems revenues.

Total operating expenses decreased by $7.2 million, or 1% , for the year ended September 30, 2012 as compared to the year ended September 30, 2011. The decrease was primarily attributable to:

• Cost of revenues - Cost of revenues increased by $1.9 million or 1%, for the year ended September 30, 2012 as compared to the year ended September 30, 2011. The increase was primarily attributable to increased employee related costs and third party consulting services due to higher professional services revenues.

• Sales and marketing - Sales and marketing expenses decreased by $3.3 million, or 2%, for the year ended September 30, 2012 as compared to the year ended September 30, 2011. The decrease was primarily attributable to $2.4 million of lower travel and $1.7 million of lower share-based compensation expense, partially offset by $1.0 million of increased incentive compensation.

• Product development - Product development expenses decreased by $3.9 million, or 5%, for the year ended September 30, 2012 as compared to the year ended September 30, 2011. The decrease was primarily attributable to a $2.3 million decrease in salary related expenses and a $1.2 million decrease in outside services.

• General and administrative - General and administrative expenses decreased by $6.8 million, or 8%, for the year ended September 30, 2012 as compared to the year ended September 30, 2011. The decrease was primarily attributable to a $5.0 million decrease in share-based compensation expense and $3.8 million of salary-related expenses, partially offset by $1.6 million of higher legal expenses and $0.6 million of higher bad debt expense.

• Depreciation and amortization - Depreciation and amortization expense was $139.0 million for the year ended September 30, 2012 as compared to $132.4 million for the year ended September 30, 2011. Depreciation and amortization expense increased by $6.6 million, or 5%, for the year ended September 30, 2012 as compared to the year ended September 30, 2011. The increase was primarily attributable to increased depreciation related to facility leasehold improvements costs and capitalized IT equipment costs and amortization of intangible assets from the Internet AutoParts and Cogita acquisitions.

• Acquisition-related costs - Acquisition-related costs were $8.8 million for the year ended September 30, 2012 as compared to $1.3 million for the year ended September 30, 2011. Acquisition-related costs for the year ended September 30, 2012 consisted primarily of $4.9 million of integration activities due to the Acquisitions and

$3.9 million of acquisition costs, primarily due diligence fees and legal fees related to the acquisition of SolarSoft, which was consummated in the first quarter of our fiscal 2013. Acquisition-related costs for the year ended September 30, 2011 consisted primarily of the Predecessor's acquisition costs incurred prior to the Acquisitions.

• Restructuring costs - During the year ended September 30, 2012, we incurred $4.8 million of restructuring costs primarily as a result of the Acquisitions to eliminate certain employee positions and to consolidate certain excess facilities with the intent to integrate acquisitions and streamline and focus our operations to properly align our cost structure with our projected revenue streams. During the year ended September 30, 2011, we incurred $14.0 million of restructuring costs, primarily as a result of eliminating certain employee positions as a result of the Acquisitions.

Interest expense

Interest expense for the year ended September 30, 2012 was $90.5 million as compared to $92.9 million for the year

ended September 30, 2011. The decrease in interest expense was primarily the result of lower deferred financing amortization expense.

Other income (expense), net

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Other income (expense) for the year ended September 30, 2012 was $0.1 million of expense compared to $0.4 million of income for the year ended September 30, 2011. Other income (expense) net for the year ended September 30, 2012 included $0.8 million of foreign exchange losses, a $0.7 million sales tax assessment and a loss on disposal of fixed assets of $0.5 million partially offset by $0.9 million of earnings from our previous minority interest in Internet AutoParts and $0.7 million of interest income. Other income (expense), net for the year ended September 30, 2011 included $1.4 million of earnings from our previous minority interest in Internet AutoParts Inc. and $0.3 million of interest income, partially offset by a loss on disposal of fixed assets of $1.5 million.

Income tax expense (benefit)

We recognized an income tax benefit of $11.5 million, or 22.8% of pre-tax loss, for the year ended September 30, 2012 as compared to an income tax benefit of $32.8 million, or 23.7% of pre-tax loss, in the year ended September 30, 2011. Our income tax rate for the year ended September 30, 2012 differed from the federal statutory rate primarily due to tax benefits related to income tax returns filed in the quarter and the impact of changes in the foreign exchange on deferred income taxes, offset by non-deductible expenses including share-based compensation, changes in our reserve for uncertain tax positions, and lower tax rates in foreign jurisdictions. Our income tax rate for the year ended September 30, 2011 differed from the federal statutory rate due primarily to the repatriation of earnings of a foreign subsidiary and increases to unrecognized tax benefits, partially offset by the release of a valuation allowance recorded against certain state deferred tax assets as a result of a merger of the Predecessor and a domestic subsidiary.

Liquidity and Capital Resources

Our primary sources of liquidity are cash flows provided by operating activities and borrowings under our 2011 Senior Secured Credit Agreement and Senior Notes. We believe that the predictable revenue stream generated by our support revenues as well as other cash flows from operations, and the $88.0 million of borrowing capacity available on the revolving credit facility contained in our 2011 Senior Secured Credit Agreement will be sufficient to cover our liquidity needs required for us to meet our working capital, capital expenditure and other cash requirements for the next twelve months. We believe that the costs associated with implementing our business strategy will not materially impact our liquidity. We are dependent upon our future financial performance, which is subject to many economic, commercial, financial and other factors that are beyond our control, including the ability of financial institutions to meet their lending obligations to us. If those factors significantly change, our business may not be able to generate sufficient cash flow from operations or additional capital may not be available to meet our liquidity needs. We anticipate that to the extent that we require additional liquidity as a result of these factors or in order to execute our strategy, it would be financed either by borrowings under our 2011 Senior Secured Credit Agreement, by other indebtedness, additional equity financings or a combination of the foregoing. We may be unable to obtain any such additional financing on terms acceptable to us or at all.

As a result of completing the Acquisitions, we have significant leverage. As of September 30, 2013, our total indebtedness was $1,318.6 million ($1,312.4 million, net of original issue discount). We also had an additional undrawn revolving credit facility of $88.0 million. Our cash requirements are, and will continue to be, significant, primarily due to our debt service requirements. Our interest expense for the year ended September 30, 2013 was $92.7 million. In addition to servicing our debt, we intend to voluntarily make dividend payments to our indirect parent company, EGL Midco Inc. ("EGL Midco"), to fund interest payments on EGL Midco's $400 million in principal amount of Senior PIK Toggle Notes (the "Midco Notes") which mature in June 2018. If EGL Midco pays all interest in cash, we anticipate that our voluntary dividend payments to EGL Midco will be approximately $36 million per year. See "Parent Company PIK Toggle Notes" below for further information regarding the Midco Notes.

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Contractual Obligations

The following table summarizes our contractual obligations at September 30, ~~2013~~2014 (in thousands):

	Payments Due by Fiscal Year
Contractual Obligations (4):	Total		2014		2015		2016		2017		2018		2019 and Beyond
Contractual Obligations (1):	Total		2015		2016		2017		2018		2019		2020 and Beyond
Long-term debt obligations (1)	$	1,318,565	$	22,100	$	8,600	$	8,600	$	8,600	$	805,650	$	465,015
Long-term debt obligations (2)	$	1,283,750	$	5,200	$	—	$	5,002	$	808,548	$	465,000	$	—
Operating lease obligations (2)	65,640		17,305		13,513		9,912		8,731		8,666		7,513
Operating lease obligations (3)	86,590		15,216		14,981		14,199		12,252		8,945		20,997
Interest obligations (3)	424,461		82,925		81,723		78,580		77,622		63,505		40,106
Interest obligations (4)	323,077		76,498		73,392		72,563		60,405		40,219		—
Pension benefit payments	3,~~065~~145		~~211~~222		~~331~~243		~~237~~280		~~257~~288		~~292~~288		1,~~737~~824
Purchase obligations	291,750		291,750		—		—		—		—		—
Total	$	1,~~811~~698,~~760~~312	$	~~122~~98,~~570~~886	$	~~104~~88,~~167~~616	$	9792,~~329~~044	$	95881,~~210~~493	$	~~878~~514,~~113~~452	$	~~514~~22,~~371~~821

(1) ~~Includes~~This ~~current~~table ~~portion~~excludes obligations for uncertain tax positions with a carrying value of ~~long-term~~$10.4 ~~debt~~million as of September 30, 2014 because we are unable to reliably estimate the timing of payment of these obligations. Additionally, ~~See~~this ~~Note~~table 6excludes -our ~~Debt~~estimated individend payments to fund interest payments on the $400 million of Midco Notes issued by our ~~audited~~indirect ~~consolidated~~parent ~~financial~~company, ~~statements~~EGL Midco since we are not obligated, at this time, to make future payments. We expect to make dividend payments of approximately $36 million per year from fiscal 2015 through fiscal 2018 to fund interest payments on the Midco Notes.

(2) Includes the current and long-term portion of debt. See Note 6 - Debt in our audited consolidated financial statements for additional information regarding our long-term debt obligations. As a result of prepayments on our 2011 Credit Agreement, we currently are not obligated to pay quarterly principal payments during fiscal 2015, 2016 and a portion of 2017. The amount listed for fiscal 2015 represents our Mandatory Prepayment. See "Calculation of Excess Cash Flow and Mandatory Prepayments of 2011 Credit Agreement" below for additional information regarding prepayments of the 2011 Credit Agreement.

(23) See Note 15 - Commitments and Contingencies in our audited consolidated financial statements for additional information regarding our operating lease obligations.

(34) Represents interest payment obligations related to our long-term debt as specified in the applicable debt agreements as of September 30, 2014. A portion of our long-term debt has variable interest rates due to either existing swap agreements or interest arrangements. We have estimated our variable interest payment obligations using the interest rate forward curve where practicable. Interest obligations have been calculated assuming 3-month LIBOR rates will remain below the 1.0% LIBOR floor contained in our term loan as of September 30, 2014.

~~agreements.~~In Aaddition ~~portion of our long-term debt has variable interest rates due~~ to ~~either~~the ~~existing~~contractual ~~swap agreements or interest arrangements. We have estimated our variable interest payment~~ obligations ~~using~~and ~~the~~commercial ~~interest~~commitments ~~rate~~listed ~~forward~~above, ~~curve~~we ~~where~~expect ~~practicable. Interest~~capital ~~obligations~~expenditures ~~have~~from ~~been~~fiscal ~~calculated~~2015 ~~assuming~~through ~~3-month~~fiscal ~~LIBOR~~2018 ~~rates~~to ~~will~~range ~~remain~~from ~~below~~three ~~the~~to ~~1.25%~~four ~~LIBOR~~percent ~~floor~~of ~~contained in our senior secured term loan~~revenues.

~~(4)~~In ~~The~~December ~~table~~2013 ~~above~~and ~~excludes~~June ~~obligations~~2014, ~~for~~we ~~uncertain~~paid ~~tax~~dividends ~~positions~~of ~~with~~$18.5 amillion ~~carrying~~and ~~value~~$18.0 ofmillion, respectively, to our indirect parent company, EGL Midco, to fund the December 2013 and June 2014 interest payments on the Midco Notes. During September 2014, we paid a $1315.60 million asvoluntary ofprepayment ~~September~~on 30the term loan contained in our 2011 Credit Agreement. Additionally, during December 2013, ~~because~~we ~~the~~paid ~~Company~~a is$13.5 ~~unable~~million tomandatory ~~reliably~~prepayment ~~estimate~~on the ~~timing~~term ofloan ~~payment~~contained ofin ~~these~~our ~~obligations~~2011 Credit Agreement.

(5) Additionally, the table above excludes our estimated dividend payments to fund interest payments on the $400 million of Midco Notes issued by our parent company, EGL Midco. We expect to make dividend payments of approximately $36 million per year through 2017 to fund interest payments on the Midco Notes.

We have current contractual obligations and commercial commitments of approximately $100 million per year from fiscal 2014 through fiscal 2017. Additionally, we expect capital expenditures from fiscal 2014 through fiscal 2017 to range from three to four percent of revenues.

In October 2012, we acquired SolarSoft Business Systems for $155 million of cash. We financed the acquisition by utilizing $86 million of our cash and cash equivalents and by drawing $69 million on our revolving credit facility. As of September 30, 2013, we have repaid the balance of the revolving credit facility and we have no balance outstanding on the facility as of September 30, 2013.

2011 Senior Secured Credit Agreement

The 2011 Senior Secured Credit Agreement consists of a term loan with an outstanding principal balance of $~~853~~818.68 million (before $65.28 million unamortized original issue discount) as of September 30, ~~2013~~2014 and a revolving credit facility with a borrowing capacity of $88103.0 million. As of September 30, ~~2013~~2014, we had no borrowings outstanding on the revolving credit facility. The interest rate on the term loan is calculated based on an interest rate index plus a margin. The interest rate index is based, at our option, on a LIBOR rate with a minimum LIBOR floor of 1.250% or a Base Rate as defined in the 2011 Senior Secured Credit Agreement. As of September 30, ~~2013~~2014, the interest rate applicable to the term loans was 4.50%. The term loan requires that we repay $8.64 million per year with the balance to be repaid at maturity in May 2018. ~~The~~Principal ~~revolving~~payments ~~credit~~may ~~facility~~be ~~matures~~prepaid inon ~~May~~a ~~2016. The~~mandatory ~~2011~~or ~~Senior~~voluntary ~~Secured Credit Agreement was initiated on May 16~~basis, see ~~2011~~"Calculation ~~and~~of ~~was~~Excess ~~amended~~Cash inFlow ~~March 2013~~ and ~~September~~Mandatory ~~2013~~Prepayments ~~("2011~~of ~~Credit~~Term ~~Agreement~~Loan"~~). See~~ ~~Note~~below ~~6 - Debt in our audited consolidated financial statements~~ for ~~more~~additional information onregarding ~~the~~prepayments. The ~~2011~~revolving ~~Credit~~credit ~~Agreement~~facility ~~including~~matures ~~Amendment~~in ~~No.~~May ~~1 and Amendment No~~2016. 2. The ~~descriptions~~2011 ofSenior ~~the~~Secured ~~amendments~~Credit toAgreement ~~the~~was ~~2011~~initiated ~~Credit~~on ~~Agreement~~May ~~and~~16, ~~the~~2011 ~~original~~and ~~terms~~was ofamended ~~the~~in ~~2011~~March ~~Credit~~2013, ~~Agreement~~September ~~are~~2013, ~~discussed~~January in2014 ~~more~~and ~~detail below.~~

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OnMay ~~March~~2014 ~~7, 2013, we entered into Amendment No. 1 to the~~ ("2011 Credit Agreement"). See ~~to,~~Note ~~among~~6 ~~other~~- ~~things,~~Debt ~~reduce~~in ~~the~~our ~~interest~~audited ~~rate~~consolidated ~~margin~~financial ~~applicable~~statements tofor ~~borrowings~~more ~~under~~information ~~the~~on ~~term loan included in~~ the 2011 Credit Agreement. including Amendment No. 1 ~~reduced~~through ~~the~~Amendment ~~interest rate margin on the term loans by 0~~No.5% ~~per annum, and increased the outstanding principal amount by $3~~4.~~1 million.~~ AsThe adescriptions ~~result~~ of ~~Amendment~~the ~~No.~~amendments 1,to ~~our~~the ~~annual~~2011 ~~principal~~Credit ~~payments~~Agreement ~~will decrease by $0.1 million per annum through March 31, 2018,~~ and ~~our~~the ~~payment~~original atterms ~~maturity~~of ~~will~~the ~~increase~~2011 byCredit ~~approximately~~Agreement ~~$3.6~~are ~~million. Our~~discussed ~~annual~~in ~~interest~~more ~~payments~~detail ~~will decrease by approximately $4.3 million per year assuming 3-month LIBOR rates remain~~ below 1.~~25% per annum.~~

On ~~September~~March 207, 2013, we entered into Amendment No. 21 to the 2011 Credit Agreement to, ~~increase~~among other things, reduce the ~~borrowing~~interest ~~capacity~~rate margin applicable to borrowings under ~~our~~the ~~revolving~~term ~~credit~~loans ~~facility~~included ~~from~~in ~~$75.0~~the ~~million~~2011 toCredit ~~$88~~Agreement.0 Amendment ~~million~~No. In ~~October~~1 ~~2012,~~reduced wethe ~~borrowed~~interest ~~$69.0~~rate ~~million~~margin ~~against~~on the ~~revolving~~term ~~credit~~loans ~~facility~~by in0.5% ~~connection~~per ~~with~~annum, and increased the ~~acquisition~~outstanding ofprincipal ~~Solarsoft~~amount by $3.1 million. WeAs ~~have~~a ~~since~~result ~~repaid~~of ~~all~~Amendment ofNo. ~~the~~1, ~~borrowings~~our ~~against~~annual ~~the~~principal ~~revolving~~payments ~~credit~~decreased ~~facility,~~by ~~and~~$0.1 asmillion ofper ~~September~~annum 30through March 31, ~~2013~~2018, weand ~~have~~our nopayment ~~borrowings~~at ~~outstanding~~maturity ~~related~~increased toby ~~the~~approximately ~~revolving~~$3.6 ~~credit~~million. Our ~~facility~~annual interest payments decreased by approximately $4.3 million per year, assuming 3-month LIBOR rates remain below 1.25% per annum.

On September 20, 2013, we entered into Amendment No. 2 to the 2011 Credit Agreement to increase the borrowing capacity under our revolving credit facility from $75.0 million to $88.0 million. Amendment No. 2 did not affect the interest rate applicable to the revolving credit facility, or the maturity date.

On January 17, 2014, we entered into Amendment No. 3 to the 2011 Credit Agreement to reduce the interest rate margin and the LIBOR floor applicable to borrowings under the term loan included in the 2011 Credit Agreement. Amendment No. 3 provided for the refinancing of our existing Term B-1 Loans under the 2011 Credit Agreement with new Term B-2 Loans. The interest rate on the Term B-2 Loans is based, at our option, on a LIBOR rate, plus a margin of 3% per annum, with a LIBOR floor of 1% per annum, or the Base Rate (as defined in the 2011 Credit Agreement), plus a margin of 2% per annum. Amendment No. 3 increased our annual principal payments by $6.3 million for fiscal 2014, decreased our annual principal payments from $8.6 million per annum to $8.4 million per annum from fiscal 2015 through fiscal 2017, and decreased our principal payment at maturity from $810.0 million to $804.3 million. Amendment No. 3 did not affect the maturity date or the outstanding principal amount of the term loan contained in the 2011 Credit Agreement.

On May 15, 2014, we entered into Amendment No. 4 to the 2011 Credit Agreement to increase the borrowing capacity under our revolving credit facility from $88.0 million to $103.0 million. Amendment No. 4 did not affect the interest rate applicable to the revolving credit facility, or the maturity date.

The 2011 Credit Agreement originated in May 2011 and provided for (i) a seven-year term loan in the amount of $870.0 million, amortized (principal repayment) at a rate of 1% per year beginning September 30, 2011 on a quarterly basis for the first six and three-quarters years, with the balance paid at maturity and (ii) a five-year revolving credit facility with a borrowing capacity of $75.0 million which was due and payable in full at maturity in May 2016.

The original interest rate under the 2011 Credit Agreement was equal to an applicable margin plus, at our option, either (a) a base rate determined by reference to the highest of (1) the corporate base rate of the administrative agent, (2) the fed funds rate plus 0.5 percent per annum and (3) the Eurocurrency rate for an interest period of one month plus 1%, or (b) a Eurocurrency rate for interest periods of one, two, three or six months, and to the extent agreed by the administrative agent nine and twelve months; provided, however that the minimum Eurocurrency rate for any interest period may be no less than 1.25% per annum in the case of the term loans. The initial applicable margin for term loans and borrowings under the revolving credit facility was 2.75% with respect to base rate borrowings and 3.75% with respect to Eurodollar rate borrowings, which in the case of borrowings under the revolving credit facility, may be reduced subject to our attainment of certain First Lien Senior Secured Leverage Ratios. ~~As a result of Amendment No. 1 on March 7, 2013, the applicable margin for term loans is 2.25% with respect to base rate borrowings and 3.25% with respect to Eurodollar rate borrowings.~~

Substantially all of our assets and those of our domestic subsidiaries are pledged as collateral to secure our obligations under the 2011 Credit Agreement and each of our material wholly-owned domestic subsidiaries guarantees our obligations thereunder. The terms of the 2011 Credit Agreement require compliance with various covenants and amounts repaid under the term loans may not be re-borrowed.

Calculation of Excess Cash Flow and Mandatory Prepayments of the 2011 Credit Agreement

The 2011 Credit Agreement requires us to make certain mandatory prepayments when we generate excess cash flow. Excess cash flow under the 2011 Credit Agreement is calculated as net income, adjusted for non-cash charges and credits, changes in working capital and other adjustments less the sum of debt principal repayments, capital expenditures, and other adjustments. The calculated excess cash flow may be reduced based on our attained ratio of consolidated total debt to consolidated Adjusted EBITDA (consolidated earnings before interest, taxes, depreciation and amortization, further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance under the indenture governing the Senior Notes and our 2011 Credit Agreement), all as defined in the 2011 Credit Agreement. Pursuant to the terms of the 2011 Credit Agreement, excess cash flow is measured on an annual basis. Any mandatory prepayments due are reduced dollar-for-dollar by any voluntary prepayments made during the year. We generated $27 million of excess cash flow during fiscal 2013. As a result, we expect to make a mandatory prepayment of $13.5 million in December 2013 in accordance with the 2011 Credit Agreement. We have included this mandatory prepayment within the current portion of long-term debt in our consolidated balance sheet as of September 30, 2013, because we expect to make the payment within the next twelve months.

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Credit Agreement, excess cash flow is measured on an annual basis. Any mandatory prepayments due are reduced dollar-for-dollar by any voluntary prepayments made during the year. Additionally, any prepayments can be applied against future quarterly principal payments.

We generated $79.4 million of excess cash flow during fiscal 2014, which required us to pay a prepayment of $19.9 million. We paid a voluntary prepayment of $15.0 million on September 30, 2014 and thus, we are required to pay a mandatory prepayment of $4.9 million in December 2014. Additionally, we plan to pay a voluntary prepayment of $0.3 million by the end of fiscal 2015. As a result of the prepayments, we are not required to pay quarterly principal payments on the term loan during fiscal 2015 or 2016, and our quarterly principal payments are reduced for fiscal 2017. As of September 30, 2014, the current portion of our long term debt is equal to the remaining mandatory prepayment of $5.2 million.

We generated $27 million of excess cash flow during fiscal 2013. As a result, we paid a mandatory prepayment of $13.5 million in December 2013 in accordance with the 2011 Credit Agreement. We included the December 2013 mandatory prepayment within the current portion of long-term debt in our consolidated balance sheet as of September 30, 2013.

Senior Notes

As of September 30, ~~2013~~2014, we had outstanding $465.0 million in principal amount of Senior Notes due 2019 at an interest rate of 8 5/8% (the "Senior Notes"). The indenture that governs the Senior Notes contains certain covenants, agreements and events of default that are customary with respect to non-investment grade debt securities, including limitations on mergers, consolidations, sale of substantially all of our assets, incurrence of indebtedness, restricted payments liens and affiliates transactions by us or our restricted subsidiaries. The terms of the Senior Notes require us to make an offer to repay the Senior Notes upon a change of control or upon certain asset sales. The terms of the indenture also significantly restrict us and our restricted subsidiaries from paying dividends and otherwise transferring assets. For more information, see Senior Notes Due 2019 ~~("Senior Notes")~~ in Note 6 - Debt in the audited consolidated financial statements included elsewhere in this filing.

Parent Company PIK Toggle Notes

In addition to our debt discussed above, our indirect parent company, Eagle Midco Inc. ("EGL Midco"), ~~has~~ issued $400 million in principal amount of Senior PIK Toggle Notes (the "Midco Notes"). The Midco Notes were issued on June 10, 2013 and mature on June 15, 2018. We and our consolidated subsidiaries have not guaranteed the Midco Notes, and we have not pledged any assets as collateral for the payment of the Midco Notes. The Midco Notes are unsecured.

Interest on the Midco Notes ~~will~~is be payable semiannually in arrears on June 15th and December 15th of each year, commencing on December 15, 2013. Subject to conditions in the indenture for the Midco Notes, EGL Midco will be required to pay interest on the Midco Notes in cash or through issuing additional notes or increasing the principal amount of the Midco Notes ("PIK Interest"). The interest rate on the Midco Notes is 9.0% per annum for interest paid in cash or 9.75% per annum for PIK Interest. PIK Interest will be paid by issuing additional notes having the same terms as the Midco Notes or by increasing the outstanding principal amount of the Midco Notes.

The terms of the Midco Notes require that a calculated portion of the interest be payable in cash ("Minimum Cash Interest"). EGL Midco will be dependent upon our cash flows for any interest on the Midco Notes which it pays in cash.

Interest on the Midco Notes will be required to be paid in cash to the extent that we are permitted to make dividend payments to EGL Midco. The 2011 Credit Agreement and the indenture governing the Senior Notes restrict our ability to pay dividends or make distributions or other payments to EGL Midco to fund payments with respect to the Midco Notes or to repay or repurchase the Midco Notes unless the restricted payment covenants in these agreements are satisfied. However, dividend payments will only be provided to the extent that after funding the interest payment our domestic cash and cash equivalents plus available borrowings under our revolving credit facility exceed $25.0 million.

The terms of the Midco Notes require EGL Midco and its subsidiaries including us to comply with certain covenants, including limitations on incurring additional indebtedness, a prohibition of additional limitations on dividend payments, limitations on sales of assets and subsidiary stock, and limitations on making guarantees. Additionally, failure to pay Minimum Cash Interest on the Midco Notes constitutes an event of default for EGL Midco, causing the Midco Notes to become immediately due and payable by Midco. The holders of the Midco Notes, however, have no recourse against us or our assets.

We are not contractually obligated to service interest or principal payments on the Midco Notes. Additionally, the holders of the Midco Notes have no recourse against us or our assets. Under applicable guidance from the SEC (SAB Topic 5-J), a parent's debt, related interest expense and allocable deferred financing fees should be included in a subsidiary's financial statements under certain circumstances. We have considered these circumstances and determined that Epicor does not meet any of the applicable criteria related to the Midco Notes and accordingly we have not ~~reflected~~included the Midco Notes inwithin ~~our~~Long-Term ~~audited consolidated financial statements for the year ended September 30, 2013.~~

However, we intend to fund cash interest payments through cash dividends to EGL Midco. If all interest is paid in cash, our dividend payments to EGL Midco would be approximately $36 million per year from fiscal 2014 through fiscal 2018. Any dividend payments made to EGL Midco will be classified as cash outflows for financing activities in our statement of cash flows.52

To the extent we do not fund interest with cash, interest obligations will be satisfied through PIK Interest. If all interest is paid in the form of PIK Interest, the outstanding balance of the Midco Notes as of their maturity date on June 15, 2018 would be approximately $644 million.

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~~required~~Debt ~~to meet the First Lien Senior Secured Leverage Ratio covenant~~ in our ~~2011~~consolidated ~~Credit~~balance ~~Agreement. See~~sheets ~~"Covenant~~as ~~Compliance"~~of ~~below~~September ~~for~~30, ~~further~~2014 ~~details~~and on2013, ~~our~~nor ~~First~~have ~~Lien~~we ~~Senior~~included ~~Secured~~interest ~~Leverage~~related ~~Ratio covenant. We continue~~ to ~~believe,~~the ~~however,~~Midco ~~that~~Notes ~~our~~within ~~cash~~interest ~~flow~~expense ~~from~~in ~~operations,~~ our ~~current~~consolidated ~~working~~statements ~~capital,~~of ascomprehensive ~~well~~loss asfor ~~funds~~the ~~available~~years toended usSeptember ~~on our revolving credit facility~~30, ~~will~~2014 ~~be sufficient to cover our liquidity needs~~ and ~~to fund dividend payments to EGL Midco for the foreseeable future~~2013.

We fund cash interest payments through cash dividends to EGL Midco. In December 2013 and June 2014, we paid dividends of $18.5 million and $18.0 million, respectively, to fund the December 2013 and June 2014 interest payments on the Midco Notes. We intend to continue funding cash interest payments through cash dividends to EGL Midco. If all interest is paid in cash, our dividend payments to EGL Midco would be approximately $36 million per year from fiscal 2015 through fiscal 2018. We include dividend payments to EGL Midco within cash outflows for financing activities in our consolidated statements of cash flows.

To the extent we do not fund interest with cash, interest obligations will be satisfied by issuing additional notes (PIK Interest). If all interest is paid in the form of PIK Interest, the outstanding balance of the Midco Notes as of their maturity date on June 15, 2018 would be approximately $585 million.

Our voluntary servicing of the Midco Notes could affect our liquidity by utilizing cash resources which might otherwise be used to service our debt or fund other investments in our business. Furthermore, we may borrow against our revolving credit facility to service the Midco Notes. If we carry an outstanding balance on our revolving credit facility, we are required to meet the First Lien Senior Secured Leverage Ratio covenant in our 2011 Credit Agreement. See "Covenant Compliance" below for further details on our First Lien Senior Secured Leverage Ratio covenant. We continue to believe, however, that our cash flow from operations, our current working capital, as well as funds available to us on our revolving credit facility will be sufficient to cover our liquidity needs and to fund dividend payments to EGL Midco for the foreseeable future.

Off Balance Sheet Arrangements

The Securities Exchange Commission rules require disclosure of off-balance sheet arrangements with unconsolidated entities which are reasonably likely to have a material effect on the company’s financial position, capital resources, results of operations, or liquidity. We did not have any such off-balance sheet arrangements as of September 30, ~~2013~~2014.

Cash Flows

Operating Activities

Cash provided by ~~(used in)~~ operating activities consists of our net loss adjusted for certain non-cash items (primarily amortization, depreciation, deferred income taxes, provision for doubtful accounts and share-based compensation) and the effect of changes in working capital and other activities. Our largest source of operating cash flows is cash collections from our customers following the purchase and renewal of their ~~maintenance~~software and hardware support, software and cloud subscriptions, and hosting and managed services agreements. We also generate significant cash from new software license revenues as well as revenues from our professional services and sales of hardware. Our primary uses of cash from operating activities are for employee related expenditures, third party royalties and maintenance, the cost of hardware products, and payment of interest on our debt.

Cash provided by operating activities was $~~140~~155.9 million, $~~133~~140.69 million and $27133.46 million for the ~~year~~years ended September 30, ~~2013~~2014, ~~the~~2013 ~~year ended September 30, 2012,~~ and ~~the period from October 1, 2010 to May 15, 2011 (Predecessor), respectively~~2012. ~~Cash used in operating activities was $3.9 million for the period from Inception to September 30, 2011.~~

Cash provided by operating activities increased by $715.40 million for the year ended September 30, ~~2013~~2014 as compared to the year ended September 30, ~~2012~~2013. Our net loss plus non-cash items provided $~~114~~153.19 million and $~~101~~118.27 million for the years ended September 30, ~~2013~~2014 and ~~2012~~2013, respectively. This year over year increase was primarily driven by ~~incremental~~increased ~~revenues and~~gross ~~associated~~ margins ~~from~~as ~~the~~a ~~Solarsoft~~result ~~acquisition~~of assoftware ~~well~~and assoftware ~~organic~~related ~~revenue~~services revenues growth, ~~partially~~as ~~offset~~well byas ~~approximately~~ a ~~$1.8~~reduction ~~million~~in ~~increase~~benefit incosts and cash paid for interest ~~expense~~ due to lower interest rates paid on our ~~revolving~~2011 ~~credit~~Credit ~~facility~~Agreement term loan and ~~settlements~~lower borrowings on our ~~interest~~revolving ~~rate~~credit ~~swap~~facility, partially offset by increased operating expenses primarily related to incentive compensation and sales commission expense. Changes in operating assets and liabilities provided $262.80 million of cash for the year ended September 30, 2014 and provided $3222.42 million of cash for the ~~years~~year ended September 30, 2013 ~~and 2012, respectively~~. The change in operating assets and liabilities in fiscal year ~~2013~~2014 was primarily due to anstrong ~~increase~~cash incollection ~~deferred~~on ~~revenue~~accounts ~~which~~receivable ~~was~~and ~~primarily~~collections ~~attributable~~of toother ~~increased~~receivables, ~~deferred~~partially ~~maintenance~~offset ~~revenues~~by aspayments ~~well~~of ascurrent ~~revenue deferrals on year end sales transactions, increases in accrued~~ liabilities ~~due~~including to our ~~litigation~~shareholder ~~settlement liability, as well as strong cash collection on accounts receivable~~litigation. The change in operating assets and liabilities in fiscal year ~~2012~~2013 was primarily due to an increase in deferred revenue ~~partially~~which ~~offset~~was byprimarily anattributable ~~increase in accounts receivable.~~

Cash provided by operating activities increased by $137.5 million for the year ended September 30, 2012 as compared to the period from Inception to September 30, 2011. Our net loss plus non-cash items provided $101.2 million for the year ended September 30, 2012 and used $29.1 million for the period from inception to September 30 2011. The increase was primarily attributable to the comparison of a twelve month period with a four and one half month period as well as due to the inclusion of $42.6 million of acquisition related costs for the period from Inception to September 30, 2011. Changes in operating assets and liabilities provided $32.4 million and $25.2 million for the year ended September 30, 2012 and the period from inception to September 30 2011, respectively. The change in operating assets and liabilities for the year ended September 30, 2012 was primarily due to increases in other long term liabilities and deferred revenue. The change in operating assets and liabilities for the period from Inception to September 30, 2011 was primarily due to a decrease in prepaid expenses and other assets and an increase in deferred revenue.53

Cash provided by operating activities increased by $106.2 million for the year ended September 30, 2012 as compared to the period from October 1, 2010 to May 15, 2011 (Predecessor). Our net loss plus non-cash items provided $101.2 million for the year ended September 30, 2012 and the Predecessor's net loss plus non-cash items provided $35.9 million for the period from October 1, 2010 to May 15, 2011 (Predecessor). The increase was primarily attributable to the comparison of a twelve month period with a seven and one half month period, as well as increased operating cash flows generated from Legacy Epicor. Changes in operating assets and liabilities provided $32.4 million for the year ended September 30, 2012 and used $8.5 million

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~~the period from October 1, 2010~~ to ~~May~~increased ~~15,~~deferred ~~2011~~support ~~(Predecessor). The~~revenues ~~change~~as inwell ~~operating~~as ~~assets~~revenue ~~and~~deferrals ~~liabilities~~on ~~for the~~ year-end ~~ended~~sales ~~September 30~~transactions, ~~2012 was primarily due to~~ increases in ~~other~~accrued ~~long term~~ liabilities ~~and~~due ~~deferred~~to ~~revenue. The~~our ~~change~~litigation insettlement ~~operating assets and liabilities for the period from October 1~~liability, ~~2010~~as towell ~~May~~as ~~15,~~strong ~~2011~~cash ~~(Predecessor)~~collection ~~was~~on ~~primarily~~accounts ~~due to an increase in prepaid expenses and other assets~~receivable.

Cash provided by operating activities increased by $7.4 million for the year ended September 30, 2013 as compared to the year ended September 30, 2012. Our net loss plus non-cash items provided $118.7 million and $100.8 million for the years ended September 30, 2013 and 2012, respectively. This year over year increase was primarily driven by incremental revenues and associated margins from the Solarsoft acquisition as well as organic revenue growth, partially offset by approximately a $1.8 million increase in cash paid for interest expense due to interest paid on our revolving credit facility and settlements on our interest rate swap. Changes in operating assets and liabilities provided $22.2 million and $32.8 million for the years ended September 30, 2013 and 2012, respectively. The change in operating assets and liabilities in fiscal year 2013 was primarily due to an increase in deferred revenue which was primarily attributable to increased deferred support revenues as well as revenue deferrals on yearend sales transactions, increases in accrued liabilities due to our litigation settlement liability, as well as strong cash collection on accounts receivable. The change in operating assets and liabilities in fiscal year 2012 was primarily due an increase in deferred revenue partially offset by an increase in accounts receivable.

Investing Activities

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