Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q

 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2018
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
 
Commission File Number: 001-38028

Presidio, Inc.
(Exact name of registrant as specified in its charter)
Delaware
 
 
 
47-2398593
(State or other jurisdiction of
incorporation or organization)
 
 
 
(I.R.S. Employer
Identification Number)

One Penn Plaza, Suite 2832
New York, New York 10119
(212) 652-5700
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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 ☐

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.  
 
Large accelerated filer
 
 
  
 
Accelerated filer
 
Non-accelerated filer
(Do not check if a smaller reporting company)
  
 
Smaller reporting company
 
Emerging growth company
 
 
 
 
    
If an emerging growth company, indicate by check mark whether the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2018, there were 92,649,404 shares of common stock, $0.01 par value, outstanding.




PRESIDIO, INC.
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

2



PART I - FINANCIAL INFORMATION

Item 1.         Financial Statements

PRESIDIO, INC.
Consolidated Balance Sheets
(in millions, except share data)
(unaudited)
 
 
As of
June 30, 2017
 
As of
March 31, 2018
Assets
 
 
 
 
Current Assets
 
 
 
 
Cash and cash equivalents
 
$
27.5

 
$
24.9

Accounts receivable, net
 
576.3

 
574.5

Unbilled accounts receivable, net
 
159.8

 
152.0

Financing receivables, current portion
 
84.2

 
85.4

Inventory
 
27.7

 
26.8

Prepaid expenses and other current assets
 
63.4

 
89.0

Total current assets
 
938.9

 
952.6

Property and equipment, net
 
32.1

 
33.9

Financing receivables, less current portion
 
113.6

 
116.7

Goodwill
 
781.5

 
784.1

Identifiable intangible assets, net
 
751.9

 
700.7

Other assets
 
32.7

 
31.4

Total assets
 
$
2,650.7

 
$
2,619.4

Liabilities and Stockholders’ Equity
 
 
 
 
Current Liabilities
 
 
 
 
Current maturities of long-term debt
 
$

 
$

Accounts payable – trade
 
350.5

 
427.1

Accounts payable – floor plan
 
264.9

 
209.8

Accrued expenses and other current liabilities
 
216.3

 
174.1

Discounted financing receivables, current portion
 
79.9

 
81.5

Total current liabilities
 
911.6

 
892.5

Long-term debt, net of debt issuance costs and current maturities
 
730.7

 
675.4

Discounted financing receivables, less current portion
 
104.7

 
105.7

Deferred income tax liabilities
 
270.4

 
182.4

Other liabilities
 
30.4

 
29.5

Total liabilities
 
2,047.8

 
1,885.5

Commitments and contingencies (Note 10)
 

 

Stockholders’ Equity
 
 
 
 
Preferred stock:
 
 
 
 
$0.01 par value; 100 shares authorized and zero shares issued and outstanding at March 31, 2018 and June 30, 2017
 

 

Common stock:
 
 
 
 
$0.01 par value; 250,000,000 shares authorized, 92,238,809 shares issued and outstanding at March 31, 2018 and 90,969,919 shares issued and outstanding at June 30, 2017
 
0.9

 
0.9

Additional paid-in capital
 
625.3

 
636.8

Retained earnings (accumulated deficit)
 
(23.3
)
 
96.2

Total stockholders’ equity
 
602.9

 
733.9

Total liabilities and stockholders’ equity
 
$
2,650.7

 
$
2,619.4


See Notes to the Consolidated Financial Statements.

3


PRESIDIO, INC.
Consolidated Statements of Operations
(in millions, except share and per-share data)
(unaudited)


 
 
Three months ended March 31,
 
Nine months ended March 31,
 
 
2017
 
2018
 
2017
 
2018
Revenue
 
 
 
 
 
 
 
 
Product
 
$
519.1

 
$
545.2

 
$
1,757.8

 
$
1,714.1

Service
 
109.7

 
119.9

 
330.5

 
377.6

Total revenue
 
628.8

 
665.1

 
2,088.3

 
2,091.7

Cost of revenue
 
 
 
 
 
 
 
 
Product
 
403.8

 
429.7

 
1,394.9

 
1,359.3

Service
 
82.9

 
96.0

 
259.8

 
299.2

Total cost of revenue
 
486.7

 
525.7

 
1,654.7

 
1,658.5

Gross margin
 
142.1

 
139.4

 
433.6

 
433.2

Operating expenses
 
 
 
 
 
 
 
 
Selling expenses
 
70.8

 
70.2

 
204.9

 
201.0

General and administrative expenses
 
27.9

 
26.1

 
80.7

 
77.8

Transaction costs
 
8.5

 
4.2

 
14.5

 
6.3

Depreciation and amortization
 
20.5

 
20.6

 
61.3

 
62.3

Total operating expenses
 
127.7

 
121.1

 
361.4

 
347.4

Operating income
 
14.4

 
18.3

 
72.2

 
85.8

Interest and other (income) expense
 
 
 
 
 
 
 
 
Interest expense
 
18.3

 
10.1

 
59.9

 
35.3

Loss on extinguishment of debt
 
26.9

 
13.3

 
27.7

 
14.8

Other (income) expense, net
 
0.1

 
(0.1
)
 
0.2

 
(0.3
)
Total interest and other (income)
  expense
 
45.3

 
23.3

 
87.8

 
49.8

Income (loss) before income taxes
 
(30.9
)
 
(5.0
)
 
(15.6
)
 
36.0

Income tax benefit
 
(15.9
)
 
(5.6
)
 
(9.6
)
 
(83.5
)
Net income (loss)
 
$
(15.0
)
 
$
0.6

 
$
(6.0
)
 
$
119.5

Earnings (loss) per share:
 
 
 
 
 
 
 
 
Basic
 
$
(0.20
)
 
$
0.01

 
$
(0.08
)
 
$
1.30

Diluted
 
$
(0.20
)
 
$
0.01

 
$
(0.08
)
 
$
1.24

Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
75,374,606

 
92,015,710

 
73,064,789

 
91,629,703

Diluted
 
75,374,606

 
96,916,782

 
73,064,789

 
96,567,883













See Notes to the Consolidated Financial Statements.

4


PRESIDIO, INC.
Consolidated Statements of Cash Flows
(in millions)
(unaudited)


 
 
Nine months ended March 31,
 
 
2017
 
2018
Cash flows from operating activities:
 
 
 
 
Net income (loss)
 
$
(6.0
)
 
$
119.5

Adjustments to reconcile net income (loss) to net cash provided by operating activities
 
 
 
 
Amortization of intangible assets
 
55.2

 
55.5

Depreciation of property and equipment in operating expenses
 
6.1

 
6.7

Depreciation of property and equipment in cost of revenue
 
4.0

 
4.4

Provision for sales returns and credit losses
 
1.6

 
1.5

Amortization of debt issuance costs
 
5.1

 
3.6

Loss on extinguishment of debt
 
27.7

 
14.8

Noncash lease income
 
(3.1
)
 
(2.2
)
Share-based compensation expense
 
8.9

 
5.6

Deferred income tax benefit
 
(14.4
)
 
(88.0
)
Other
 
0.3

 
0.2

Change in assets and liabilities, net of acquisitions and dispositions:
 
 
 
 
Unbilled and accounts receivable
 
37.0

 
13.3

Inventory
 
24.2

 
1.0

Prepaid expenses and other assets
 
(25.2
)
 
(23.8
)
Accounts payable – trade
 
(35.7
)
 
74.5

Accrued expenses and other liabilities
 
10.6

 
(43.9
)
Net cash provided by operating activities
 
96.3

 
142.7

Cash flows from investing activities:
 
 
 
 
Acquisition of businesses, net of cash and cash equivalents acquired
 

 
(9.5
)
Proceeds from collection of escrow related to acquisition of businesses
 
0.6

 
0.2

Additions of equipment under sales-type and direct financing leases
 
(76.3
)
 
(80.6
)
Proceeds from collection of financing receivables
 
8.8

 
3.0

Additions to equipment under operating leases
 
(1.6
)
 
(1.5
)
Proceeds from disposition of equipment under operating leases
 
1.4

 
0.7

Purchases of property and equipment
 
(8.9
)
 
(10.5
)
Net cash used in investing activities
 
(76.0
)
 
(98.2
)
Cash flows from financing activities:
 
 
 
 
Proceeds from initial public offering, net of underwriter discounts and commissions
 
247.5

 

Payment of initial public offering costs
 
(0.7
)
 

Proceeds from issuance of common stock under share-based compensation plans
 
0.6

 
5.9

Proceeds from the discounting of financing receivables
 
86.5

 
81.5

Retirements of discounted financing receivables
 
(4.4
)
 
(5.7
)
Net repayments on the receivables securitization facility
 
(5.0
)
 

Deferred financing costs
 

 
(1.2
)
Redemptions and repurchases of senior and subordinated notes
 
(230.8
)
 
(135.7
)
Borrowings on term loans, net of original issue discount
 

 
138.2

Repayments of term loans
 
(80.5
)
 
(75.0
)
Net change in accounts payable — floor plan
 
(38.7
)
 
(55.1
)
Net cash used in financing activities
 
(25.5
)
 
(47.1
)
Net decrease in cash and cash equivalents
 
(5.2
)
 
(2.6
)
Cash and cash equivalents:
 
 
 
 
Beginning of the period
 
33.0

 
27.5

End of the period
 
$
27.8

 
$
24.9

Supplemental disclosures of cash flow information
 
 
 
 
Cash paid during the period for:
 
 
 
 
Interest
 
$
68.7

 
$
36.0

Income taxes, net of refunds
 
$
2.6

 
$
29.9

Reduction of discounted lease assets and liabilities
 
$
65.3

 
$
80.2

See Notes to the Consolidated Financial Statements.

5


PRESIDIO, INC.
Consolidated Statement of Stockholders’ Equity
(in millions, except share data)
(unaudited)


 
 
Preferred stock
 
Common stock
 
Additional
paid-in
capital
 
Retained earnings (accumulated deficit)
 
Total
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Balance, June 30, 2017
 

 
$

 
90,969,919

 
$
0.9

 
$
625.3

 
$
(23.3
)
 
$
602.9

Common stock issued
  under share-based
  compensation plans
 

 

 
1,268,890

 

 
5.9

 

 
5.9

Net income
 

 

 

 

 

 
119.5

 
119.5

Share-based compensation
  expense
 

 

 

 

 
5.6

 

 
5.6

Balance, March 31, 2018
 

 
$

 
92,238,809

 
$
0.9

 
$
636.8

 
$
96.2

 
$
733.9











































See Notes to the Consolidated Financial Statements.

6


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)




Note 1.         Nature of Business and Significant Accounting Policies

Description of the Company

Presidio, Inc., a Delaware corporation, through its subsidiaries (collectively, the “Company”, “we” and “our”) is a leading provider of information technology (“IT”) solutions to the middle market in North America, assisting clients as they harness technology innovation and simplify IT complexity to digitally transform their businesses and drive return on IT investment. Our Digital Infrastructure, Cloud and Security solutions enable our middle market, large and government clients to take advantage of new digital revenue streams, omnichannel customer experience models, and the rich data insights generated by those interactions. We deliver this technology expertise through a full life-cycle model of professional, managed, and ongoing support services, including strategy, consulting, design and implementation.

The Company is headquartered in New York, New York and all of its direct and indirect subsidiaries are located in the United States.

During the three months ended September 30, 2017, the Company made an acquisition, which expands our geographic footprint in Minnesota, that is immaterial to the consolidated financial statements.

On April 3, 2018, the Company completed the acquisition of all of the issued and outstanding units of Red Sky Solutions, LLC in exchange for $36.6 million paid in cash and approximately $4.2 million paid in 269,287 restricted shares of the Company’s common stock. The total consideration for the acquisition is subject to final post-closing purchase price adjustments related to net working capital.  The acquisition expands our geographic footprint in the southwestern United States.

Public Offerings

On March 15, 2017, the Company completed an initial public offering in which the Company issued and sold 18,766,465 shares of common stock, inclusive of 2,099,799 shares issued and sold on March 21, 2017, pursuant to the underwriters’ option to purchase additional shares, at the public offering price of $14.00 per share. 
    
On November 21, 2017, the Company completed a secondary public offering of 8,000,000 shares of the Company’s common stock by certain funds affiliated with Apollo Global Management, LLC (the “Selling Stockholder”) at a price to the public of $14.25 per share. In addition, the underwriters to such secondary public offering purchased an additional 1,200,000 shares of common stock from the Selling Stockholder. The Company did not sell any shares and did not receive any proceeds from the offering. In conjunction with this secondary offering, the Company incurred $1.0 million of expenses, which is presented within transaction costs on the consolidated statement of operations for the nine months ended March 31, 2018.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and Securities and Exchange Commission ("SEC") rules and regulations for interim reporting periods. The consolidated financial statements do not include all disclosures normally made in annual financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements included within the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2017. All financial information presented in the financial statements and notes herein is presented in millions except for share and per-share information and percentages.

In management’s opinion, all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for the periods shown have been made. All other adjustments are of a normal recurring nature.

The Company has evaluated subsequent events through the issue date of these consolidated financial statements.


7


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


Principles of Consolidation

The Company’s consolidated financial statements include the accounts of Presidio, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, asset residual values, vendor rebates and consideration, goodwill, identifiable intangibles, measurement of income tax assets and liabilities and provisions for doubtful accounts, credit losses, inventory obsolescence, and other contingencies. Actual results could differ from management’s estimates.

Other Comprehensive Income (Loss)

The Company did not have any components of other comprehensive income (loss) for any of the periods presented.

Recent Accounting Pronouncements Adopted During the Fiscal Year

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which restricts the valuation of inventory to the lower of cost or net realizable value, which is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. The standard has an effective date for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years, with early adoption permitted. The Company adopted this standard in the three months ended September 30, 2017. The adoption of this standard had an immaterial impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

The Company is still evaluating the impact of the following additional accounting pronouncements not yet adopted as of March 31, 2018.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), along with subsequent clarifying ASUs, which outline a single, comprehensive model for accounting for revenue from contracts with customers. Under the standard, revenue is to be recognized upon the transfer of promised goods or services to a customer, in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standard, as amended, is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted.

The standard allows entities to apply the standard retrospectively to each prior reporting period presented ("full retrospective adoption") or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application ("modified retrospective adoption"). The Company has formed an implementation committee and engaged external advisors to assist in evaluating the potential differences compared to existing GAAP and to assist in the implementation process associated with the adoption of this standard. The Company's analysis and evaluation of the new standard will continue through the standard's effective date The Company has performed the initial assessment of the standard and identified potential differences that would result from applying the requirements of the new standard to its revenue contracts. The Company is currently in the process of implementing appropriate changes to its business processes, systems and controls to support recognition and disclosure under the standard. As the quantitative impact of adopting the standard may be significantly impacted by arrangements contracted before the adoption date, the Company is still evaluating and has not yet reached a conclusion about whether the accounting impact of the new standard will be material to its consolidated financial statements. The Company currently plans to implement ASU 2014-09 using the modified retrospective adoption method and we will adopt the standard on its effective date beginning July 1, 2018.


8


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which changes the accounting for leases in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The standard has an effective date for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact that the standard will have on the consolidated financial statements. The adoption of the standard is not expected to have a material impact on the Company’s leasing business from a lessor perspective.    

Note 2.         Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in millions):
 
 
June 30, 2017
 
March 31, 2018
Partner incentive program receivable
 
$
26.2

 
$
28.0

Prepaid income taxes
 

 
18.0

Deferred product costs and other current assets
 
37.2

 
43.0

Total prepaid expenses and other current assets
 
$
63.4

 
$
89.0


Note 3.         Financing Receivables and Operating Leases

The Company records the lease receivables related to sales-type or direct financing leases as financing receivables, and the related liability resulting from discounting customer payment streams as discounted financing receivables, in the Company’s consolidated balance sheets. Discounted customer payment streams are typically collateralized by a security interest in the underlying assets being leased.

Financing receivables – The assets and related liabilities for discounted and not discounted sales-type and direct financing leases to financial institutions were as follows as of June 30, 2017 (in millions):
 
 
Discounted to
financial institutions
 
Not discounted to
financial institutions
 
Total
Financing receivables:
 
 
 
 
 
 
Minimum lease payments
 
$
197.2

 
$
4.2

 
$
201.4

Estimated net residual values
 

 
7.2

 
7.2

Unearned income
 
(9.4
)
 
(0.8
)
 
(10.2
)
Provision for credit losses
 

 
(0.6
)
 
(0.6
)
Total, net
 
$
187.8

 
$
10.0

 
$
197.8

Reported as:
 
 
 
 
 
 
Current
 
$
80.8

 
$
3.4

 
$
84.2

Long-term
 
107.0

 
6.6

 
113.6

Total, net
 
$
187.8

 
$
10.0

 
$
197.8

Discounted financing receivables:
 
 
 
 
 
 
Nonrecourse
 
$
183.7

 
$

 
$
183.7

Recourse
 

 

 

Total
 
$
183.7

 
$

 
$
183.7

Reported as:
 
 
 
 
 
 
Current
 
$
79.3

 
$

 
$
79.3

Long-term
 
104.4

 

 
104.4

Total
 
$
183.7

 
$

 
$
183.7



9


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


The assets and related liabilities for discounted and not discounted sales-type and direct financing leases to financial institutions were as follows as of March 31, 2018 (in millions):
 
 
Discounted to
financial institutions
 
Not discounted to
financial institutions
 
Total
Financing receivables:
 
 
 
 
 
 
Minimum lease payments
 
$
204.1

 
$
3.4

 
$
207.5

Estimated net residual values
 

 
7.3

 
7.3

Unearned income
 
(11.3
)
 
(1.0
)
 
(12.3
)
Provision for credit losses
 

 
(0.4
)
 
(0.4
)
Total, net
 
$
192.8

 
$
9.3

 
$
202.1

Reported as:
 
 
 
 
 
 
Current
 
$
82.4

 
$
3.0

 
$
85.4

Long-term
 
110.4

 
6.3

 
116.7

Total, net
 
$
192.8

 
$
9.3

 
$
202.1

Discounted financing receivables:
 
 
 
 
 
 
Nonrecourse
 
$
185.8

 
$

 
$
185.8

Recourse
 

 

 

Total
 
$
185.8

 
$

 
$
185.8

Reported as:
 
 
 
 
 
 
Current
 
$
80.7

 
$

 
$
80.7

Long-term
 
105.1

 

 
105.1

Total
 
$
185.8

 
$

 
$
185.8


The discounted financing receivables associated with sales-type and direct financing type leases are presented in the consolidated balance sheets together with the discounted financing receivables associated with operating leases which is discussed below.

Operating leases – Equipment under operating leases and accumulated depreciation are reported as part of other assets in the consolidated balance sheets and were as follows (in millions): 
 
 
June 30, 2017
 
March 31, 2018
Equipment under operating leases
 
$
4.6

 
$
3.3

Accumulated depreciation
 
(2.9
)
 
(1.6
)
Total equipment under operating leases, net
 
$
1.7

 
$
1.7


Depreciation expense associated with equipment under operating leases that is included in cost of product revenue within the Company’s consolidated statements of operations was $0.4 million and $0.3 million for the three months ended March 31, 2018 and 2017, respectively, and $1.0 million and $1.3 million for the nine months ended March 31, 2018 and 2017, respectively.

Liabilities for discounted operating leases to financial institutions were as follows (in millions):
 
 
June 30, 2017
 
March 31, 2018
Discounted operating leases:
 
 
 
 
Current
 
$
0.7

 
$
0.8

Noncurrent
 
0.2

 
0.6

Total
 
$
0.9

 
$
1.4



10


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


The discounted financing receivables associated with operating leases are presented on the consolidated balance sheets together with the discounted financing receivables associated with sales-type and direct financing type leases which are discussed above.

Note 4.         Property and Equipment

Property and equipment and accumulated depreciation and amortization were as follows (in millions):
 
 
Estimated
useful lives
 
June 30, 2017
 
March 31, 2018
Furniture and fixtures
 
3 to 7 years
 
$
5.3

 
$
6.0

Equipment
 
3 to 7 years
 
22.2

 
28.0

Software
 
3 years
 
19.9

 
22.5

Leasehold improvements
 
Life of lease
 
13.3

 
15.2

Total property and equipment
 
 
 
60.7

 
71.7

Accumulated depreciation and amortization
 
 
 
(28.6
)
 
(37.8
)
Total property and equipment, net
 
 
 
$
32.1

 
$
33.9


Depreciation and amortization associated with property and equipment that is included in depreciation and amortization within the Company’s consolidated statements of operations was $2.3 million and $2.1 million for the three months ended March 31, 2018 and 2017, respectively, and $6.7 million and $6.1 million for the nine months ended March 31, 2018 and 2017, respectively.

Depreciation and amortization expense associated with property and equipment directly utilized in support of managed services and cloud services that is included in cost of service revenue within the Company’s consolidated statements of operations was $1.2 million and $0.9 million for the three months ended March 31, 2018 and 2017, respectively, and $3.4 million and $2.7 million for the nine months ended March 31, 2018 and 2017, respectively.

Note 5.         Goodwill and Identifiable Intangible Assets

Goodwill

As described in Note 1, we completed an acquisition during the three months ended September 30, 2017 that was immaterial to the consolidated financial statements which resulted in a $2.6 million increase in goodwill.

Since October 22, 2015, the Company has operated as one reporting unit. The Company performed an assessment as of March 31, 2018 to determine whether it was more likely than not that the fair value of the Company's reporting unit was less than its carrying amount. Based on the results of this assessment, the Company determined that it was not more likely than not that the fair value of its reporting unit was less than its carrying amount. As a result, the Company concluded that its goodwill was not impaired. The Company did not identify or record any impairment losses related to its goodwill during any of the periods presented.


11


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


Identifiable Intangible Assets

Identifiable intangible assets consisted of the following as of June 30, 2017 (in millions):
 
 
Range of life
(years)
 
Gross amount
 
Accumulated
amortization
 
Total, net
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
Customer relationships
 
5 – 10
 
$
703.2

 
$
(159.8
)
 
$
543.4

Developed technology
 
5
 
3.6

 
(1.6
)
 
2.0

Trade names
 
2
 
5.1

 
(3.6
)
 
1.5

Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
Trade names
 
Indefinite
 
205.0

 

 
205.0

Total intangible assets
 
 
 
$
916.9

 
$
(165.0
)
 
$
751.9


Identifiable intangible assets consisted of the following as of March 31, 2018:
 
 
Range of life
(years)
 
Gross amount
 
Accumulated
amortization
 
Total, net
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
Customer relationships
 
5 – 10
 
$
707.0

 
$
(213.0
)
 
$
494.0

Developed technology
 
5
 
3.6

 
(2.1
)
 
1.5

Trade names
 
1
 
0.5

 
(0.3
)
 
0.2

Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
Trade names
 
Indefinite
 
205.0

 

 
205.0

Total intangible assets
 
 
 
$
916.1

 
$
(215.4
)
 
$
700.7


Amortization associated with intangible assets was $18.3 million and $18.4 million for the three months ended March 31, 2018 and 2017, respectively, and $55.5 million and $55.2 million for the nine months ended March 31, 2018 and 2017, respectively. The weighted-average remaining useful life of the finite-lived intangible assets was 7.0 years and 7.7 years as of March 31, 2018 and June 30, 2017, respectively.

As described in Note 1, we completed an acquisition during the three months ended September 30, 2017 that was immaterial to the consolidated financial statements which resulted in a $4.3 million increase in finite-lived intangible assets.

The Company performed an assessment as of March 31, 2018 to determine whether it was more likely than not that the fair value of the Company's indefinite-lived trade name was less than its carrying amount. Based on the results of this assessment, the Company determined that it was not more likely than not that the fair value of its indefinite-lived trade name was less than its carrying amount. As a result, the Company concluded that its indefinite-lived trade name intangible asset was not impaired. The Company did not identify or record any impairment losses related to its intangible assets during any of the periods presented.


12


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


Based on the finite-lived intangible assets recorded at March 31, 2018, the future amortization expense is expected to be as follows (in millions):
 
Years ending June 30,
2018 (remaining three months)
$
18.1

2019
71.9

2020
71.7

2021
71.1

2022
71.1

2023 and thereafter
191.8

Total
$
495.7


Note 6.         Accounts Payable – Floor Plan

The accounts payable – floor plan balances on the consolidated balance sheets relate to an agreement with a financial institution that provides an indirect wholly-owned subsidiary of the Company with funding for discretionary inventory purchases from approved vendors. Payables are due within 90 days and are noninterest bearing, provided they are paid when due. In accordance with the agreement, the financial institution has been granted a senior security interest in the indirect wholly-owned subsidiary’s inventory purchased under the agreement and accounts receivable arising from the sale thereof. Payments on the facility are guaranteed by Presidio LLC and subsidiaries. As of March 31, 2018 and June 30, 2017, the aggregate availability for purchases under the floor plan was the lesser of $325.0 million or the liquidation value of the pledged assets. The balances outstanding under the accounts payable - floor plan facility were $209.8 million and $264.9 million as of March 31, 2018 and June 30, 2017, respectively.

Note 7.         Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in millions):
 
 
June 30, 2017
 
March 31, 2018
Accrued compensation
 
$
64.5

 
$
54.5

Accrued interest
 
11.7

 
7.3

Accrued equipment purchases/vendor expenses
 
78.3

 
47.5

Accrued income taxes
 
7.3

 

Accrued non-income taxes
 
7.4

 
9.9

Customer deposits
 
5.1

 
3.3

Unearned revenue
 
40.0

 
49.5

Other accrued expenses and current liabilities
 
2.0

 
2.1

Total accrued expenses and other current liabilities
 
$
216.3

 
$
174.1


13


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)



Note 8.         Long-Term Debt and Credit Agreements

Long-term debt consisted of the following (in millions):
 
 
June 30, 2017
 
March 31, 2018
Revolving credit facility
 
$

 
$

Receivables securitization facility
 

 

Term loan facility, due February 2022
 
626.6

 

Term loan facility, due February 2024
 

 
691.6

Senior notes, 10.25% due February 2023
 
125.0

 

Total long-term debt
 
751.6

 
691.6

Unamortized debt issuance costs
 
(20.9
)
 
(16.2
)
Total long-term debt, net of debt issuance costs
 
$
730.7

 
$
675.4

Reported as:
 
 
 
 
Current
 
$

 
$

Long-term
 
730.7

 
675.4

Total long-term debt, net of debt issuance costs
 
$
730.7

 
$
675.4


As of June 30, 2017 and March 31, 2018, there were no borrowings outstanding under the Company's revolving credit facility and there were $1.8 million in letters of credit outstanding. As of March 31, 2018, the Company was in compliance with the covenants in its existing credit agreement (the “Credit Agreement”) and had $48.2 million available for borrowings.

Receivables Securitization Facility

On November 28, 2017, the Company entered into Amendment No. 2 to the Second Amended and Restated Receivables Purchase Agreement and Reaffirmation of Performance Guaranty which, among other things, extended the maturity of the facility to November 28, 2020. The Company incurred $0.6 million in deferred financing costs associated with this amendment.

As of June 30, 2017 and March 31, 2018, there were no outstanding borrowings under the receivables securitization facility. The Company had $229.0 million available under the receivables securitization facility based on the collateral available as of March 31, 2018.

Term Loan

On January 5, 2018, Presidio LLC and Presidio Networked Solutions LLC (together, the “Borrowers”), indirect wholly-owned subsidiaries of the Company, entered into an Incremental Assumption Agreement and Amendment No. 6 (the “Sixth Amendment”) amending the Credit Agreement, by and among the Borrowers, the guarantors party thereto, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
    
Pursuant to the Sixth Amendment, the Borrowers (i) refinanced all $576.6 million in aggregate principal amount of term loans outstanding under the Credit Agreement (the “Existing Term Loans”) and (ii) borrowed $140.0 million in aggregate principal amount of incremental term loans, in each case with new term loans (the “New Term Loans”) under the Credit Agreement.

The New Term Loans have an interest rate of LIBOR plus 2.75% (with a LIBOR floor of 1.0%) or base rate plus 1.75% (reduced from the interest rates of LIBOR plus 3.25% or base rate plus 2.25% applicable to the Existing Term Loans), and a maturity date of February 2, 2024 (two years longer than the maturity date of the Existing Term Loans). The New Term Loans were issued at a price equal to 99.75% of their face value.

In association with the Sixth Amendment, the Company incurred $2.9 million in professional fees which are presented within transaction costs on the Company's consolidated statement of operations and capitalized $2.4 million of debt issuance costs,

14


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


inclusive of original issuance discount, presented on a net basis along with the associated debt obligations on the Company's consolidated balance sheet.

Subsequent to entering into the Sixth Amendment, the Company voluntarily prepaid $25.0 million in aggregate principal amount of the New Term Loans, resulting in a $0.6 million loss on extinguishment of debt reflected in the Company's consolidated statement of operations associated with the write-off of debt issuance costs.

The Company has made $75.0 million in aggregate voluntary prepayments of term loans under its Credit Agreement during the nine months ended March 31, 2018, resulting in $2.0 million loss on extinguishment of debt reflected in the Company’s consolidated statement of operations associated with the write-off of debt issuance costs.

Senior Notes

Proceeds from the New Term Loans were used to (i) refinance all of the Existing Term Loans, (ii) redeem all of the $125.0 million outstanding aggregate principal amount of Presidio Holdings Inc.'s 10.25% senior notes due 2023 (the “Senior Notes”) in accordance with the optional redemption provisions contained in the indenture governing the Senior Notes and (iii) pay the redemption premium on the Senior Notes, accrued and unpaid interest, and other fees and expenses payable in connection with the foregoing. In connection with the redemption of the Senior Notes, the Company recorded a loss on extinguishment of debt of $12.6 million, of which $1.9 million related to write-offs of unamortized debt issuance costs.    

Note 9.         Fair Value Measurements

For certain of the Company’s financial instruments, including cash and cash equivalents, accounts and unbilled receivables, accounts payable – trade, accounts payable – floor plan, and other accrued liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. Additionally, the Company’s financing receivables were measured at their respective fair values upon initial recognition.

The fair value hierarchy for the Company’s financial assets and liabilities measured at fair value were as follows as of June 30, 2017 (in millions):
 
 
 
 
Fair value measurement
 
 
Carrying value
 
Level 1
 
Level 2
 
Level 3
Term loans
 
$
626.6

 
$

 
$
627.4

 
$

Senior notes
 
125.0

 

 
138.8

 

Total
 
$
751.6

 
$

 
$
766.2

 
$


The fair value hierarchy for the Company’s financial assets and liabilities measured at fair value were as follows as of March 31, 2018 (in millions):
 
 
 
 
Fair value measurement
 
 
Carrying value
 
Level 1
 
Level 2
 
Level 3
Term loans
 
$
691.6

 
$

 
$
693.3

 
$


The fair value of the Company’s term loans are estimated based on quoted market prices for the debt which is traded in over-the-counter secondary markets that are not considered active. The carrying value of the Company’s term loans exclude unamortized debt issuance costs.

For certain of the Company’s nonfinancial assets, including goodwill, intangible assets, and property and equipment, the Company may be required to assess the fair values of these assets, on a recurring or nonrecurring basis, and record an impairment if the carrying value exceeds the fair value. In determining the fair value of these assets, the Company may use a combination of valuation methods which include Level 3 inputs. For the periods presented, there were no impairments charges.

15


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)



Note 10.     Commitments and Contingencies

Claims and assessments- In the normal course of business, the Company is subject to certain claims and assessments that arise in the ordinary course of business. The Company records a liability when the Company believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine the outcome and the estimated amount of a loss related to such matters. Management believes that there are no claims or assessments outstanding which would materially affect the consolidated results of operations or financial position of the Company.

Note 11.     Share-based Compensation

During the nine months ended March 31, 2018, the Company did not issue any equity awards pursuant to the Company's Amended and Restated 2015 Long-Term Incentive Plan (the "2015 LTIP"). During the nine months ended March 31, 2018, the Company granted 315,600 service-based non-qualified stock options that vest in four equal installments on each of the first four anniversaries of the grant date and 150,000 service-based restricted stock units that vest in two equal installments over a two-year period; all of which were issued pursuant to the Company's 2017 Long-Term Incentive Plan (the "2017 LTIP").

During the nine months ended March 31, 2018, there were 1,088,907 service-based and rolled options exercised and 437,049 service-based and rolled options expired or forfeited. As of March 31, 2018, 5,591,235 service-based and rolled options were outstanding, of which 2,676,996 were vested.

During the nine months ended March 31, 2018, there were 422,498 performance-based and market-based options forfeited. As of March 31, 2018, the performance condition for these options was deemed met; however, as the market condition for vesting had not yet been realized, the total balance of 3,030,538 options outstanding were unvested.

As of March 31, 2018, there were 1,320,017 remaining shares available for issuance under the Presidio, Inc. Employee Stock Purchase Plan (the "ESPP"). On March 31, 2018, the Company held $0.7 million of contributions made by employees that were used to purchase 45,453 shares under the ESPP on April 2, 2018.

Share-Based Compensation Expense

The following table summarizes the share-based compensation expense recorded in our operating expenses, as follows (in millions):
 
 
Three months ended March 31,
 
Nine months ended March 31,
 
 
2017
 
2018
 
2017
 
2018
Selling expenses
 
$
3.4

 
$
0.4

 
$
3.9

 
$
1.1

General and administrative expenses
 
4.5

 
2.7

 
5.0

 
4.5

Total
 
$
7.9

 
$
3.1

 
$
8.9

 
$
5.6


As of March 31, 2018, there was $7.7 million of unrecognized share-based compensation expense, $6.5 million of which relates to service-based awards from the 2015 LTIP and 2017 LTIP grants and $1.2 million of which relates to the restricted stock unit grants.

16


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)



Note 12.     Earnings Per Share

The following is a reconciliation of the weighted-average number of shares used to compute basic and diluted earnings per share (in millions, except share and per-share data):
 
 
Three months ended March 31,
 
Nine months ended March 31,
 
 
2017
 
2018
 
2017
 
2018
Numerator:
 
 
 
 
 
 
 
 
Earnings (loss)
 
$
(15.0
)
 
$
0.6

 
$
(6.0
)
 
$
119.5

Denominator:
 
 
 
 
 
 
 
 
Weighted-average shares – basic
 
75,374,606

 
92,015,710

 
73,064,789

 
91,629,703

Effect of dilutive securities:
 
 
 
 
 
 
 
 
Share-based awards
 

 
4,901,072

 

 
4,938,180

Weighted-average shares – diluted
 
75,374,606

 
96,916,782

 
73,064,789

 
96,567,883

Earnings (loss) per share:
 
 
 
 
 
 
 
 
Basic
 
$
(0.20
)
 
$
0.01

 
$
(0.08
)
 
$
1.30

Diluted
 
$
(0.20
)
 
$
0.01

 
$
(0.08
)
 
$
1.24


Potentially dilutive securities that have been excluded from the computation of diluted weighted-average common shares outstanding because their inclusion would have been anti-dilutive consisted of the following:
 
 
Three months ended March 31,
 
Nine months ended March 31,
 
 
2017
 
2018
 
2017
 
2018
Share-based awards excluded from EPS because of anti-dilution
 
10,370,049

 
246,793

 
10,370,049

 
2,151,086


Note 13.     Income Taxes

Recent U.S. federal income tax legislation, commonly referred to as The Tax Cuts and Jobs Act (“TCJA”), was enacted on December 22, 2017 which, among other things, reduces the U.S. federal corporate tax rate from 35.0% to 21.0% effective on January 1, 2018. The rate change is administratively effective at the beginning of Presidio’s fiscal year on July 1, resulting in a blended rate of 28.1% for the fiscal year ending June 30, 2018, which is accounted for in the interim and annual periods that include December 22, 2017. As the Company has a June 30 fiscal year-end, the blended U.S. federal corporate tax rate for our fiscal year ended June 30, 2019 will be 21.0%.

The Company recognized provisional amounts of $3.2 million and $92.4 million of income tax benefit for the three and nine months ended March 31, 2018, respectively, relating to the revaluation of deferred tax asset and liability balances due to the change in tax rates enacted in the period. The Company is still analyzing certain aspects of the TCJA and refining its calculations, which could potentially affect the measurement of these balances. The changes included in the TCJA are broad and complex and could materially affect the estimates recorded for the quarter and year to date periods, due to, among other things, changes in legislative interpretations or further guidance issued on the application of certain provisions of the TCJA. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the TCJA to finalize the recording of the related tax impacts.
The Company recorded an income tax benefit for the three and nine months ended March 31, 2018 of $5.6 million and $83.5 million, respectively, compared to income tax benefit for the three and nine months ended March 31, 2017 of $15.9 million and $9.6 million, respectively. The Company's effective tax rates for the three and nine months ended March 31, 2018 were 112.0% and (231.9)%, compared to the three and nine months ended March 31, 2017 of 51.5% and 61.5%, respectively.


17


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


The Company’s effective tax rates differed from the U.S. federal statutory tax rate primarily due to the $3.2 million and $92.4 million income tax benefit impact of revaluation of deferred tax asset and liability balances, or 64.0% and (256.7)% effective tax rate impact, for three and nine months ended March 31, 2018, respectively. The other differences include the favorable excess tax benefit deduction for the three and nine months ended March 31, 2018 related to share-based compensation of $0.9 million and $3.0 million, or 18.0% and (8.3)%, respectively, and the impact of state taxes and permanent differences including the TCJA which reduced our U.S. federal statutory rate from 35.0% to 28.1% for our fiscal year ending June 30, 2018.

Note 14.     Related Party Transactions

Apollo Global Management, LLC (together with its subsidiaries, “Apollo”) is a leading alternative investment management firm which owns and operates businesses across a variety of industries. The Company recorded revenue to parties affiliated with Apollo or our directors of $0.6 million and $3.0 million for the three months ended March 31, 2018 and 2017, respectively, and $1.4 million and $5.1 million for the nine months ended March 31, 2018 and 2017, respectively. The outstanding receivables associated with parties affiliated with Apollo or our directors were $1.7 million at March 31, 2018 and June 30, 2017, respectively.

The Company leases an office that is owned by members of the Company’s management. The office location was carried over from a prior acquisition and the Company has continued to renew the lease. Rent expense for the office was $0.1 million for both the three months ended March 31, 2018 and 2017, respectively, and $0.3 million for both the nine months ended March 31, 2018 and 2017, respectively.

Note 15.     Segment Information

Geographic Areas

Revenue earned by the Company from customers outside of the United States is not material for any of the periods presented. Additionally, the Company does not have long-lived assets outside of the United States.

Revenue by Solution Area
    
The following table presents total revenue by solution area (in millions):
 
 
Three months ended March 31,
 
Nine months ended March 31,
 
 
2017
 
2018
 
2017
 
2018
Cloud
 
$
119.0

 
$
102.2

 
$
367.1

 
$
346.6

Security
 
89.2

 
83.9

 
225.7

 
278.2

Digital Infrastructure
 
420.6

 
479.0

 
1,495.5

 
1,466.9

Total revenue
 
$
628.8

 
$
665.1

 
$
2,088.3

 
$
2,091.7


The type of solution sold by the Company to its customers is based upon internal classifications.

Note 16.     Supplemental Consolidating Information

The following financial statements set forth condensed consolidating financial information for the Company. The condensed consolidating financial information presents Presidio, Inc. on a standalone basis, Presidio Holdings Inc. and subsidiaries on a consolidated basis as guarantors of the Credit Agreement and the consolidating intercompany adjustments between the entities.

The following condensed consolidating financing information was prepared on the same basis as the consolidated financial statements (in millions):



18


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


Condensed Consolidating Balance Sheet
As of June 30, 2017
 
 
 
Presidio, Inc.
 
Presidio Holdings Inc. & Subsidiaries
 
Intercompany Adjustments
 
Consolidated
Assets
 
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
0.7

 
$
26.8

 
$

 
$
27.5

Accounts receivable, net
 

 
576.3

 

 
576.3

Unbilled accounts receivable, net
 

 
159.8

 

 
159.8

Financing receivables, current portion
 

 
84.2

 

 
84.2

Inventory
 

 
27.7

 

 
27.7

Prepaid expenses and other current assets
 
1.3

 
69.1

 
(7.0
)
 
63.4

Total current assets
 
2.0

 
943.9

 
(7.0
)
 
938.9

Property and equipment, net
 

 
32.1

 

 
32.1

Deferred tax asset
 
2.7

 

 
(2.7
)
 

Financing receivables, less current portion
 

 
113.6

 

 
113.6

Goodwill
 

 
781.5

 

 
781.5

Identifiable intangible assets, net
 

 
751.9

 

 
751.9

Other assets
 
605.2

 
32.7

 
(605.2
)
 
32.7

Total assets
 
$
609.9

 
$
2,655.7

 
$
(614.9
)
 
$
2,650.7

Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
 
Accounts payable – trade
 

 
350.5

 

 
350.5

Accounts payable – floor plan
 

 
264.9

 

 
264.9

Accrued expenses and other current liabilities
 
7.0

 
216.3

 
(7.0
)
 
216.3

Discounted financing receivables, current portion
 

 
79.9

 

 
79.9

Total current liabilities
 
7.0

 
911.6

 
(7.0
)
 
911.6

Long-term debt, net of debt issuance costs and current maturities
 

 
730.7

 

 
730.7

Discounted financing receivables, less current portion
 

 
104.7

 

 
104.7

Deferred income tax liabilities
 

 
273.1

 
(2.7
)
 
270.4

Other liabilities
 

 
30.4

 

 
30.4

Total liabilities
 
7.0

 
2,050.5

 
(9.7
)
 
2,047.8

Total stockholders’ equity
 
602.9

 
605.2

 
(605.2
)
 
602.9

Total liabilities and stockholders’ equity
 
$
609.9

 
$
2,655.7

 
$
(614.9
)
 
$
2,650.7












19


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


Condensed Consolidating Balance Sheet
As of March 31, 2018
 
 
 
Presidio, Inc.
 
Presidio Holdings Inc. & Subsidiaries
 
Intercompany Adjustments
 
Consolidated
Assets
 
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
0.3

 
$
24.6

 
$

 
$
24.9

Accounts receivable, net
 

 
574.5

 

 
574.5

Unbilled accounts receivable, net
 

 
152.0

 

 
152.0

Financing receivables, current portion
 

 
85.4

 

 
85.4

Inventory
 

 
26.8

 

 
26.8

Prepaid expenses and other current assets
 
2.0

 
91.6

 
(4.6
)
 
89.0

Total current assets
 
2.3

 
954.9

 
(4.6
)
 
952.6

Property and equipment, net
 

 
33.9

 

 
33.9

Deferred tax asset
 
1.6

 

 
(1.6
)
 

Financing receivables, less current portion
 

 
116.7

 

 
116.7

Goodwill
 

 
784.1

 

 
784.1

Identifiable intangible assets, net
 

 
700.7

 

 
700.7

Other assets
 
734.7

 
31.4

 
(734.7
)
 
31.4

Total assets
 
$
738.6

 
$
2,621.7

 
$
(740.9
)
 
$
2,619.4

Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
 
Accounts payable – trade
 

 
427.1

 

 
427.1

Accounts payable – floor plan
 

 
209.8

 

 
209.8

Accrued expenses and other current liabilities
 
4.7

 
174.0

 
(4.6
)
 
174.1

Discounted financing receivables, current portion
 

 
81.5

 

 
81.5

Total current liabilities
 
4.7

 
892.4

 
(4.6
)
 
892.5

Long-term debt, net of debt issuance costs and current maturities
 

 
675.4

 

 
675.4

Discounted financing receivables, less current portion
 

 
105.7

 

 
105.7

Deferred income tax liabilities
 

 
184.0

 
(1.6
)
 
182.4

Other liabilities
 

 
29.5

 

 
29.5

Total liabilities
 
4.7

 
1,887.0

 
(6.2
)
 
1,885.5

Total stockholders’ equity
 
733.9

 
734.7

 
(734.7
)
 
733.9

Total liabilities and stockholders’ equity
 
$
738.6

 
$
2,621.7

 
$
(740.9
)
 
$
2,619.4



20


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


Condensed Consolidating Statement of Operations
Three months ended March 31, 2017
 
 
 
Presidio, Inc.
 
Presidio Holdings Inc. & Subsidiaries
 
Intercompany Adjustments
 
Consolidated
Total revenue
 
$

 
$
628.8

 
$

 
$
628.8

Total cost of revenue
 

 
486.7

 

 
486.7

Gross margin
 

 
142.1

 

 
142.1

Operating expenses
 
 
 
 
 
 
 
 
Selling, general and administrative, and transaction costs
 
0.3

 
106.9

 

 
107.2

Depreciation and amortization
 

 
20.5

 

 
20.5

Total operating expenses
 
0.3

 
127.4

 

 
127.7

Operating income (loss)
 
(0.3
)
 
14.7

 

 
14.4

Interest and other (income) expense
 
 
 
 
 
 
 
 
Interest expense
 

 
18.3

 

 
18.3

Loss on extinguishment of debt
 

 
26.9

 

 
26.9

Other (income) expense, net
 
14.9

 
0.1

 
(14.9
)
 
0.1

Total interest and other (income) expense
 
14.9

 
45.3

 
(14.9
)
 
45.3

Loss before income taxes
 
(15.2
)
 
(30.6
)
 
14.9

 
(30.9
)
Income tax benefit
 
(0.2
)
 
(15.7
)
 

 
(15.9
)
Net loss
 
$
(15.0
)
 
$
(14.9
)
 
$
14.9

 
$
(15.0
)

Condensed Consolidating Statement of Operations
Three months ended March 31, 2018
 
 
 
Presidio, Inc.
 
Presidio Holdings Inc. & Subsidiaries
 
Intercompany Adjustments
 
Consolidated
Total revenue
 
$

 
$
665.1

 
$

 
$
665.1

Total cost of revenue
 

 
525.7

 

 
525.7

Gross margin
 

 
139.4

 

 
139.4

Operating expenses
 
 
 
 
 
 
 
 
Selling, general and administrative, and transaction costs
 
0.4

 
100.1

 

 
100.5

Depreciation and amortization
 

 
20.6

 

 
20.6

Total operating expenses
 
0.4

 
120.7

 

 
121.1

Operating income (loss)
 
(0.4
)
 
18.7

 

 
18.3

Interest and other (income) expense
 
 
 
 
 
 
 
 
Interest expense
 

 
10.1

 

 
10.1

Loss on extinguishment of debt
 

 
13.3

 

 
13.3

Other (income) expense, net
 
(0.9
)
 
(0.1
)
 
0.9

 
(0.1
)
Total interest and other (income) expense
 
(0.9
)
 
23.3

 
0.9

 
23.3

Income (loss) before income taxes
 
0.5

 
(4.6
)
 
(0.9
)
 
(5.0
)
Income tax benefit
 
(0.1
)
 
(5.5
)
 

 
(5.6
)
Net income
 
$
0.6

 
$
0.9

 
$
(0.9
)
 
$
0.6



21


PRESIDIO, INC.
Notes to the Consolidated Financial Statements
(unaudited)


Condensed Consolidating Statement of Operations
Nine months ended March 31, 2017
 
 
 
Presidio, Inc.
 
Presidio Holdings Inc. & Subsidiaries
 
Intercompany Adjustments
 
Consolidated
Total revenue
 
$

 
$
2,088.3

 
$

 
$
2,088.3

Total cost of revenue
 

 
1,654.7

 

 
1,654.7

Gross margin
 

 
433.6