What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-08-12 compared with 2020-08-11 · 260 added, 313 removed, 1230 unchanged (32% of the section changed)

20 unchanged sentences

We also have audited the Company’s internal control over financial reporting as of June 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting of Itiviti Holding AB (“Itiviti”), which was acquired on May 12, 2021 and whose financial statements constitute 37% of total assets, and 1% of revenues of the consolidated financial statement amounts as of and for the year ended June 30, 2021.

Accordingly, our audit did not include the internal control over financial reporting at Itiviti.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

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A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

A company’s internal control over financial reporting includes those policies and procedures

that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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The Company determines the fair value of its reporting units using the income approach, which considers a discounted future cash flow analysis using various assumptions, including projections of revenues based on assumed long-term growth rates and projections of earnings before income tax (“EBIT”), estimated costs and appropriate discount rates based on the particular reporting unit’s weighted-average cost of capital.

The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows based on forecasted EBIT margins, including future revenues, and the selection of the terminal value growth rate and the discount rate assumptions.

The goodwill balance was $1,674.5 million as of June 30, 2020, which is allocated among various reporting units.

The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows based on forecasted EBIT margins, including projections of revenues, and the selection of the terminal value growth rate and the discount rate assumptions.

The goodwill balance was $3.720 billion as of June 30, 2021, which is allocated among various reporting units.

During fiscal year 2021, the Company performed the required impairment tests of Goodwill and determined that there was no impairment.

The Company also performed a sensitivity analysis under Step 1 of the goodwill impairment test assuming hypothetical reductions in the fair values of the reporting units.

We identified goodwill as a critical audit matter because of the significant estimates and assumptions management makes to estimate the fair value of certain reporting units and the sensitivity of these reporting units’ operations to changes in demand.

Auditing the fair value of certain of the reporting units involved a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, as it relates to evaluating whether management’s judgments in determining whether the projected future operating cash flows based on forecasted EBIT margins, including future revenues, and the selection of terminal value growth rate and discount rate were appropriate.

A 10% change in their estimates of projected future operating cash flows, discount rates, or terminal value growth rates used in their calculations of the fair values of the reporting units would not result in an impairment of their goodwill.

Auditing the fair value of certain of the reporting units involved a high degree of subjectivity, including the need to involve our fair value specialists, as it relates to evaluating whether management’s judgments in determining whether the projected future operating cash flows based on forecasted EBIT margins, including projections of revenues, selection of terminal growth and the weighted-average cost of capital (used to determine the discount rate) were appropriate.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the projected future operating cash flows based on forecasted EBIT margins, including future revenues, and the selection of the terminal value growth rate and discount rate for certain of the reporting units included the following, among others:

• We tested the effectiveness of controls over goodwill, including those over the projected future operating cash flows based on forecasted EBIT margins, including future revenues, and the selection of the terminal value growth rate.

Our audit procedures related to the projected future operating cash flows based on forecasted EBIT margins, including projections of revenues, and the selection of the terminal value growth rate and discount rate for certain of the reporting units included the following, among others:

• We tested the effectiveness of controls over goodwill, including those over the projected future operating cash flows and the selection of the discount, and terminal value growth rates.

• We performed a sensitivity analysis on the future cash flows to determine what revenue and EBIT growth rate is needed to cause an impairment for each reporting unit.

• We evaluated the reasonableness of management’s projected future operating cash flows based on forecasted EBIT margins, including future revenues by comparing to (1) historical results for significant reporting units, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in Company press releases, analyst and industry reports of the Company and companies in its peer group.

• We considered the impact of changes in the regulatory environment on management’s forecasts.

• With the assistance of our fair value specialists, we evaluated the selection of the terminal value growth rate and the discount rate, including testing the underlying source information and the mathematical accuracy of the calculations by developing a range of independent estimates and comparing those to the rates selected by management.

• We evaluated the reasonableness of management’s projected future operating cash flows based on forecasted EBIT margins, including projections of revenues by comparing to (1) historical results for significant reporting units, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in Company press releases, analyst and industry reports of the Company and companies in its peer group.

• We considered the impact of changes in the regulatory environment, uncertainty in the market, and economic conditions on management’s forecasts.

• With the assistance of our fair value specialists, we evaluated the discount rates, and terminal value growth rates, including testing the underlying source information and the mathematical accuracy of the calculations by developing a range of independent estimates and comparing those to the rates selected by management.

/s/ D ELOITTE & T OUCHE LLP

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Foreign currency translation adjustments 117.6 ( 26.4 ) ( 15.0 )

Net losses on securities, net of taxes of $ 0.0 , $ 0.0 and $ 1.2 for the years ended June 30, 2020, 2019 and 2018, respectively

Pension and post-retirement liability adjustment, net of taxes of $( 0.1 ), $ 0.9 and $ 0.9 for the years ended June 30, 2021, 2020 and 2019, respectively

0.3 ( 2.8 ) ( 2.7 )

Fair market value loss on cash flow hedge, net of tax benefit of $ 2.6 , — , and — for the years ended June 30, 2021, 2020 and 2019, respectively.

Total other comprehensive income (loss), net 109.7 ( 29.2 ) ( 17.7 )

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( 2,030.9 ) ( 2,035.7 )

Accumulated other comprehensive loss (Note 19) ( 100.4 ) ( 71.2 )

Accumulated other comprehensive income (loss) (Note 19) 9.2 ( 100.4 )

Total stockholders’ equity 1,809.1 1,346.5

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Deferred income taxes 52.0 29.0 ( 3.5 )

Gain on forward foreign exchange derivative ( 66.7 ) — —

Other ( 31.7 ) ( 26.9 ) ( 37.6 )

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Software purchases and capitalized internal use software ( 48.8 ) ( 36.0 ) ( 22.0 )

Proceeds from asset sales 18.0 — —

Acquisitions, net of cash acquired ( 2,603.6 ) ( 339.1 ) ( 354.7 )

Purchase of intellectual property — — ( 40.0 )

Settlement of forward foreign exchange derivative 66.7 — —

Other investing activities ( 34.0 ) ( 3.8 ) ( 6.3 )

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Shares Amount

Balances, July 1, 2017 154.5 $ 1.6 $ 987.6 $ 1,469.4 $ ( 1,398.9 ) $ ( 55.8 ) $ 1,003.8

Balances, June 30, 2018 154.5 $ 1.6 $ 1,048.5 $ 1,727.0 $ ( 1,630.8 ) $ ( 51.9 ) $ 1,094.3

Comprehensive income (loss) — — — 482.1 — ( 17.7 ) 464.3

Stock option exercises and excess tax benefits — — 51.5 — — — 51.5

Cumulative effect of changes in accounting principle (a) — — — 102.8 — ( 1.5 ) 101.3

Stock option exercises — — 31.3 — — — 31.3

Stock-based compensation — — 58.3 — — — 58.3

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Comprehensive income (loss) — — — 462.5 — ( 29.2 ) 433.3

Cumulative effect of changes in accounting principle (a) — — — 102.8 — ( 1.5 ) 101.3

Cumulative effect of changes in accounting principle (b) — — — 0.2 — — 0.2

Stock option exercises — — 42.1 — — — 42.1

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Comprehensive income (loss) — — — 547.5 — 109.7 657.2

Cumulative effect of changes in accounting principle (b) — — — 0.2 — — 0.2

Stock option exercises — — 35.0 — — — 35.0

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(“Broadridge” or the “Company”), a Delaware corporation and a part of the S&P 500 ® Index (“S&P”), is a global financial technology leader providing investor communications and technology-driven solutions to banks, broker-dealers, asset and wealth managers and corporate issuers.

Broadridge’s services include investor communications, securities processing, data and analytics, and customer communications solutions.

Broadridge serves a large and diverse client base across four client groups:

banks/broker-dealers, asset management firms/mutual funds, wealth management firms, and corporate issuers.

For capital markets firms, Broadridge helps clients lower costs and improve the effectiveness of their trade and account processing operations with support for their operational technologies, and their administration, finance, risk and compliance requirements.

Broadridge serves asset management firms by meeting their critical needs for shareholder communications and by providing investment operations technology to support their investment decisions.

For wealth management clients, Broadridge provides an integrated platform with tools that optimize advisor productivity, enhance client experience and digitize enterprise operations.

For corporate issuer clients, Broadridge helps manage every aspect of their shareholder communications, including registered and beneficial proxy processing, annual meeting support, transfer agency services and financial disclosure document creation, management and United States of America (“U.S.”) Securities and Exchange Commission (the “SEC”) filing services.

The Company operates in two reportable segments:

Investor Communication Solutions (“ICS”) and Global Technology and Operations (“GTO”).

• Investor Communication Solutions - Broadridge provides governance and communications solutions through its Investor Communication Solutions business segment to the following financial services clients:

banks/broker-dealers, asset management firms/mutual funds, wealth management firms, and corporate issuers.

In addition to financial services firms, Broadridge’s Customer Communications business also serves companies in the healthcare, insurance, consumer finance, telecommunications, utilities, and other service industries.

• Investor Communication Solutions - Broadridge provides the following governance and communications solutions through its Investor Communication Solutions business segment:

Regulatory Solutions, Data-Driven Fund Solutions, Corporate Issuer Solutions, and Customer Communications Solutions.

A large portion of Broadridge’s ICS business involves the processing and distribution of proxy materials to investors in equity securities and mutual funds, as well as the facilitation of related vote processing.

ProxyEdge ® (“ProxyEdge”) is Broadridge’s innovative electronic proxy delivery and voting solution for institutional investors and financial advisors that helps ensure the voting participation of the largest stockholders of many companies.

Broadridge also provides the distribution of regulatory reports and corporate action/reorganization event information, as well as tax reporting solutions that help its clients meet their regulatory compliance needs.

For asset managers and retirement service providers, Broadridge offers data-driven solutions and an end-to-end platform for content management, composition, and multi-channel distribution of regulatory, marketing, and transactional information.

Broadridge has implemented digital applications to make voting easier for retail investors.

Broadridge also provides the distribution of regulatory reports, class action and corporate action/reorganization event information, as well as tax reporting solutions that help its clients meet their regulatory compliance needs.

For asset managers and retirement service providers, Broadridge offers data-driven solutions and an end-to-end platform for content management, composition, and omni-channel distribution of regulatory, marketing, and transactional information.

Broadridge’s data and analytics solutions provide investment product distribution data, analytical tools, insights, and research to enable asset managers to optimize product distribution across retail and institutional channels globally.

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(“Matrix”), Broadridge provides mutual fund trade processing services for retirement service providers, third-party administrators, financial advisors, banks and wealth management professionals.

In addition, Broadridge provides public corporations and mutual funds with a full suite of solutions to help manage their annual meeting process, including registered and beneficial proxy distribution and processing services, proxy and annual report document management solutions, virtual shareholder meeting services and solutions that help them gain insight into their shareholder base through Broadridge’s shareholder data services.

In addition, Broadridge provides public corporations and mutual funds with a full suite of solutions to help manage their annual meeting process, including registered and beneficial proxy materials distribution, proxy processing and tabulation services, digital voting solutions, proxy and shareholder report document management solutions, virtual shareholder meeting services and shareholder data services.

Broadridge also offers financial reporting document composition and management solutions, SEC disclosure and filing services, and registrar, stock transfer and record-keeping services through Broadridge Corporate Issuer Solutions.

We provide customer communications solutions which include print and digital solutions, content management, postal optimization, and fulfillment services.

These services include customer communications management capabilities through the Broadridge Communications Cloud SM platform (the “Communications Cloud”).

Through one point of integration, the Communications Cloud helps companies create, deliver, and manage multi-channel communications and customer engagement.

The platform includes data-driven composition tools, identity and preference management, multi-channel optimization and digital communication experience, archive and information management, digital and print delivery, and analytics and reporting tools.

• Global Technology and Operations - Broadridge is a leading global provider of securities processing solutions for capital markets, wealth management, and asset management firms.

Broadridge offers advanced solutions that automate the securities transaction lifecycle, from desktop productivity tools, data aggregation, performance reporting, and portfolio management to order capture and execution, trade confirmation, margin, cash management, clearance and settlement, asset servicing, reference data management, reconciliations, securities financing and collateral optimization, compliance and regulatory reporting, and portfolio accounting and custody-related services.

We provide omni-channel customer communications solutions which include print and digital solutions to modernize technology infrastructures, simplify communications processes, accelerate digital adoption and improve the customer experience.

Through one point of integration, the Broadridge Communications Cloud SM platform (the “Communications Cloud”) helps companies create, deliver, and manage their communications and customer engagement.

The platform includes data-driven composition tools, identity and preference management, omni-channel optimization and digital communication experience, archive and information management, digital and print delivery, and analytics and reporting tools.

• Global Technology and Operations - Broadridge is a leading global provider of business solutions for capital markets, and wealth and investment management firms.

Broadridge offers advanced solutions that automate firms’ transaction lifecycle, from desktop productivity tools, data aggregation, performance reporting, and portfolio management to order capture and execution, trade confirmation, margin, cash management, clearance and settlement, asset servicing, reference data management, reconciliations, securities financing and collateral optimization, compliance and regulatory reporting, and portfolio accounting and custody-related services.

In addition, Broadridge provides business process outsourcing services that support the entire trade lifecycle operations of its buy- and sell-side clients’ businesses through a combination of its technology and operations expertise.

For capital markets firms, Broadridge helps its clients lower their costs and improve the effectiveness of their businesses across the front, middle and back office.

Broadridge’s core post-trade services help financial institutions efficiently and cost-effectively consolidate their books and records, gather and service assets under management and manage risk, thereby enabling them to focus on their core business activities.

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The wealth management platform enables full-service, regional and independent broker-dealers and investment advisors to better engage with customers through digital marketing and customer communications tools.

Broadridge also integrates data, content and technology to drive new customer acquisition, support holistic advice and cross-sell opportunities through the creation of sales and educational content, including seminars as well as customizable advisor websites, search engine marketing and electronic and print newsletters.

Broadridge also integrates data, content and technology to drive new customer acquisition, support holistic and personalized advice and cross-sell opportunities through the creation of sales and educational content, including seminars as well as customizable advisor websites, search engine marketing and electronic and print newsletters.

Broadridge’s advisor solutions help advisors optimize their practice management through customer and account data aggregation and reporting.

Broadridge offers buy-side technology solutions for the global investment management industry, including portfolio management, compliance and operational workflow solutions for hedge funds, family offices, investment managers and the providers that service this space.

Through Broadridge’s Managed Services, Broadridge provides business process outsourcing services that support the entire trade lifecycle operations of its buy- and sell-side clients’ businesses through a combination of its technology and operations expertise.

Broadridge also provides support for advisor, investor and compliance workflow.

With the recent acquisition of Itiviti Holding AB (“Itiviti”), Broadridge has strengthened its capabilities with a set of front-office trade order and execution management solutions, connectivity and network offerings which will integrate with its existing middle and back-office solutions.

Broadridge also offers buy-side technology solutions for the global investment management industry, including portfolio management, compliance and operational workflow solutions for hedge funds, family offices, alternative asset managers, traditional asset managers and the providers that service this space.

Consolidation and Basis of Presentation .

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Amounts presented may not sum due to rounding.

Certain prior period amounts have been reclassified to conform to the current year presentation where applicable, except as it relates to (i) Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) No.

Certain prior period amounts have been reclassified to conform to the current year presentation where applicable, except as it relates to Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) No.

2016-02 “Leases”, as amended (“ASU No.

2016-02”), (ii) No.

2014-09 “Revenue from Contracts with Customers” and its related amendments (collectively “ASU No.

2014-09”), (iii) ASU No.

2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU No.

2016-01”), and (iv) ASU No.

2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU No.

2018-02”), as described further below.

Effective July 1, 2019, the Company adopted ASU No.

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2016-02, as amended, is included in Note 2, “Summary of Significant Accounting Policies” and Note 8, “Leases”.

Effective July 1, 2018, the Company adopted ASU No.

2014-09 using the modified retrospective transition approach applied to all contracts.

Under this transition approach, the Company has not restated the prior period Consolidated Financial Statements presented to the current period presentation.

Additional information about the Company’s revenue recognition policies and the related impact of the adoption of ASU No.

2014-09 is included in Note 2, “Summary of Significant Accounting Policies” and Note 3, “Revenue Recognition”.

Effective July 1, 2018, the Company adopted ASU No.

2016-01, which requires changes in the fair value of publicly traded equity securities for which the Company does not have significant influence to be recorded as part of Net earnings rather than as Other comprehensive income (loss), net.

In addition, equity investments that do not have a readily determinable fair value will be recorded at cost less impairment as further adjusted for observable price changes in orderly transactions for identical or similar investments of the issuer.

The Company adopted ASU No.

2016-01 using the modified-retrospective transition approach by recording the cumulative effect of previously unrecognized gains or losses on publicly traded equity securities to retained earnings as of July 1, 2018.

The provisions of ASU No.

2016-01 relative to equity investments that do not have a readily determinable fair value have been applied prospectively.

The Consolidated Financial Statements have not been revised for periods prior to July 1, 2018.

The impact of adopting ASU No.

2016-01 resulted in a reclassification of less than $ 0.1 million in unrealized gains, net from accumulated other comprehensive loss to retained earnings as of July 1, 2018.

Effective July 1, 2018, the Company adopted ASU No.

2018-02, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects associated with the change in the U.S.

federal corporate tax rate resulting from the U.S.

Tax Cuts and Jobs Act (the “Tax Act”) enacted in December 2017.

The adoption of ASU No.

2018-02 resulted in an increase to retained earnings of $ 1.5 million.

Effective July 1, 2018, the Company adopted ASU No.

2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU No.

2017-07”) whereby the Company revised its presentation in the Consolidated Statements of Earnings to reflect the non-service cost components of net benefit cost as part of Other nonoperating income (expenses), net, which were previously recorded as part of Total operating expenses.

All prior period information has been conformed to the current period presentation.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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In addition, revenue is also generated from the fulfillment of professional services engagements which are generally priced on a time and materials or fixed price basis, and are recognized as the services are provided to the client which corresponds to the timing of transfer of value to the client.

Finally, the Company recognizes license revenues from software term licenses installed on clients’ premises upon delivery and acceptance of the software license, assuming a contract is deemed to exist.

Finally, the Company generally recognizes license revenues from software term licenses installed on clients’ premises upon delivery and acceptance of the software license, assuming a contract is deemed to exist, and recognizes revenue attributed to the associated software maintenance and support obligation over the contract term.

Software term license revenue is not a significant portion of the Company’s revenues.

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The fair value of the Company’s long-term fixed-rate senior notes is based on quoted market prices.

Refer to Note 13, “Borrowings,” for a further description of the Company’s long-term fixed-rate senior notes.

Refer to Note 13, “Borrowings,” for a further description of the Company’s long-term fixed-rate senior notes as well as Note 7, “Fair Value of Financial Instruments” for additional details on the fair value of the Company’s financial instruments.

Property, Plant and Equipment.

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In determining whether a security without a readily determinable fair value is impaired, management considers qualitative factors to identify an impairment including the financial condition and near-term prospects of the issuer.

Refer to Note 7, “Fair Value of Financial Instruments” for additional details on the fair value of the Company’s securities.

Inventories are stated at the lower of cost (determined on a first-in, first-out basis) or market.

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The estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of the Company’s routine, long-range planning process.

If the carrying amount of reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess.

The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination is determined.

If the carrying amount of the reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess not to exceed the total amount of goodwill allocated to that reporting unit.

Refer to Note 10, “Goodwill and Intangible Assets, Net” for a further description on the Company’s accounting for goodwill.

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The majority of our clients operate in the financial services industry.

In the fiscal years ended June 30, 2020, 2019 and 2018, we derived approximately 20 % , 22 % and 21 % of our consolidated revenues from our five largest clients in that particular fiscal year, respectively.

Our largest single client in each of our fiscal years 2021, 2020 and 2019 accounted for approximately 6 % of our consolidated revenues.

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Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU No.

2018-15, “Intangibles - Goodwill and Other - Internal-Use Software:

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU No.

2018-15”), which aligns the requirements for capitalizing implementation costs incurred in a cloud computing hosting arrangement that is a service contract with the requirements under GAAP for capitalizing implementation costs incurred to develop or obtain internal-use software.

2018-15 became effective for the Company beginning in the first quarter of fiscal year 2021.

Entities are permitted to apply either a retrospective or prospective transition approach to adopt the guidance, for which the Company elected to adopt ASU No.

2018-15 on a prospective basis.

The adoption of ASU No.

2018-15 did not have a material impact on the Company's Consolidated Financial Statements.

In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments - Credit Losses” (“ASU No.

2016-13”), which prescribes an impairment model for most financial instruments based on expected losses rather than incurred losses.

Under this model, an estimate of expected credit losses over the contractual life of the instrument is to be recorded as of the end of a reporting period as an allowance to offset the amortized cost basis, resulting in a net presentation of the amount expected to be collected on the financial instrument.

The expected credit loss model incorporates historical collection experience and other factors, including those related to current market conditions and events.

The Company monitors trade receivable balances and other related assets, and estimates the allowance for lifetime expected credit losses.

2016-13 became effective for the Company in the first quarter of fiscal year 2021.

For most instruments, entities must apply the standard using a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The adoption of ASU No.

2016-13 did not have a material impact on the Company's Consolidated Financial Statements.

In February 2016, the FASB issued ASU No.

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2016-02, as amended, did not have a material impact on the Consolidated Statements of Earnings, the Consolidated Statements of Comprehensive Income, the Consolidated Statements of Cash Flows, or the Consolidated Statements of Stockholders’ Equity.

Effective July 1, 2018, the Company adopted ASU No.

2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most prior revenue recognition guidance, including industry specific requirements.

It also includes guidance on accounting for the incremental costs of obtaining and costs incurred to fulfill a contract with a customer.

The core principle of the revenue model is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

2014-09 also requires certain enhanced disclosures, including disclosures on the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers.

The Company identified certain impacts of ASU No.

2014-09 on its Consolidated Financial Statements.

Specifically, under ASU No.

2014-09, the Company now capitalizes certain sales commissions, and it capitalizes certain additional costs that are part of setting up or converting a client’s systems to function with the Company’s technology, both of which were previously expensed.

Additionally, the Company now recognizes proxy revenue primarily at the time of proxy materials distribution to the client’s shareholders rather than on the date of the client’s shareholder meeting, which is typically 30 days after the proxy materials distribution.

Other changes to the timing of revenue recognition include deferral of revenue from certain transaction processing platform enhancements as well as acceleration of revenue from certain multi-year software license arrangements that was previously recognized over the term of the software subscription.

The Company adopted ASU No.

2014-09 effective July 1, 2018 using the modified retrospective transition method applied to all contracts, which resulted in a cumulative-effect increase in the opening balance of retained earnings of $ 101.3 million, most notably related to the deferral of incremental sales commissions incurred in obtaining contracts in prior periods.

Under this transition approach, the Company did not restate the prior period Consolidated Financial Statements presented.

See Note 3, “Revenue Recognition” for additional information about the Company’s revenue recognition policies.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU No.

2018-15, “Intangibles - Goodwill and Other - Internal-Use Software:

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU No.

2018-15 will be effective for the Company beginning in the first quarter of fiscal year 2021.

Entities are permitted to apply either a retrospective or prospective transition approach to adopt the guidance.

The pending adoption of this guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.

In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments - Credit Losses” (“ASU No.

2016-13”), which prescribes an impairment model for most financial instruments based on expected losses rather than incurred losses.

2016-13 is effective for the Company in the first quarter of fiscal year 2021.

For most instruments, entities must apply the standard using a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

The pending adoption of this guidance is not expected to have a material impact on the Company's Consolidated Financial Statements.

Subsequent Events.

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Distribution revenues primarily include revenues related to the physical mailing of proxy materials, interim communications, transaction reporting, customer communications and fulfillment services, as well as Matrix administrative services.

Fiscal Year Ended June 30, 2020 Fiscal Year Ended June 30, 2019

(in millions) (in millions)

In the second quarter of fiscal year 2021, the Company changed its presentation of disaggregated revenue by product line disclosures to reflect internal realignment of the Company’s revenue reporting, specifically as it relates to recurring fee revenues.

Presentation of disaggregated revenue by product line disclosures in prior periods have been changed to conform to the current period presentation.

Years ended June 30,

2021 2020 2019

(in millions)

Investor Communication Solutions

Equity proxy $ 473.3 $ 437.0

Mutual fund and exchange traded funds (“ETF”) interims 284.6 265.9

Customer communications and fulfillment 735.4 736.4

Other ICS 368.7 324.8

Regulatory $ 953.6 $ 792.5 $ 750.4

Data-driven fund solutions 358.0 339.4 303.9

Issuer 189.0 156.7 137.1

Customer communications 574.2 573.4 572.6

Total ICS Recurring fee revenues 2,074.8 1,862.0 1,764.0

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Global Technology and Operations

Equities and other $ 996.2 $ 831.7

Fixed income 178.0 164.6

Capital markets $ 700.5 $ 650.2 $ 590.6

Wealth and investment management 557.6 524.0 405.7

Total GTO Recurring fee revenues 1,258.1 1,174.2 996.3

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2021 June 30,

2020 June 30,

(in millions)

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Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period.

During the fiscal year ended June 30, 2020, contract assets increased primarily due to an increase in software term license revenues recognized but not yet invoiced, while contract liabilities increased primarily due to recent acquisitions and the timing of client payments.

The Company recognized $ 141.2 million of revenue during the fiscal year ended June 30, 2020 that was

included in the contract liability balance as of June 30, 2019.

The Company recognized $ 96.4 million of revenue during the fiscal year ended June 30, 2019 that was included in the contract liability balance as of July 1, 2018.

EARNINGS PER SHARE

During the fiscal year ended June 30, 2021, contract liabilities increased primarily due to a combination of recent acquisitions, growth in revenues and the timing of client payments.

The Company recognized $ 158.7 million of revenue during the fiscal year ended June 30, 2021 that was included in the contract liability balance as of June 30, 2020.

The Company recognized $ 141.2 million of revenue during the fiscal year ended June 30, 2020 that was included in the contract liability balance as of June 30, 2019.

The Company recognized $ 96.4 million of revenue during fiscal year ended June 30, 2019 that was included in the contract liability balance as of July 1, 2018.

WEIGHTED-AVERAGE SHARES OUTSTANDING

Basic earnings per share (“EPS”) is calculated by dividing the Company’s Net earnings by the basic Weighted-average shares outstanding for the periods presented.

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Diluted 117.8 117.0 118.8

The following table sets forth the computation of basic EPS utilizing Net earnings for the following fiscal years and the Company’s basic Weighted-average shares outstanding:

Years ended June 30,

2020 2019 2018

(in millions, except per share

Net earnings $ 462.5 $ 482.1 $ 427.9

Basic Weighted-average shares outstanding 114.7 115.9 116.8

Basic EPS $ 4.03 $ 4.16 $ 3.66

The following table sets forth the computation of diluted EPS utilizing Net earnings for the following fiscal years and the Company’s diluted Weighted-average shares outstanding:

Years ended June 30,

2020 2019 2018

(in millions, except per share

Net earnings $ 462.5 $ 482.1 $ 427.9

Diluted Weighted-average shares outstanding 117.0 118.8 120.4

Diluted EPS $ 3.95 $ 4.06 $ 3.56

INTEREST EXPENSE, NET

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The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed is allocated to Goodwill.

Pro forma supplemental financial information for all acquisitions is not provided as the impact of these acquisitions on the Company’s operating results was not material for any acquisition individually or in the aggregate.

The Company is providing unaudited pro forma supplemental information for the Itiviti Acquisition as the Company deemed this acquisition to be material to the Company’s operating results.

Unaudited pro forma supplemental financial information for all acquisitions, excluding Itiviti, is not provided as the impact of these acquisitions on the Company’s operating results, financial position or cash flows was not material for any acquisition individually.

The following represents the fiscal year 2021 acquisitions:

BUSINESS COMBINATIONS

Financial information on each transaction is as follows:

Itiviti Advisor-Stream Total

(in millions)

Cash payments, net of cash acquired $ 2,580.4 $ 23.2 $ 2,603.6

Deferred payments, net — 2.9 2.9

Contingent consideration liability — 7.3 7.3

Aggregate purchase price $ 2,580.4 $ 33.4 $ 2,613.8

Net tangible assets acquired / (liabilities assumed) $ ( 256.6 ) $ ( 3.0 ) $ ( 259.6 )

Goodwill 1,932.4 25.8 1,958.2

Intangible assets 904.6 10.5 915.1

Aggregate purchase price $ 2,580.4 $ 33.4 $ 2,613.8

In May 2021, the Company acquired Itiviti, a leading provider of trading and connectivity technology to the capital markets industry.

The acquisition of Itiviti extends the Company’s market-leading back office capabilities into the front office and deepens its multi-asset class solutions, better enabling the Company to help its clients adapt to a rapidly evolving marketplace.

Itiviti is included in the Company’s GTO reportable segment.

• Goodwill is not tax deductible.

• Intangible assets acquired consist primarily of customer relationships and software technology, which are being amortized over a seven-year life and five-year life, respectively.

The allocation of the purchase price will be finalized upon completion of the analysis of the fair values of the acquired business’ assets and liabilities.

The following summarizes the allocation of purchase price for the Itiviti acquisition (in millions):

Accounts receivable $ 39.9

Other current assets 14.1

Property, plant and equipment 9.4

Intangible assets 904.6

Goodwill 1,932.4

Other non-current assets 28.7

Payables and accrued expenses ( 45.8 )

Current contract liabilities ( 58.1 )

Deferred taxes ( 211.6 )

Other long term liabilities ( 33.2 )

Consideration paid, net of cash acquired $ 2,580.4

Unaudited Pro Forma Financial Information

The unaudited pro forma condensed consolidated results of operations in the table below are provided for illustrative purposes only and summarize the combined results of operations of Broadridge and Itiviti.

For purposes of this pro forma presentation, the acquisition of Itiviti is assumed to have occurred on July 1, 2019.

The pro forma financial information for all periods presented also includes the estimated business combination accounting effects resulting from this acquisition, notably amortization expense from the acquired intangible assets, interest expense from recent debt financing, the proceeds of which were used to fund the acquisition, and certain other integration related impacts.

This unaudited pro forma financial information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisition had actually occurred on July 1, 2019, nor of the results of operations that may be obtained in the future.

Years ended June 30,

(in millions)

Revenues $ 5,221.7 $ 4,723.4

Net earnings $ 514.9 $ 367.5

Basic earnings per share $ 4.45 $ 3.21

Diluted earnings per share $ 4.37 $ 3.14

AdvisorStream

In June 2021, the Company acquired AdvisorStream, a leading provider of digital engagement and marketing solutions for the global wealth and insurance industries.

AdvisorStream's advisor marketing platform enables advisors to drive revenue and growth by providing personalized and consistent client communications.

AdvisorStream is included in the Company’s GTO reportable segment.

• Goodwill is not tax deductible.

• Intangible assets acquired consist primarily of customer relationships and software technology, which are being amortized over a five-year life and five-year life, respectively.

The allocation of the purchase price will be finalized upon completion of the analysis of the fair values of the acquired business’ assets and liabilities.

The following represents the fiscal year 2020 acquisitions:

Fiscal Year 2020 Acquisitions:

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Financial information on each transaction is as follows:

Shadow Financial Fi360 Clear-Structure Funds-Library Total

Shadow Financial Fi360 Clear-Structure Funds-Library Other Acquisitions Total

(in millions)

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• Intangible assets acquired consist primarily of customer relationships and software technology, which are being amortized over a seven-year life and five-year life, respectively.

The allocation of the purchase price will be finalized upon completion of the analysis of the fair values of the acquired business’ assets and liabilities.

• In fiscal year 2021, the Company settled deferred payment obligations totaling $ 3.0 million.

In November 2019, the Company acquired Fi360, a provider of fiduciary and Regulation Best Interest solutions for the wealth and retirement industry, including the accreditation and continuing education for the Accredited Investment Fiduciary ® Designation, the leading designation focused on fiduciary responsibility.

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• Intangible assets acquired consist primarily of customer relationships and software technology, which are being amortized over a seven-year life and five-year life, respectively.

The allocation of the purchase price will be finalized upon completion of the analysis of the fair values of the acquired business’ assets and liabilities.

• In fiscal year 2021, the Company settled deferred payment obligations totaling $ 3.5 million.

ClearStructure Financial Technology, LLC (“ClearStructure”)

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• Intangible assets acquired consist primarily of customer relationships and software technology, which are being amortized over a seven-year life and five-year life, respectively.

The allocation of the purchase price will be finalized upon completion of the analysis of the fair values of the acquired business’ assets and liabilities, and is still subject to a working capital adjustment.

• In fiscal year 2021, the Company settled deferred payment obligations totaling $ 2.2 million.

FundsLibrary Limited (“FundsLibrary”)

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FundsLibrary's solutions enable fund managers to increase distribution opportunities and help them comply with regulations such as Solvency II and MiFID II.

The business will be combined with FundAssist Limited (“FundAssist”) , Broadridge's existing European funds regulatory communications business.

The combined solution provides funds with a single, integrated provider to manage data, perform calculations, compose documents, manage regulatory compliance and disseminate information across multiple jurisdictions .

The business was combined with FundAssist Limited (“FundAssist”) , Broadridge's existing European funds regulatory communications business.

The combination of FundsLibrary's data platform and technology with Broadridge's existing fund calculation, document creation and translation capabilities, creates an end-to-end solution for fund managers and distributors, enabling them to respond to demanding regulatory requirements across multiple jurisdictions.

FundsLibrary is included in our ICS reportable segment.

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• Intangible assets acquired consist primarily of customer relationships and software technology, which are being amortized over a seven-year life and three-year life, respectively.

The following represents the fiscal year 2019 acquisitions:

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• Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a four-year life and six-year life, respectively.

• In the first quarter of fiscal year 2020, the Company settled deferred payment obligations totaling $ 0.5 million.

• In fiscal year 2020, the Company settled deferred payment obligations totaling $ 0.5 million.

RPM Technologies (“RPM”)

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RPM is included in our GTO reportable segment.

• The contingent consideration liability is payable over the next two years upon the achievement by the acquired business of certain revenue targets, and has a maximum potential pay-out of $ 3.7 million upon the achievement in full of the defined financial targets by the acquired business.

• The fair value of the contingent consideration liability at June 30, 2020 is $ 0.8 million.

• Goodwill is partially tax deductible.

• Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a five-year life and seven-year life, respectively.

• In the first quarter of fiscal year 2020, the Company settled deferred payment obligations totaling $ 40.9 million.

• In fiscal year 2020, the Company settled deferred payment obligations totaling $ 40.9 million.

Retirement Plan Custody and Trust Assets from TD Ameritrade

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• Intangible assets acquired consist of customer relationships, which are being amortized over a seven-year life.

The following represents the fiscal year 2018 acquisitions:

Fiscal Year 2018 Acquisitions:

BUSINESS COMBINATIONS

Financial information on each transaction is as follows:

Summit ActivePath FundAssist Total

(in millions)

Cash payments, net of cash acquired $ 26.4 $ 21.8 $ 41.3 $ 89.5

Deferred payments, net

1.4 2.4 — 3.8

Contingent consideration liability (acquisition date fair value)

2.7 — 6.4 9.2

Aggregate purchase price

$ 30.6 $ 24.2 $ 47.7 $ 102.5

Net tangible assets acquired / (liabilities assumed)

$ 0.2 $ ( 10.0 ) $ ( 1.9 ) $ ( 11.7 )

18.5 28.7 29.2 76.3

Intangible assets

12.0 5.6 20.4 38.0

Aggregate purchase price

$ 30.6 $ 24.2 $ 47.7 $ 102.5

Summit Financial Disclosure, LLC (“Summit”)

In October 2017, the Company acquired Summit , a full service financial document management solutions provider, including document composition and regulatory filing services.

Summit is included in our ICS reportable segment.

• The contingent consideration liability is payable over the next three years upon the achievement by the acquired business of certain revenue and earnings targets, and has a maximum potential pay-out of $ 11.0 million upon the achievement in full of the defined financial targets by the acquired business.

• The fair value of the contingent consideration liability at June 30, 2020 is $ 7.3 million.

• Goodwill is primarily tax deductible.

• Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a five -year life and seven -year life, respectively.

ActivePath Solutions LTD “(ActivePath”)

In March 2018, the Company acquired ActivePath, a digital technology company with technology that enhances the consumer experience associated with consumer statements, bills and regulatory communications.

ActivePath is included in our ICS reportable segment.

• Goodwill is not tax deductible.

• Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a five -year life and two -year life, respectively.

FundAssist Limited (“FundAssist”)

In May 2018, the Company acquired FundAssist, a regulatory, marketing and sales solutions service provider to the global investments industry.

FundAssist is included in our ICS reportable segment.

• The contingent consideration liability contains a revenue component which will be settled in fiscal year 2021, based on the achievement of a defined revenue target by the acquired business.

• The fair value of the contingent consideration liability at June 30, 2020 is $ 5.3 million.

• Goodwill is not tax deductible.

• Intangible assets acquired consist primarily of customer relationships and software technology, which are being amortized over a six -year life and five -year life, respectively.

ASSET ACQUISITION

Purchase of Intellectual Property

In February 2018, the Company paid $ 40.0 million to an affiliate of Inveshare, Inc.

(“Inveshare”) for the delivery of blockchain technology applications, as contemplated as part of the Company’s acquisition of intellectual property assets from Inveshare.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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Cash and cash equivalents:

Money market funds (1) $ 150.1 $ — $ — $ 150.1

Money market funds (a) $ — $ — $ — $ —

Other current assets:

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Cash and cash equivalents:

Money market funds (1) $ 68.1 $ — $ — $ 68.1

Money market funds (a) $ 150.1 $ — $ — $ 150.1

Other current assets:

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Total liabilities as of June 30, 2020 $ — $ — $ 33.1 $ 33.1

(1) Money market funds include money market deposit account balances of $ 150.1 million and $ 30.1 million as of June 30, 2020 and 2019, respectively.

(a) Money market funds include money market deposit account balances of $ 0.0 million and $ 150.1 million as of June 30, 2021 and 2020, respectively.

In addition, the Company has non-marketable securities with a carrying amount of $ 37.5 million as of June 30, 2021 and $ 33.3 million as of June 30, 2020 that are classified as Level 2 financial assets and included as part of Other non-current assets.

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Additional contingent consideration incurred 7.3 7.0

Net increase in contingent consideration liability 1.0 3.6

Foreign currency impact on contingent consideration liability ( 0.7 ) ( 0.6 )

Net increase (decrease) in contingent consideration liability ( 1.5 ) 1.0

Foreign currency impact 1.8 ( 0.7 )

Payments ( 17.5 ) ( 2.6 )

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Components of Lease Cost (a)

Fiscal Year Ended

June 30, 2020

Years ended June 30,

(in millions)

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(a) Lease cost is included within Cost of revenues and Selling, general and administrative expenses, dependent upon the nature and use of the ROU asset, in the Company’s Consolidated Statements of Earnings.

Rent expense for all operating leases was $ 49.0 million during the year ended June 30, 2019 (under Accounting Standards Codification (“ASC”) 840 (Leases)).

Supplemental Cash Flow Information

Fiscal Year Ended

June 30, 2020

Years ended June 30,

(in millions)

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ROU assets obtained in exchange for operating lease liabilities $ 24.4 $ 89.6

Maturity of Lease Liabilities under Accounting Standards Codification (“ASC”) 842 (Leases)

Maturity of Lease Liabilities under ASC 842 (Leases)

Future rental payments on leases with initial non-cancellable lease terms in excess of one year were due as follows at June 30, 2021:

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Present value of operating lease liabilities $ 303.3

Maturity of Lease Liabilities under ASC 840 (Leases)

Future minimum rental payments on leases with initial non-cancellable lease terms in excess of one year were due as follows at June 30, 2019:

Years Ending June 30, (In millions)

Thereafter 204.4

Total lease payments $ 406.5

Rent expense for all operating leases was $ 49.0 million and $ 50.4 million during the year ended June 30, 2019 and 2018, respectively.

PROPERTY, PLANT AND EQUIPMENT, NET

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Goodwill, gross, at July 1, 2019 $ 913.1 $ 586.9 $ 1,500.0

Transfers (a) ( 2.8 ) 2.8 —

Additions 131.6 69.9 201.5

Fair value adjustments (b) 7.4 — 7.4

Foreign currency translation and other ( 5.1 ) ( 13.0 ) ( 18.1 )

Fair value adjustments (a) ( 0.2 ) ( 8.8 ) ( 9.0 )

Accumulated impairment losses — — —

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Foreign currency translation and other 16.5 71.2 87.7

Fair value adjustments (b) ( 0.2 ) ( 8.8 ) ( 9.0 )

Fair value adjustments (a) 0.2 ( 0.5 ) ( 0.4 )

Accumulated impairment losses — — —

Goodwill, net, at June 30, 2021 $ 1,056.1 $ 2,664.0 $ 3,720.1

(a) In connection with an organizational change made in the first quarter of fiscal year 2020, in order to further align and enhance our portfolio of services, the results for the Company's wealth management Advisor Solutions services that were previously reported in our Investor Communication Solutions reportable segment are now reported within the Global Technology and Operations reportable segment.

As a result, $ 2.8 million of goodwill was reclassified from the ICS segment to the GTO segment based on a relative fair value analysis.

(b) Fair value adjustments includes adjustments to goodwill as part of finalization of the purchase price allocations.

(a) Fair value adjustments includes adjustments to goodwill as part of finalization of the purchase price allocations.

Additions for the fiscal year ended June 30, 2021 include $ 1,932.4 million and $ 25.8 million, for the acquisition of Itiviti and AdvisorStream, respectively.

Additions for the fiscal year ended June 30, 2020 include $ 17.6 million, $ 84.4 million, $ 44.2 million and $ 39.2 million for the acquisitions of Shadow Financial, Fi360, ClearStructure and FundsLibrary, respectively.

Additions for the fiscal year ended June 30, 2019 include $ 31.1 million, $ 181.6 million and $ 27.1 million for the acquisitions of Rockall, RPM and TD Ameritrade, respectively.

During fiscal years 2021, 2020 and 2019, the Company performed the required impairment tests of Goodwill and determined that there was no impairment.

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$ 2,236.8 $ ( 811.8 ) $ 1,425.0 $ 1,208.1 $ ( 624.4 ) $ 583.8

In fiscal year 2020 there were no asset retirements related to fully amortized intangibles.

In fiscal year 2019, intangible assets and accumulated amortization were reduced by $ 0.2 million for asset retirements related to fully amortized intangibles.

Other intangibles consist of capitalized internal use software and the following intangible assets acquired in business acquisitions:

intellectual property, covenants, patents, and trademarks.

Other intangibles consist primarily of capitalized internal use software.

All of the intangible assets have finite lives and as such, are subject to amortization.

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ROU assets (a) 262.0 292.6

Long-term investments 194.0 141.6

Deferred sales commissions costs 108.6 104.4

Contract assets (b) 89.8 81.9

Deferred data center costs (c) 24.5 29.0

Long-term investments 141.6 100.4

Long-term broker fees 48.7 32.8

Deferred data center costs (c) 24.3 24.5

Other 35.0 30.2

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Accrued dividend payable 66.8 62.2

Managed services administration fees 59.4 53.1

Business process outsourcing administration fees 66.1 59.4

Customer deposits 55.5 44.5

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Current portion of long-term debt

Fiscal 2014 Senior Notes (a) September 2020 $ 400.0 $ 399.9 $ — — $ 402.1

Fiscal 2014 Senior Notes September 2020 $ — $ — $ 399.9 $ — $ —

Total $ — $ — $ 399.9 $ — $ —

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Fiscal 2021 Revolving Credit Facility:

dollar tranche March 2024 $ — $ — $ 360.0 $ 1,100.0 $ —

Multicurrency tranche March 2024 149.8 149.8 215.7 250.2 149.8

dollar tranche April 2026 $ 20.0 $ 20.0 $ — $ 1,080.0 $ 20.0

Multicurrency tranche April 2026 94.4 94.4 149.8 305.6 94.4

Total Revolving Credit Facility $ 114.4 $ 114.4 $ 149.8 $ 1,385.6 $ 114.4

Fiscal 2014 Senior Notes (a) September 2020 — — 399.2 — —

Fiscal 2021 Term Loans May 2024 $ 1,550.0 $ 1,543.4 $ — $ — $ 1,550.0

Fiscal 2016 Senior Notes June 2026 $ 500.0 $ 496.7 $ 496.1 $ — $ 549.0

Fiscal 2020 Senior Notes December 2029 750.0 742.5 741.7 — 791.3

Fiscal 2021 Senior Notes May 2031 1,000.0 990.6 — — 1,021.1

Total Senior Notes $ 2,250.0 $ 2,229.8 $ 1,237.8 $ — $ 2,361.4

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Total debt $ 3,914.4 $ 3,887.6 $ 1,787.5 $ 1,385.6 $ 4,025.9

(a) The Fiscal 2014 Senior Notes were reclassified from Long-term debt to Current portion of long-term debt in September 2019 to reflect the remaining maturity of less than a year.

Future principal payments on the Company’s outstanding debt are as follows:

Years ending June 30, 2021 2022 2023 2024 2025 Thereafter Total

(in millions) $ 400.0 $ — $ — $ 149.8 $ — $ 1,250.0 $ 1,799.8

Future principal payments on the Company’s outstanding debt are as follows (in millions):

2022 2023 2024 2025 2026 Thereafter Total

Years ending June 30, $ — $ — $ 1,550.0 $ — $ 614.4 $ 1,750.0 $ 3,914.4

Fiscal 2021 Revolving Credit Facility:

On March 18, 2019, the Company entered into an amended and restated $ 1.5 billion five -year revolving credit facility (the “Fiscal 2019 Revolving Credit Facility”), which replaced the $ 1.0 billion five -year revolving credit facility entered into during February 2017 (the “Fiscal 2017 Revolving Credit Facility”) (together the “Revolving Credit Facilities”).

In April 2021, the Company entered into an amended and restated $ 1.5 billion five-year revolving credit facility (the “Fiscal 2021 Revolving Credit Facility”), which replaced the $ 1.5 billion five-year revolving credit facility entered into during March 2019 (the “Fiscal 2019 Revolving Credit Facility”) (together the “Revolving Credit Facilities”).

The Fiscal 2021 Revolving Credit Facility is comprised of a $ 1.1 billion U.S.

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The fair value of the variable-rate Fiscal 2021 Revolving Credit Facility borrowings at June 30, 2021 approximates carrying value and has been classified as a Level 2 financial liability (as defined in Note 7, “Fair Value of Financial Instruments”).

Borrowings under the Fiscal 2019 Revolving Credit Facility can be made in tranches up to 360 days and bear interest at LIBOR plus 101.5 basis points.

In addition, the Fiscal 2019 Revolving Credit Facility has an annual facility fee equal to 11.0 basis points on the entire facility.

Under the Fiscal 2021 Revolving Credit Facility, revolving loans denominated in U.S.

Dollars, Canadian Dollars, Euro, Yen, and Swedish Kronor initially bear interest at LIBOR, CDOR, EURIBOR, TIBOR and STIBOR, respectively, plus 1.015 % per annum (subject to step-ups to 1.175 % and step-downs to 0.805 % based on ratings) and revolving loans denominated in Sterling initially bear interest at SONIA plus 1.0476 % per annum (subject to step-ups to 1.2076 % and step-downs to 0.8376 % based on ratings).

The Fiscal 2021 Revolving Credit Facility also has an annual facility fee equal to 11.0 basis points on the entire facility (subject to step-ups to 20.0 basis points and step-downs to 7.0 basis points based on ratings).

The Company may voluntarily prepay, in whole or in part and without premium or penalty, borrowings under the Fiscal 2021 Revolving Credit Facility in accordance with individual drawn loan maturities.

The Fiscal 2019 Revolving Credit Facility is subject to certain covenants, including a leverage ratio.

The Fiscal 2021 Revolving Credit Facility is subject to certain

covenants, including a leverage ratio.

At June 30, 2021, the Company is in compliance with all covenants of the Fiscal 2021 Revolving Credit Facility.

Fiscal 2021 Term Loans:

In March 2021, the Company entered into a term credit agreement (“Term Credit Agreement”) providing for term loan commitments in an aggregate principal amount of $ 2.55 billion, comprised of a $ 1.0 billion tranche (“Tranche 1”) and a $ 1.55 billion tranche (“Tranche 2,” together with Tranche 1, the “Fiscal 2021 Term Loans”).

The Company borrowed the Fiscal 2021 Term Loans in May 2021 in order to finance the Itiviti acquisition.

Once borrowed, amounts repaid or prepaid in respect of such Fiscal 2021 Term Loans may not be reborrowed.

The Tranche 1 Loans was to mature on the date that is 18 months after the date on which the Fiscal 2021 Term Loans are borrowed (the “Funding Date”), but was repaid in full in May 2021 with proceeds from the Fiscal 2021 Senior Notes (as discussed further below).

The Tranche 2 Loan will mature in May 2024 on the third anniversary of the Funding Date.

The proceeds of the Fiscal 2021 Term Loans were used by the Company to solely finance the acquisition of Itiviti and pay certain fees and expenses in connection therewith.

The Tranche 2 Loan bears interest at LIBOR plus 0.875 % per annum (subject to step-ups to LIBOR plus 1.250 % or a step-down to LIBOR plus 0.750 % based on ratings).

The Company may voluntarily prepay, in whole or in part and without premium or penalty.

In the event of receipt of cash proceeds by the Company or its subsidiaries from certain incurrences of indebtedness, certain equity issuances, and certain sales, transfers or other dispositions of assets, the Company will be required to prepay outstanding Loans, subject to certain limitations and qualifications as set forth in the Term Credit Agreement.

The Term Credit Agreement is subject to certain covenants, including a leverage ratio.

At June 30, 2021, the Company is in compliance with all covenants of the Fiscal 2021 Term Loans.

Fiscal 2014 Senior Notes :

In August 2013, the Company completed an offering of $ 400.0 million in aggregate principal amount of senior notes (the “Fiscal 2014 Senior Notes”).

The Fiscal 2014 Senior Notes will mature on September 1, 2020 and bear interest at a rate of 3.95 % per annum.

Interest on the Fiscal 2014 Senior Notes is payable semi-annually in arrears on March 1st and September 1st of each year.

The Fiscal 2014 Senior Notes were issued at a price of 99.871 % (effective yield to maturity of 3.971 %).

The indenture governing the Fiscal 2014 Senior Notes contains certain covenants including covenants restricting the Company’s ability to create or incur liens securing indebtedness for borrowed money and to enter into certain sale-leaseback transactions.

At June 30, 2020, the Company is in compliance with the covenants of the indenture governing the Fiscal 2014 Senior Notes.

The indenture also contains covenants regarding the purchase of the Fiscal 2014 Senior Notes upon a change of control triggering event.

The Company may redeem the Fiscal 2014 Senior Notes in whole or in part at any time before their maturity.

The fair value of the fixed-rate Fiscal 2014 Senior Notes at June 30, 2020 and 2019 was $ 402.1 million and $ 405.4 million, respectively, based on quoted market prices and has been classified as a Level 1 financial liability (as defined in Note 7, “Fair Value of Financial Instruments”).

In August 2013, the Company completed an offering of $ 400.0 million in aggregate principal amount of senior notes (the “Fiscal 2014 Senior Notes”), which bore interest at a rate of 3.95 % per annum.

On September 1, 2020 the Company repaid in full the $ 400.0 million in Fiscal 2014 Senior Notes that were outstanding at their maturity date.

Fiscal 2016 Senior Notes:

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The Fiscal 2016 Senior Notes were issued at a price of 99.589 % (effective yield to maturity of 3.449 %).

The indenture governing the Fiscal 2016 Senior Notes contains certain covenants including covenants restricting the Company’s ability to create or incur liens securing indebtedness for borrowed money, to enter into certain sale-leaseback transactions, and to engage in mergers or consolidations and transfer or lease all or substantially all of our assets.

The indenture governing the Fiscal 2016 Senior Notes contains certain covenants including covenants restricting the Company’s ability to create or incur liens securing indebtedness for borrowed money, to enter into certain sale-leaseback transactions, certain subsidiary indebtedness, and to engage in mergers or consolidations and transfer or lease all or substantially all of our assets.

At June 30, 2021, the Company is in compliance with the covenants of the indenture governing the Fiscal 2016 Senior Notes.

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The Fiscal 2020 Senior Notes were issued at a price of 99.717 % (effective yield to maturity of 2.933 %).

The indenture governing the Fiscal 2020 Senior Notes contains certain covenants including covenants restricting the Company’s ability to create or incur liens securing indebtedness for borrowed money, to enter into certain sale-leaseback transactions, and to engage in mergers or consolidations and transfer or lease all or substantially all of our assets.

The indenture governing the Fiscal 2020 Senior Notes contains certain covenants including covenants restricting the Company’s ability to create or incur liens securing indebtedness for borrowed money, to enter into certain sale-leaseback transactions, certain subsidiary indebtedness, and to engage in mergers or consolidations and transfer or lease all or substantially all of our assets.

At June 30, 2021, the Company is in compliance with the covenants of the indenture governing the Fiscal 2020 Senior Notes.

1 unchanged sentence

The Company may redeem the Fiscal 2020 Senior Notes in whole or in part at any time before their maturity.

The fair value of the fixed-rate Fiscal 2020 Senior Notes at June 30, 2020 was $ 803.6 million, based on quoted market prices and has been classified as a Level 1 financial liability (as defined in Note 7, “Fair Value of Financial Instruments”).

The Fiscal 2019 Revolving Credit Facility, Fiscal 2014 Senior Notes, Fiscal 2016 Senior Notes and Fiscal 2020 Senior Notes are senior unsecured obligations of the Company and are ranked equally in right of payment.

The fair value of the fixed-rate Fiscal 2020 Senior Notes at June 30, 2021 and June 30, 2020 was $ 791.3 million and $ 803.6 million, respectively, based on quoted market prices and has been classified as a Level 1 financial liability (as defined in Note 7, “Fair Value of Financial Instruments”).

Fiscal 2021 Senior Notes:

In May 2021, the Company completed an offering of $ 1.0 billion in aggregate principal amount of senior notes (the “Fiscal 2021 Senior Notes”).

The Fiscal 2021 Senior Notes will mature on May 1, 2031 and bear interest at a rate of 2.60 % per annum.

Interest on the Fiscal 2021 Senior Notes is payable semi-annually in arrears on May 1 and November 1 of each year.

The Fiscal 2021 Senior Notes were issued at a price of 99.957 % (effective yield to maturity of 2.605 %).

The indenture governing the Fiscal 2021 Senior Notes contains certain covenants including covenants restricting the Company’s ability to create or incur liens securing indebtedness for borrowed money, to enter into certain sale-leaseback transactions, certain subsidiary indebtedness, and to engage in mergers or consolidations and transfer or lease all or substantially all of our assets.

At June 30, 2021, the Company is in compliance with the covenants of the indenture governing the Fiscal 2021 Senior Notes.

The indenture also contains covenants regarding the purchase of the Fiscal 2021 Senior Notes upon a change of control triggering event.

The Company may redeem the Fiscal 2021 Senior Notes in whole or in part at any time before their maturity.

The fair value of the fixed-rate Fiscal 2021 Senior Notes at June 30, 2021 was $ 1.02 billion, based on quoted market prices and has been classified as a Level 1 financial liability (as defined in Note 7, “Fair Value of Financial Instruments”).

The Fiscal 2019 Revolving Credit Facility, Fiscal 2021 Term Loans, Fiscal 2016 Senior Notes, Fiscal 2020 Senior Notes and Fiscal 2021 Senior Notes are senior unsecured obligations of the Company and are ranked equally in right of payment.

In addition, certain of the Company’s subsidiaries established unsecured, uncommitted lines of credit with banks.

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Time-based Restricted Stock Units:

The Company has a time-based restricted stock unit (“RSU”) program under which RSUs representing the right to receive one share of the Company’s common stock for each vested RSU are granted.

The Company has a time-based restricted stock unit (“RSU”) program under which RSUs representing the right to receive one share of the Company’s common stock for each vested RSU granted.

Time-based RSUs typically vest two and one-half years from the date of grant.

1 unchanged sentence

Performance-based Restricted Stock Units:

The Company has a performance-based RSU program under which RSUs representing the right to receive one share of the Company’s common stock for each vested RSU are granted.

The Company has a performance-based RSU program under which RSUs representing the right to receive one share of the Company’s common stock for each vested RSU granted.

RSUs vest upon the achievement by the Company of specific performance metrics.

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Shares Weighted

Balances at July 1, 2017 5,137,641 $ 39.63 1,074,593 $ 55.98 470,862 $ 58.26

Balances at June 30, 2018 4,478,288 $ 55.69 982,399 $ 67.72 395,689 $ 74.29

Granted 528,978 98.72 360,147 121.11 133,213 116.53

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As of June 30, 2021, the Company’s outstanding “in the money” vested stock options using the fiscal year-end share price of $ 161.53 had an aggregate intrinsic value of $ 160.9 million.

As of June 30, 2020, time-based RSUs and performance-based RSUs expected to vest using the fiscal year-end share price of $ 126.19 (approximately 0.7 million and 0.2 million shares, respectively) had an aggregate intrinsic value of $ 83.7 million and $ 30.3 million, respectively.

As of June 30, 2021, time-based RSUs and performance-based RSUs expected to vest using the fiscal year-end share price of $ 161.53 had an aggregate intrinsic value of $ 116.6 million and $ 37.6 million, respectively.

Performance-based RSUs granted in the table above represent initial target awards, and performance adjustments for (i) change in shares issued based upon attainment of performance goals determined in the period, and (ii) estimated change in shares issued resulting from attainment of performance goals to be determined at the end of the prospective performance period.

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428,431 8.47 $ 117.45

$ 140.01 to $ 148.07

347,017 9.60 $ 147.97

3,203,682 6.31 $ 88.33 $ 234.5

Exercisable Options

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118,472 8.34 $ 117.72

$ 140.01 to $ 148.07

24,501 9.39 $ 146.60

1,739,109 5.10 $ 69.04 $ 160.9

(a) Calculated using the closing stock price on the last trading day of fiscal year 2021 of $ 161.53 , less the option exercise price, multiplied by the number of instruments.

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From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase programs.

The Company repurchased 0.4 million shares in fiscal year 2020 under our share repurchase program as compared to 3.2 million shares repurchased in fiscal year 2019, which excludes shares withheld by the Company to cover payroll taxes on the vesting of RSU awards, which are also accounted for as treasury stock.

The Company did not repurchase shares in fiscal year 2021 under our share repurchase program as compared to 0.4 million shares repurchased in fiscal year 2020, which excludes shares withheld by the Company to cover payroll taxes on the vesting of RSU awards, which are also accounted for as treasury stock.

The Company considers several factors in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and cash flows, issuances due to employee benefit plan activity, and market conditions.

The following table presents the assumptions used to determine the fair values of the stock option grants using the Binomial options pricing model during the fiscal years ended June 30, 2021, 2020 and 2019:

Fiscal Year Ended

June 30, 2020 Fiscal Year Ended

June 30, 2019 Fiscal Year Ended

June 30, 2018

Years ended June 30,

2021 2020 2019

Graded Vesting

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Weighted-average fair value (in dollars) $ 30.98 $ 21.49 $ 22.12

Fiscal Year Ended

June 30, 2018

Cliff Vesting

Risk-free interest rate 2.7 %

Dividend yield 1.6 %

Weighted-average volatility factor 23.8 %

Weighted-average expected life (in years) 6.0

Weighted-average fair value (in dollars) $ 21.65

EMPLOYEE BENEFIT PLANS

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Other Post-employment Benefit Obligations.

The Company sponsors a post-employment plan (the “Gratuity Plan”) covering all employees in India who are eligible under the terms of their employment.

The Gratuity Plan is required by local law and provides a lump sum payment to vested employees upon retirement, death, incapacitation, or termination of employment based on the respective employee’s salary and the tenure of employment.

The Gratuity Plan is currently unfunded.

The amounts charged to expense by the Company for this plan were:

The Company sponsors certain non-US benefits-related plans covering certain eligible international employees who are eligible under the terms of their employment in their respective countries.

These plans are generally unfunded.

The amounts charged to expense by the Company for these plans were in fiscal years 2021, 2020 and 2019 was:

Years ended June 30,

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(in millions)

The Gratuity Plan $ 1.0 $ 1.3 $ 1.0

The benefit obligation to the Company under this plan at June 30, 2020, 2019 and 2018 was:

Other Non-U.S.

Benefits-Related Plans $ 1.8 $ 1.0 $ 1.3

The benefit obligation to the Company under these plans at June 30, 2021, 2020 and 2019 was:

Years ended June 30,

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(in millions)

The Gratuity Plan $ 6.4 $ 5.8 $ 5.0

Other Non-U.S.

Benefits-Related Plans $ 9.1 $ 6.4 $ 5.8

Earnings before income taxes shown below are based on the geographic location to which such earnings are attributable.

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The Provision for income taxes and effective tax rates for the fiscal year ended June 30, 2021 were $ 148.7 million and 21.4 %, compared to $ 117.0 million and 20.2 %, for the fiscal year ended June 30, 2020, respectively.

The decrease in the effective tax rate for the fiscal year ended June 30, 2020 compared to the fiscal year ended June 30, 2019 was primarily driven by higher discrete benefits, partially offset by lower ETB of $ 15.6 million for the fiscal year ended June 30, 2020 compared to $ 19.3 million for the fiscal year ended June 30, 2019.

The increase in the effective tax rate for the fiscal year ended June 30, 2021 compared to the fiscal year ended June 30, 2020 was primarily driven by lower discrete benefits, partially offset by higher ETB of $ 16.9 million for the fiscal year ended June 30, 2021 compared to $ 15.6 million for the fiscal year ended June 30, 2020.

The Provision for income taxes and effective tax rates for the fiscal year ended June 30, 2020 were $ 117.0 million and 20.2 %, compared to $ 125.2 million and 20.6 %, for the fiscal year ended June 30, 2019, respectively.

The decrease in the effective tax rate for the fiscal year ended June 30, 2019 compared to the fiscal year ended June 30, 2018 is primarily due to a reduced statutory U.S.

federal tax rate as well as a prior period net tax charge relating to the enactment of the Tax Act, partially offset by the recognition of lower ETB attributable to stock-based compensation compared to the ETB recognized in fiscal year ended June 30, 2018.

In the fiscal year ending June 30, 2019, the Company’s federal corporate statutory income tax rate was 21.0 % compared to a blended tax rate of 28.1 % for the prior fiscal year.

In addition, notwithstanding the reduction in the federal corporate statutory income tax rate for the fiscal year ended June 30, 2018, the Tax Act required the Company to accrue a transition tax on earnings of certain foreign subsidiaries at December 31, 2017, and which in turn led to the accrual of applicable foreign withholding taxes to repatriate such earnings subject to the transition tax.

At June 30, 2018 the Company estimated the transition tax and applicable foreign withholding taxes to be approximately $ 30.8 million, partially offset by a benefit of approximately $ 15.3 million relating to the remeasurement of the Company’s net deferred tax liabilities.

The SEC issued Staff Accounting Bulletin No.

118 (“SAB 118”) which provided the Company with up to one year to finalize accounting for the impacts of the Tax Act.

Under SAB 118, the Company finalized the prior year estimate of the transition tax and applicable withholding taxes and recognized a tax benefit of approximately $ 0.5 million in the fiscal year ended June 30, 2019.

In addition to the lower corporate tax rate, the Tax Act introduced two new federal tax provisions relating to foreign source earnings, (i) a minimum tax on global intangible low-tax income (“GILTI”) and (ii) a deduction for foreign-derived intangible income (“FDII”).

Both provisions were effective beginning with the fiscal year ended June 30, 2019, and on a net basis generated a tax benefit of approximately $ 1.8 million.

As of June 30, 2021, the Company had approximately $ 727.8 million of accumulated earnings and profits attributable to foreign subsidiaries.

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The Company does not consider the remaining $ 291.0 million of accumulated earnings to be permanently reinvested outside the U.S.

The Company has accrued approximately $ 8.9 million of foreign withholding taxes and $ 0.6 million of state income taxes attributable to such earnings.

The Company has accrued approximately $ 16.3 million of foreign income and withholding taxes, state income taxes, and tax on exchange gain attributable to such earnings.

Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse.

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Net deferred tax liabilities $ ( 394.8 ) $ ( 124.2 )

The Company has estimated foreign net operating loss carryforwards of approximately $ 13.1 million as of June 30, 2020 of which $ 1.5 million expires in the June 30, 2020 through June 30, 2028 period, and of which $ 11.6 million has an indefinite utilization period.

The Company has estimated foreign net operating loss carryforwards of approximately $ 63.0 million as of June 30, 2021 of which $ 7.9 million are subject to expiration in the June 30, 2022 through June 30, 2041 period, and of which $ 55.1 million has an indefinite utilization period.

In addition, the Company has estimated U.S.

federal net operating loss carryforwards of approximately $ 37.0 million of which $ 16.9 million can be utilized through June 30, 2030 with the balance of $ 20.2 million having an indefinite utilization period.

Valuation allowances are recognized to reduce deferred tax assets when it is more likely than not that the Company will not be able to utilize the deferred tax assets attributable to net operating and capital loss carryforwards of certain subsidiaries to offset future taxable earnings.

federal net operating loss carryforwards of approximately $ 43.5 million of which $ 24.4 million are subject to expiration in the June 30, 2022 through June 30, 2037 period with the balance of $ 19.1 million having an indefinite utilization period.

Valuation allowances are recognized to reduce deferred tax assets when it is more likely than not that the Company will not be able to utilize the deferred tax assets of certain subsidiaries to offset future taxable earnings.

The Company has recorded valuation allowances of $ 10.5 million and $ 6.7 million at June 30, 2021 and 2020, respectively.

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During the fiscal year ended June 30, 2021, the Company adjusted accrued interest by approximately less than $ 0.1 million and recognized a total liability for interest on unrecognized tax positions of $ 3.6 million;

in the fiscal year ended June 30, 2019, the Company adjusted accrued interest by approximately $( 0.1 ) million and recognized a total liability of $ 3.6 million for interest on unrecognized tax positions;

in the fiscal year ended June 30, 2018 the Company adjusted accrued interest by approximately $ 0.5 million and recognized a total liability of $ 3.7 million for interest on unrecognized tax positions.

in the fiscal year ended June 30, 2020, the Company adjusted accrued interest by less than 0.1 million and recognized a total liability for interest on unrecognized tax positions of $ 3.6 million;

in the fiscal year ended June 30, 2019, the Company adjusted accrued interest by approximately $( 0.1 ) million and recognized a total liability for interest on unrecognized tax positions of $ 3.6 million.

The Company is regularly subject to examination of its income tax returns by U.S.

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Data Center Agreements

In March 2010, the Company and IBM entered into an Information Technology Services Agreement (the “IT Services Agreement”), under which IBM provides certain aspects of the Company’s information technology infrastructure.

Under the IT Services Agreement, IBM provides a broad range of technology services to the Company including supporting its mainframe, midrange, network and data center operations, as well as providing disaster recovery services.

The migration of the data center processing to IBM was completed in August 2012.

In March 2010, the Company and IBM entered into an Information Technology Services Agreement (the “IT Services Agreement”), under which IBM provided certain aspects of the Company’s information technology infrastructure.

Under the IT Services Agreement, IBM provided a broad range of technology services to the Company including supporting its mainframe, midrange, network and data center operations, as well as providing disaster recovery services.

The migration of data center processing to IBM was completed in August 2012.

The IT Services Agreement would have expired on June 30, 2022, but a two-year extension was signed in March 2015, amending the expiration date to June 30, 2024.

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As a result of the IBM Private Cloud Agreement, the Company transferred certain of its employees in April 2020 to IBM and its affiliates, and such transferred employees are expected to continue providing services to the Company on behalf of IBM under the IBM Private Cloud Agreement.

Pursuant to the IBM Private Cloud Agreement, the Company has agreed to transfer the ownership of certain Company-owned hardware (the “Hardware”) located at Company facilities worldwide along with the Company’s maintenance agreements (“Maintenance Contracts”) associated with the Hardware to IBM.

The transfer of the Hardware and Maintenance Contracts to IBM is expected to close no later than September 30, 2020.

The Company concluded that the Hardware qualifies as assets held for sale since the Company has committed to a plan of disposal expected to be completed within a year, and therefore, has recorded the Hardware at fair value less costs to dispose based on the expected selling price to IBM (a Level 3 fair value measurement as defined in Note 7, “Fair Value of Financial Instruments”).

Accordingly, the Company has recorded a non-cash pre-tax charge of $ 30.4 million for the year ended June 30, 2020, equal to the difference between the Hardware’s carrying value and estimated fair value less costs to dispose, included as part of Cost of revenues on the Company’s Consolidated Statements of Earnings and is included in Other for purposes of the Company's segment reporting.

As of June 30, 2020, the Hardware classified as assets held for sale has a carrying amount of $ 18.0 million and is included in the Company’s Other current assets line item on the Consolidated Balance Sheets.

Pursuant to the IBM Private Cloud Agreement, the Company agreed to transfer the ownership of certain Company-owned hardware (the “Hardware”) located at Company facilities worldwide to IBM.

As of June 30, 2020, the Hardware was classified as assets held for sale with a carrying amount of $ 18.0 million and was included in the Company’s Other current assets line item on the Consolidated Balance Sheets.

The transfer of the Hardware and Maintenance Contracts to IBM closed on September 30, 2020 for a selling price of $ 18.0 million.

Fixed minimum commitments remaining under the IBM Private Cloud Agreement at June 30, 2021 are $ 207.0 million through March 31, 2030, the final year of the contract.

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In December 2019, the Company amended the existing EU IT Services Agreement whereby the Company will migrate from the existing dedicated on-premise solution to a managed Broadridge private cloud environment provided by IBM, as well as extended the term of the EU IT Services Agreement to June 2029 (the “Amended EU IT Services Agreement”).

The Company has the right to renew the term of the Amended EU IT Services Agreement for up to one additional 12 -month term or one additional 24 -month term.

The Company has the right to renew the term of the Amended EU IT Services Agreement for up to one additional 12 -month period or one additional 24 -month period.

Fixed minimum commitments remaining under the Amended EU IT Services Agreement at June 30, 2021 are $ 30.8 million through fiscal year 2029, the final year of the contract.

The total annual expenses related to these IBM agreements was $ 118.7 million, $ 106.1 million, and $ 107.5 million for the fiscal years ended June 30, 2020, 2019 and 2018, respectively.

The total annual expenses related to these IBM agreements and certain other data center arrangements was $ 176.7 million, $ 118.7 million, and $ 106.1 million, for the fiscal years ended June 30, 2021, 2020 and 2019, respectively.

The following table summarizes the capitalized costs related to data center agreements as of June 30, 2021:

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Total expenses $ 4.5 $ 6.1 $ 5.8

At June 30, 2020, the Company has a future commitment to fund $ 3.5 million to one of the Company’s investees.

The Company has an equity method investment that is a variable interest in a variable interest entity, the Company is not the primary beneficiary and therefore does not consolidate the investee.

The Company’s potential maximum loss exposure related to this unconsolidated investment totaled $ 25.3 million as of June 30, 2021, which represents the carrying value of the Company's investment and is recorded in Other non-current assets in the Company’s Consolidated Balance Sheets.

In addition, as of June 30, 2021, the Company has a future commitment to fund this investee for up to an additional $ 7.0 million if certain future funding milestones are met.

Additional funding provided by the Company to the investee as a result of meeting the future funding milestones would increase the Company’s corresponding potential maximum loss exposure by that amount.

In addition, as of June 30, 2021, the Company also has a future commitment to fund $ 2.0 million to one of the Company’s other investees.

Contractual Obligations

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Total expenses $ 345.4 $ 247.9 $ 208.4

The minimum commitments at June 30, 2020 for the aforementioned Amended IT Services Agreement, the Amended EU IT Services Agreement, the IBM Private Cloud Agreement, software license agreements including hosted software arrangements, and software and hardware maintenance and support agreements are as follows:

The future minimum commitments at June 30, 2021 for the aforementioned Amended IT Services Agreement, the Amended EU IT Services Agreement, the IBM Private Cloud Agreement, software license agreements including hosted software arrangements, and software and hardware maintenance and support agreements are as follows:

Years Ending June 30, (in millions)

1 unchanged sentence

Total $ 551.7

In the normal course of business, the Company is subject to various claims and litigation.

While the outcome of any claim or litigation is inherently unpredictable, the Company believes that the ultimate resolution of these matters will not, individually or in the aggregate, result in a material impact on its financial condition, results of operations or cash flows.

It is not the Company’s business practice to enter into off-balance sheet arrangements.

1 unchanged sentence

The Company manages its exposure to these market risks through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments.

The Company may use derivative financial instruments as risk management tools and not for trading purposes.

The Company was not a party to any derivative financial instruments as of June 30, 2020 and 2019.

The Company was not a party to any outstanding derivative financial instruments at June 30, 2021 or June 30, 2020.

In connection with the acquisition of Itiviti in March 2021 the Company entered into two derivative instruments designed to mitigate the Company’s exposure to the impact of (i) changes in foreign exchange rates on the acquisition of Itiviti purchase consideration, and (ii) changes in interest rates on the Fiscal 2021 Senior Notes.

The Company executed a forward foreign exchange derivative instrument (“Forward”) with an aggregate notional amount of EUR 1.955 billion.

The Forward acted as an economic hedge against the impact of changes in the Euro on the Company’s purchase consideration for the acquisition of Itiviti.

The Company recorded changes in fair value of the Forward as part of Other non-operating income (expenses), net in the Consolidated Statement of Earnings.

In May 2021, the Company settled the Forward derivative for a cumulative pre-tax gain of $ 66.7 million.

Also, the Company executed a forward treasury lock agreement (“Treasury Lock”), designated as a cash flow hedge, in the aggregate notional amount of $ 1.0 billion to manage exposure to fluctuations in the benchmark interest rate associated with the Fiscal 2021 Senior Notes, which were used to pay down a portion of the Term Credit Agreement associated with the Itiviti acquisition.

Accordingly, changes in the fair value of the Treasury Lock were recorded as part of Other comprehensive income (loss), net each period up to when the Treasury Lock was settled.

In May 2021, the Treasury Lock was settled for a pre-tax loss of $ 11.0 million, after which the final settlement loss will be reclassified into Interest expense, net ratably over the ten year term of the Fiscal 2021 Senior Notes.

The expected amount of the existing loss that would be reclassified into earnings before income taxes within the next twelve months is approximately $ 1.1 million.

In the normal course of business, the Company also enters into contracts in which it makes representations and warranties that relate to the performance of the Company’s products and services.

The Company does not expect any material losses related to such representations and warranties, or collateral arrangements.

The Company’s business process outsourcing and mutual fund processing services are performed by Broadridge Business Process Outsourcing, LLC (“BBPO”), an indirect wholly-owned subsidiary, which is a broker-dealer registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority, Inc.

The Company’s business process outsourcing and mutual fund processing services are performed by Broadridge Business Process Outsourcing, LLC (“BBPO”), an indirect subsidiary, which is a broker-dealer registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority, Inc.

Although BBPO’s FINRA membership agreement allows it to engage in clearing and the retailing of corporate securities in addition to mutual fund retailing on a wire order basis, BBPO does not clear customer transactions, process any retail business or carry customer accounts.

As a registered broker-dealer and member of FINRA, BBPO is subject to the Uniform Net Capital Rule 15c3-1 of the Securities Exchange Act of 1934, as amended, which requires BBPO to maintain a minimum net capital amount.

At June 30, 2020, BBPO was in compliance with this capital requirement.

At June 30, 2021, BBPO was in compliance with this net capital requirement.

BBPO, as a “Managing Clearing Member” of the Options Clearing Corporation (the “OCC”), is also subject to OCC Rule 309(b) with respect to the business process outsourcing services that it provides to other OCC “Managed Clearing Member” broker-dealers.

OCC Rule 309(b) requires BBPO to maintain a minimum net capital amount.

At June 30, 2020, BBPO was in compliance with this capital requirement.

At June 30, 2021, BBPO was in compliance with this net capital requirement.

In addition, Matrix Trust Company (“Matrix Trust”) , a subsidiary of the Company, is a Colorado State non-depository trust company and National Securities Clearing Corporation trust member, whose primary business is to provide cash agent, custodial and directed trustee services to institutional customers, and investment management services to collective investment trust funds.

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Securities Pension

Liabilities Total

Liabilities Cash Flow Hedge Total

(in millions)

Balances at July 1, 2017 $ ( 48.9 ) $ 2.3 $ ( 9.2 ) $ ( 55.8 )

Balances at June 30, 2018 $ ( 43.2 ) $ ( 0.4 ) $ ( 8.3 ) $ — $ ( 51.9 )

Cumulative effect of changes in accounting principle (a) — 0.4 ( 1.9 ) — ( 1.5 )

Other comprehensive income (loss) before reclassifications ( 15.0 ) — ( 3.6 ) — ( 18.7 )

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Balances at June 30, 2019 $ ( 58.3 ) $ — $ ( 12.9 ) $ — $ ( 71.2 )

Cumulative effect of changes in accounting principle (a) — 0.4 ( 1.9 ) ( 1.5 )

Other comprehensive income (loss) before reclassifications ( 26.4 ) — ( 4.2 ) — ( 30.7 )

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In connection with an organizational change made in the first quarter of fiscal year 2020, in order to further align our portfolio of services, the results for the Company's wealth management Advisor Solutions services that were previously reported in our Investor Communication Solutions reportable segment are now reported within the Global Technology and Operations reportable segment.

As a result, our prior period segment results have been revised to reflect this change, which resulted in transferring $ 42.8 million of revenues and $ 2.2 million of earnings before income taxes between reportable segments for the year ended June 30, 2019 and $ 46.3 million of revenues and $ 5.5 million earnings before income taxes between reportable segments for the year ended June 30, 2018.

Communication

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Revenues and assets by geographic area are as follows:

States Canada United

Kingdom Other Total

States Canada Europe Other Total

(in millions)

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Column A Column B Column C Column D Column E

of period Additions

expenses Deductions Balance

of period (1) Charged

expenses (2) Charged to other accounts Deductions Balance

Fiscal year ended June 30, 2021:

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Deferred tax valuation allowance $ 3.3 $ 3.4 $ — $ — $ 6.7

Other receivables $ — $ 1.0 $ — $ — $ 1.0

Fiscal year ended June 30, 2019:

1 unchanged sentence

Deferred tax valuation allowance $ 3.8 $ 0.4 $ — $ ( 0.8 ) $ 3.3

Amounts may not sum due to rounding.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data