What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-08-06 compared with 2023-08-08 · 137 added, 173 removed, 1220 unchanged (20% of the section changed)

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

The goodwill balance was $3,461.6 million as of June 30, 2023, which is allocated among various reporting units.

During fiscal year 2024, the Company performed the required impairment tests of goodwill and determined that there was no impairment.

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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 earnings before interest and taxes, including projections of revenues, selection of terminal value growth rates and the weighted-average cost of capital used to determine the discount rates were appropriate.

Auditing the fair value of a reporting unit within the Global Technology Operations (GTO) segment 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 earnings before interest and taxes, including projections of revenues, selection of terminal value growth rates and the weighted-average cost of capital used to determine the discount rates were appropriate.

How this Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the projected future operating cash flows based on forecasted earnings before interest and taxes, including projections of revenues, selection of the terminal value growth rates and weighted-average cost of capital used to determine the discount rates for certain of the reporting units included the following, among others:

Our audit procedures related to the projected future operating cash flows based on forecasted earnings before interest and taxes, including projections of revenues, selection of the terminal value growth rates and weighted-average cost of capital used to determine the discount rates for a reporting unit within the GTO segment 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 earnings before interest and taxes, including projections of revenues, and the selection of the terminal value growth rates and weighted-average cost of capital used to determine the discount rates.

• We performed a sensitivity analysis on the projected future operating cash flows to determine what revenue and earnings before interest and taxes growth rates are needed to cause an impairment for certain of the reporting units.

• We evaluated the reasonableness of management’s projected future operating cash flows based on forecasted earnings before interest and taxes, including projections of revenues by comparing to (1) historical results for certain of the 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 evaluated the reasonableness of management’s projected future operating cash flows based on forecasted earnings before interest and taxes, including projections of revenues by comparing to (1) historical results for the reporting unit, (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 rate and terminal value growth rate for certain of the reporting units, 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 discount and terminal value growth rates selected by management.

• With the assistance of our fair value specialists, we evaluated the discount rate and terminal value growth rate for the reporting unit, 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 discount and terminal value growth rates selected by management.

/s/ D ELOITTE & T OUCHE LLP

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Interest expense, net (Note 5) ( 138.1 ) ( 135.5 ) ( 84.7 )

Other non-operating income (expenses), net ( 6.0 ) ( 3.0 ) 72.7

Other non-operating expenses, net ( 1.7 ) ( 6.0 ) ( 3.0 )

Earnings before income taxes 877.4 794.9 672.2

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Foreign currency translation adjustments ( 46.8 ) ( 59.4 ) ( 247.0 )

Pension and post-retirement liability adjustment, net of tax (provision) benefit of $( 0.1 ), $( 3.4 ) and $( 0.1 ) for the years ended June 30, 2023, 2022 and 2021, respectively

Fair market value loss on cash flow hedge, net of tax (provision) benefit of $( 0.3 ), $( 0.2 ), and $ 2.6 for the years ended June 30, 2023, 2022 and 2021, respectively

Pension and post-retirement liability adjustment, net of tax benefit (provision) of $ 0.4 , $( 0.1 ) and $( 3.4 ) for the years ended June 30, 2024, 2023 and 2022, respectively

( 1.1 ) 0.2 10.6

Cash flow hedge amortization, net of taxes of $( 0.3 ), $( 0.3 ), and $( 0.2 ) for the years ended June 30, 2024, 2023 and 2022, respectively

Total other comprehensive income (loss), net ( 47.0 ) ( 58.4 ) ( 235.6 )

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Accounts receivable, net of allowance for doubtful accounts of $ 9.7 and $ 7.2 , respectively

1,065.6 974.0

Other current assets 170.9 166.2

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Net earnings $ 698.1 $ 630.6 $ 539.1

Adjustments to reconcile Net earnings to Net cash flows provided by operating activities:

Adjustments to reconcile Net earnings to net cash flows from operating activities:

Depreciation and amortization 119.8 84.4 82.4

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Amortization of other assets 157.8 126.2 131.4

Write-down of long lived assets 2.5 39.5 31.4

Write-down of long lived assets and related charges 18.2 2.5 39.5

Stock-based compensation expense 70.6 73.1 68.4

Deferred income taxes ( 119.7 ) ( 50.8 ) 50.7

Gain on forward foreign exchange derivative — — ( 66.7 )

Other ( 57.7 ) ( 27.4 ) ( 17.9 )

Changes in operating assets and liabilities, net of assets and liabilities acquired:

Current assets and liabilities:

Accounts receivable, net ( 37.4 ) 19.6 ( 85.4 )

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Contract liabilities 80.6 328.5 109.5

Non-current assets and liabilities:

Other non-current assets ( 232.4 ) ( 472.4 ) ( 696.9 )

Other non-current liabilities 24.3 9.1 ( 13.1 )

Net cash flows provided by operating activities 823.3 443.5 640.1

Net cash flows from operating activities 1,056.2 823.3 443.5

Cash Flows From Investing Activities

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Software purchases and capitalized internal use software ( 55.6 ) ( 36.8 ) ( 44.1 )

Proceeds from asset sales — — 18.0

Acquisitions, net of cash acquired ( 34.3 ) — ( 13.3 )

Settlement of forward foreign exchange derivative — — 66.7

Other investing activities ( 0.8 ) ( 5.3 ) ( 24.0 )

Net cash flows used in investing activities ( 80.4 ) ( 110.4 ) ( 2,653.7 )

Net cash flows from investing activities ( 148.0 ) ( 80.4 ) ( 110.4 )

Cash Flows From Financing Activities

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Other financing activities ( 14.3 ) ( 17.5 ) ( 22.0 )

Net cash flows provided by (used in) financing activities ( 714.7 ) ( 370.8 ) 1,797.8

Net cash flows from financing activities ( 855.5 ) ( 714.7 ) ( 370.8 )

Effect of exchange rate changes on Cash and cash equivalents ( 0.6 ) ( 0.6 ) ( 12.2 )

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Accrual of unpaid property, plant, equipment and software $ 1.2 $ 0.8 $ 19.2

Accrual of unpaid stock repurchase excise tax $ 2.7 $ — $ —

Amounts may not sum due to rounding.

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Broadridge Financial Solutions, Inc.

(“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, public companies, investors and mutual funds.

(“Broadridge” or the “Company”), a Delaware corporation and a part of the S&P 500 ® Index, is a global financial technology leader powering investing, corporate governance, and communications to enable our clients to operate, innovate, and grow.

We deliver technology-driven solutions to banks, broker-dealers, asset and wealth managers, public companies, investors, and mutual funds.

The Company operates in two reportable segments:

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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.

Through our Retirement and Workplace Trade processing business, Broadridge provides automated mutual fund and exchange-traded funds trade processing services for financial institutions who submit trades on behalf of their clients such as qualified and non-qualified retirement plans and individual wealth accounts.

In addition, Broadridge provides fiduciary-focused learning and development, software and technology, and data and analytics services to advisors, institutions and asset managers across the retirement and wealth ecosystem.

In addition, Broadridge provides public corporations and mutual funds with a full suite of solutions to help manage their annual meeting process, including a full suite of annual meeting and shareholder engagement solutions such as 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, shareholder engagement and environmental, social and governance solutions.

Broadridge also provides fiduciary-focused learning and development, software and technology, and data and analytics services to advisors, institutions and asset managers across the retirement and wealth ecosystem.Through its Retirement and Workplace business (“Broadridge Retirement and Workplace”), Broadridge provides automated mutual fund and exchange-traded funds trade processing services for financial institutions who submit trades on behalf of their clients such as qualified and non-qualified retirement plans and individual wealth accounts.

In addition, Broadridge’s marketing and transactional communications solutions provide a content management and omni-channel distribution platform for marketing and sales communications for asset managers, insurance providers and retirement service providers.

Broadridge provides public corporations and mutual funds with a full suite of solutions to help manage their annual meeting process, including a full suite of annual meeting and shareholder engagement solutions such as 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, shareholder engagement and environmental, social and governance solutions.

Broadridge also offers disclosure solutions, including annual SEC filing services and capital markets transaction services.

We also provide registrar, stock transfer and record-keeping services through our transfer agency 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.

Broadridge provides registrar, stock transfer and record-keeping services through its transfer agency services.

Broadridge provides 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 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.

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These services combine Broadridge’s technology with its operations expertise to support the entire trade lifecycle, including securities clearing and settlement, reconciliations, record-keeping, wealth management asset servicing, and custody-related functions.

For capital markets firms, Broadridge provides a set of multi-asset, multi-entity and multi-currency trading, connectivity and post-trade solutions that support processing of securities transactions in equities, options, fixed income securities, foreign exchange, exchange-traded derivatives and mutual funds.

Provided on a SaaS basis within large user communities, Broadridge’s technology is a global solution, processing clearance and settlement in over 100 countries.

Broadridge’s solutions enable global capital markets firms to access market liquidity, drive more effective market making and efficient front-to-back trade processing.

Broadridge’s capital markets technology and solutions deliver simplification and innovation across the trade lifecycle, from order initiation to settlement.

Through Broadridge Trading and Connectivity Solutions, Broadridge offers a set of global front-office trade order and execution management systems and connectivity solutions that enable market participants to connect and trade.

The combination of the front-office solutions from the 2021 acquisition of Itiviti Holding AB (“Itiviti”) and Broadridge’s post-trade product suite and other capital markets capabilities enables clients to streamline their front-to-back technology platforms and operations and increase straight-through-processing efficiencies, across equities, fixed income, exchange-traded derivatives, and other asset classes .

Broadridge’s Wealth Management business delivers offers technology solutions and other capabilities across the entire wealth management lifecycle and streamlines all aspects of wealth management services, including account management, fee management and client on-boarding.

Broadridge’s front-office solutions, post-trade product suite and other capital markets capabilities enable its clients to streamline their front-to-back technology platforms and operations and increase straight-through-processing efficiencies, across equities, fixed income, exchange-traded derivatives, and other asset classes.

Broadridge also provides a set of multi-asset, multi-entity and multi-currency trading, connectivity and post-trade solutions that support processing of securities transactions in equities, options, fixed income securities, foreign exchange, exchange-traded derivatives and mutual funds.

Provided on a SaaS basis within large user communities, Broadridge’s technology is a global solution, processing clearance and settlement in over 100 countries.

Broadridge’s technology enables its clients to meet the requirements of market change such as the T+1 securities settlement cycle and Broadridge’s solutions enable global capital markets firms to access market liquidity, drive more effective market making and efficient front-to-back trade processing.

Broadridge’s Wealth Management business delivers technology solutions and other capabilities across the entire wealth management lifecycle and streamlines all aspects of wealth management services, including account management, fee management and client on-boarding.

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

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and in accordance with the SEC requirements for Annual Reports on Form 10-K.

These financial statements present the consolidated position of the Company and include the entities in which the Company directly or indirectly has a controlling financial interest as well as various entities in which the Company has investments recorded under the equity method of accounting as well as certain marketable and non-marketable securities.

These financial statements present the consolidated position of the Company and include the entities in which the Company directly or indirectly has a controlling financial interest, entities in which the Company has investments recorded under the equity method of accounting as well as certain marketable and non-marketable securities.

Intercompany balances and transactions have been eliminated.

Amounts presented may not sum due to rounding.

Certain prior period amounts have been reclassified to conform to the current year presentation where applicable.

Beginning with the first quarter of fiscal year 2023, the Company changed reporting for segment revenues, segment earnings (loss) before income taxes, and segment amortization of acquired intangibles and purchased intellectual property to reflect the impact of actual foreign exchange rates applicable to the individual periods presented.

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The Company evaluates the carrying value of deferred sales commission costs for impairment on the basis of whether these costs are fully recoverable from the expected future undiscounted net operating cash flows of the portfolio of clients to which the deferred sales commission costs relate.

Refer to Note 12, “Other Non-Current Assets” for a further description of the Company’s Deferred sales commission costs.

Refer to Note 12, “Other Non-Current Assets” for further information related to the Company’s Deferred sales commission costs.

Deferred Data Center Costs.

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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.

Recently Issued Accounting Pronouncements

In October 2021, the FASB issued ASU No.

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2021-08”), which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers.

2021-08 became effective for the Company in the first quarter of fiscal year 2024.

The adoption of ASU No.

2021-08 did not have a material impact on the Company's Consolidated Financial Statements.

Recently Issued Accounting Pronouncements

In March, 2024, the FASB issued ASU No.

2024-01, “Compensation—Stock Compensation - Scope Application of Profits Interest and Similar Awards” (“ASU No.

2024-01”), which provides illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of Topic 718 or another accounting standard.

2024-01 is effective for the Company in the first quarter of fiscal year 2026.

Early adoption of the amendments is permitted, including adoption in an interim period.

Early adoption of the amendments is permitted.

The Company is currently assessing the impact that the adoption of ASU No.

2024-01 will have on the Company’s Consolidated Financial Statements.

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures” (“ASU No.

2023-09”), which requires an entity to annually disclose specific categories in the rate reconciliation, additional information for reconciling items that meet a quantitative threshold, and certain information about income taxes paid.

2023-09 is effective for the Company in the fourth quarter of fiscal year 2026.

Early adoption of the amendments is permitted.

The Company is currently assessing the impact that the adoption of ASU No.

2023-09 will have on the Company’s Consolidated Financial Statements.

In November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures” (“ASU No.

2023-07”), which requires an entity to improve its disclosures related to reportable segments and provide additional, more detailed information about a reportable segment’s expenses.

2023-07 is effective for the Company in the fourth quarter of fiscal year 2025.

The amendments in this ASU must be applied on a retrospective basis to all prior periods presented in the financial statements and early adoption is permitted.

The Company is currently assessing the impact that the adoption of ASU No.

2023-07 will have on its Consolidated Financial Statements.

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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, 2023, contract assets decreased primarily due to an decrease in software term license revenues and contract liabilities increased primarily due to the timing of client payments.

During the fiscal year ended June 30, 2022, contract assets increased primarily due to an increase in software term license revenues recognized but not yet invoiced and contract liabilities increased primarily due to growth in revenues and the timing of client payments.

During the fiscal year ended June 30, 2024, contract assets increased primarily due to an increase in software term license revenues, while contract liabilities increased due to the timing of client invoices in relation to the timing of revenue recognized.

During the fiscal year ended June 30, 2023, contract assets decreased primarily due to a decrease in software term license revenues and contract liabilities increased primarily due to growth in revenues and the timing of client payments.

The Company recognized $ 249.4 million of revenue during the fiscal year ended June 30, 2024 that was included in the contract liability balance as of June 30, 2023.

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The Company calculates diluted EPS using the treasury stock method, which reflects the potential dilution that could occur if outstanding stock options at the presented date are exercised and restricted stock unit awards have vested.

As of June 30, 2023, 2022 and 2021, the computation of diluted EPS did not include 1.2 million, 0.7 million and 0.4 million options to purchase Broadridge common stock, respectively, as the effect of their inclusion would have been anti-dilutive.

As of June 30, 2024, 2023 and 2022, the computation of diluted EPS excluded 0.3 million, 1.2 million and 0.7 million options to purchase Broadridge common stock, respectively, as the effect of their inclusion would have been anti-dilutive.

The following table sets forth the denominators of the basic and diluted EPS computations:

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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.

FISCAL YEAR 2024 BUSINESS COMBINATION

AdvisorTarget

In May 2024, the Company acquired AdvisorTarget, a market leader in providing asset management and wealth management firms with data products to help power digital marketing, sales and engagement programs targeting financial advisors.

AdvisorTarget is included in the Company’s ICS reportable segment.

The aggregate purchase price included $ 34.3 million in cash, $ 1.0 million in deferred payments, $ 1.6 million for the settlement of a preexisting relationship, and contingent consideration with a maximum potential pay-out of $ 30.5 million.

The contingent consideration is payable through fiscal year 2028 upon the achievement by the acquired business of certain defined revenue targets.

Net tangible liabilities assumed in the transaction were $ 3.1 million, and contingent liabilities incurred were valued at $ 14.0 million.

This acquisition resulted in $ 41.8 million of Goodwill, which is tax deductible.

Intangible assets acquired, which totaled $ 12.1 million, consist primarily of software technology and customer relationships, which are being amortized over a five-year life.

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.

During the fiscal years ended June 30, 2023 and 2022, there were no material acquisitions.

The following section provides details for the fiscal year 2021 acquisitions.

The Company is providing unaudited pro forma supplemental information for the acquisition of Itiviti as the acquisition was 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.

FISCAL YEAR 2021 BUSINESS COMBINATIONS

Financial information on each transaction is as follows:

Itiviti AdvisorStream 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 — 8.5 8.5

Aggregate purchase price $ 2,580.4 $ 34.5 $ 2,615.0

Net tangible assets acquired / (liabilities assumed) $ ( 252.9 ) $ ( 3.3 ) $ ( 256.2 )

Goodwill 1,928.7 27.3 1,956.0

Intangible assets 904.6 10.5 915.1

Aggregate purchase price $ 2,580.4 $ 34.5 $ 2,615.0

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

Accounts receivable $ 38.9

Other current assets 14.2

Property, plant and equipment 4.4

Intangible assets 904.6

Goodwill 1,928.7

Other non-current assets 48.3

Payables and accrued expenses ( 72.0 )

Current contract liabilities ( 55.4 )

Deferred taxes ( 200.2 )

Other long term liabilities ( 31.2 )

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 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.

Year ended June 30,

(in millions)

Revenues $ 5,221.7

Net earnings $ 514.9

Basic earnings per share $ 4.45

Diluted earnings per share $ 4.37

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.

• The contingent consideration liability is payable through fiscal year 2024 upon the achievement by the acquired business of certain revenue targets, and has a maximum potential pay-out of $ 12.0 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, 2023 is $ 7.7 million.

• Goodwill is not tax deductible.

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

• In fiscal year 2023, the Company settled deferred payment obligations totaling $ 2.6 million.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period.

The fair values of the contingent consideration obligations are based on a probability weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria.

The fair values of contingent consideration obligations are based on a probability weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria.

The measurement is based on significant inputs that are not observable in the market, therefore, the Company classifies this liability as Level 3 in the table below.

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(a) Includes investments related to the Company’s Defined Benefit Pension Plans and Executive Retirement and Savings Plan (the “ERSP”).

In addition, the Company has non-marketable securities with a carrying amount of $ 55.6 million as of June 30, 2023 and $ 53.4 million as of June 30, 2022 that are classified as Level 2 financial assets and included as part of Other non-current assets.

In addition, the Company has non-marketable securities with a carrying amount of $ 58.3 million as of June 30, 2024 and $ 55.6 million as of June 30, 2023 that are classified as Level 2 financial assets and included as part of Other non-current assets on the Consolidated Balance Sheets.

The following table sets forth an analysis of changes during fiscal years 2024 and 2023 in Level 3 financial liabilities of the Company:

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Additional contingent consideration incurred 14.0 —

Net increase (decrease) in contingent consideration liability ( 0.5 ) 1.1

Foreign currency impact ( 0.4 ) ( 1.0 )

Net decrease in contingent consideration liability ( 6.7 ) ( 0.5 )

Foreign currency impact on contingent consideration liability ( 0.1 ) ( 0.4 )

Payments ( 5.2 ) —

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(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, 2024 include $ 41.8 million for the acquisition of AdvisorTarget.

During fiscal years 2024, 2023 and 2022, the Company performed the required impairment tests of Goodwill and determined that there was no impairment.

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

During the fourth quarter of fiscal year 2023, the Company executed a non-exclusive amended services contract and substantially completed the development of the related software platform customized for our client.

In connection with the substantial completion of the platform and execution of the amended services agreement, the Company also developed a substantive plan to market the platform to other prospective clients as a service.

As a result, $622.3 million of Deferred client conversion and start-up costs were reclassified to Internal use software within Intangible assets, net on the Company’s Consolidated Balance Sheet, which contributed to the increase in Internal use software as of June 30, 2023.

Refer to Note 11, “Deferred Client Conversion and Start-Up Costs” for a further discussion regarding the Company’s Intangible assets.

The weighted-average remaining useful life of the intangible assets is as follows:

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Deferred Client Conversion and Start-up Costs

Deferred client conversion and start-up costs include direct costs incurred to set up or convert a client’s systems to function with the Company’s technology, and are generally deferred and recognized on a straight-line basis over the service term of the arrangement to which the costs relate, which commences when the client goes live with the Company’s services.

The key judgment for determining the amount of costs to be deferred relates to the extent to which such costs are recoverable.

This estimate includes (i) projected future client revenues, including variable revenues, offset by an estimate of conversion costs including an estimate of onboarding costs as well as ongoing operational costs, and (ii) an estimate of the expected client life.

This is also the basis for how the Company assesses such costs for impairment.

Deferred client conversion and start-up costs of $ 892.1 million as of June 30, 2024 consist of costs incurred to set-up or convert a client’s systems to function with the Company’s technology of $ 884.5 million, as well as other start-up costs of $ 7.6 million.

Deferred client conversion and start-up costs of $ 937.0 million as of June 30, 2023 consist of costs incurred to set-up or convert a client’s systems to function with the Company’s technology of $ 925.4 million, as well as other start-up costs of $ 11.5 million.

As a result, $622.3 million of Deferred client conversion and start-up costs were reclassified to Internal use software within Intangible assets, net on the Company’s Consolidated Balance Sheet, which contributed to the decrease in Deferred Client Conversion and Start-up Costs as of June 30, 2023.

Refer to Note 10, “Goodwill and Intangible Assets, Net” for a further discussion regarding the Company’s Intangible assets.

The total amount of deferred client conversion and start-up costs and deferred sales commission costs amortized in Operating expenses for the fiscal year ended June 30, 2024 and 2023 was $ 132.9 million and $ 94.9 million, respectively.

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Accrued broker fees 126.3 148.0

Accrued dividend payable 85.6 75.0

Accrued taxes 112.5 69.7

Customer deposits 65.6 58.7

Accrued dividend payable 93.4 85.6

Business process outsourcing administration fees 59.9 61.7

Customer deposits 52.7 65.6

Operating lease liabilities 38.0 40.9

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Restructuring Charges

Employee compensation and benefits within the table above includes a restructuring liability of $ 19.5 million and $ 12.3 million as of June 30, 2023 and 2022, respectively.

During the fourth quarter of fiscal year 2023, Broadridge has undergone a corporate restructuring initiative to streamline our management structure, reallocate work to lower cost locations, and reduce headcount in deprioritized areas.

This restructuring resulted in total charges of $ 20.4 million of severance costs recorded in Operating expenses .

The total estimated pre-tax costs for actions identified as part of the restructuring initiative are approximately $ 35.0 million to $ 50.0 million, of which $ 20.4 million were incurred to date.

We expect to incur the remaining charges for the initiative in the third quarter of fiscal year 2024.

Restructuring charges are not reflected in segment profit and are recorded within the Other segment.

The total Employee compensation and benefits liability within the table above of $ 354.4 million and $ 335.6 million, respectively, includes a restructuring liability of $ 38.9 million and $ 19.5 million as of June 30, 2024 and 2023, respectively.

During the fourth quarter of fiscal year 2024, Broadridge completed a corporate restructuring initiative to exit and realign some of its businesses, streamline the Company’s management structure, reallocate work to lower cost locations, and reduce headcount in deprioritized areas (the “Corporate Restructuring Initiative”), which was initiated in the fourth quarter of fiscal year 2023.

For fiscal years 2024 and 2023, this restructuring resulted in total severance costs of $ 45.2 million and $ 20.4 million, respectively recorded in Operating expenses .

These costs were not reflected in segment profit and are recorded within the Other segment.

Outstanding borrowings and available capacity under the Company’s borrowing arrangements were as follows:

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Total Revolving Credit Facility $ — $ — $ — $ 1,500.0 $ —

Fiscal 2021 Term Loans (a) May 2024 $ — $ — $ 1,535.8 $ — $ —

Fiscal 2024 Amended Term Loan (a) August 2026 $ 1,120.0 $ 1,117.9 $ — $ — $ 1,120.0

Fiscal 2016 Senior Notes June 2026 $ 500.0 $ 498.7 $ 498.0 $ — $ 480.4

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Total debt $ 3,370.0 $ 3,355.1 $ 3,413.3 $ 1,500.0 $ 3,111.6

(a) The Fiscal 2021 Term Loans were reclassified from Long-term debt to Current portion of long-term debt in May 2023 to reflect the remaining maturity of less than a year.

(a) The Fiscal 2021 Term Loans were reclassified from Current portion of long-term debt to Long-term debt in the first quarter of fiscal year 2024 upon amendment of the loan, to reflect the remaining maturity of more than one year.

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

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Fiscal 2021 Revolving Credit Facility:

In April 2021, the Company entered into an amended and restated $ 1.5 billion five-year revolving credit facility (as amended on December 23, 2021 and May 23, 2023, the “Fiscal 2021 Revolving Credit Facility”), which replaced the $ 1.5 billion five-year revolving credit facility entered during March 2019 (the “Fiscal 2019 Revolving Credit Facility” and together with the Fiscal 2021 Revolving Credit Facility, the “Revolving Credit Facilities”).

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

dollar tranche and a $ 400.0 million multicurrency tranche.

On May 23, 2023, we amended the interest rate index from LIBOR to Adjusted SOFR.

On May 23, 2023, we amended the interest rate index from LIBOR to Adjusted Term SOFR.

All other terms remained unchanged.

The weighted-average interest rate on the Revolving Credit Facilities was 4.95 %, 1.30 % and 1.20 % for the fiscal years ended June 30, 2023, 2022 and 2021, respectively.

The weighted-average interest rate on the Fiscal 2021 Revolving Credit Facility was 6.50 %, 4.95 % and 1.30 % for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.

The fair value of the variable-rate Fiscal 2021 Revolving Credit Facility borrowings at June 30, 2024 approximates carrying value and has been classified as a Level 2 financial liability (as defined in Note 7, “Fair Value of Financial Instruments”).

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Dollars, Canadian Dollars, Euro, Swedish Kronor and Yen bears interest at Adjusted Term SOFR, CDOR, EURIBOR, TIBOR and STIBOR, respectively, plus 1.100 % (subject to step-ups to 1.175 % and step-downs to 0.805 % based on public debt ratings) and revolving loans denominated in Sterling bears interest at SONIA plus 1.1326 % 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 15.0 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 Fiscal 2021 Revolving Credit Facility also has an annual facility fee equal to 15.0 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.

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Fiscal 2021 Term Loans:

In March 2021, the Company entered into a term credit agreement (as amended on December 23, 2021 and May 23, 2023, “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.

In March 2021, the Company entered into an amended and restated term credit agreement as amended on December 23, 2021 and May 23, 2023, (“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 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.

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

The Tranche 1 Loan was to mature on the date that is 18 months after the date on which the Fiscal 2021 Term Loans were 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 Adjusted Term SOFR plus 1.100 % per annum (subject to step-ups to Adjusted Term SOFR plus 1.350 % or a step-down to SOFR plus 0.850 % based on ratings).

On May 23, 2023, we amended the interest rate index from LIBOR to Adjusted SOFR.

The Tranche 2 Loan was to mature in May 2024.

The Tranche 2 Loan bore interest at Adjusted Term SOFR plus 1.000 % per annum (subject to step-ups to Adjusted Term SOFR plus 1.250 % or a step-down to SOFR plus 0.750 % based on ratings).

On May 23, 2023, we amended the interest rate index from LIBOR to Adjusted Term SOFR.

All other terms remained unchanged.

The Company may voluntarily prepay the Tranche 2 Loan 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, 2023, the Company is in compliance with all covenants of the Fiscal 2021 Term Loans.

Fiscal 2024 Amended Term Loan:

On August 17, 2023, the Company amended and restated the Term Credit Agreement (the “Amended and Restated Term Credit Agreement”), providing for term loan commitment in an aggregate principal amount of $ 1.3 billion, replacing the Tranche 2 Loan of the Fiscal 2021 Term Loans (the “Fiscal 2024 Amended Term Loan”).

The Fiscal 2024 Amended Term Loan will mature in August 2026 on the third anniversary of the amended Funding Date of August 17, 2023.

The Fiscal 2024 Term Loan bears interest at Adjusted Term SOFR plus 1.250 % per annum (subject to a step-up to Adjusted Term SOFR plus 1.375 % or step-downs to Adjusted Term SOFR plus 1.125 % and Adjusted Term SOFR plus 1.000 % in each case, based on ratings).

The Company may voluntarily prepay the Fiscal 2024 Amended Term Loan 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 the Fiscal 2024 Term Loan, subject to certain limitations and qualifications as set forth in the Amended and Restated Term Credit Agreement.

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

At June 30, 2024, the Company is in compliance with all covenants of the Fiscal 2024 Amended Term Loan.

Fiscal 2016 Senior Notes:

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At June 30, 2024, the Company is in compliance with the covenants of the indenture governing the Fiscal 2020 Senior Notes.

The indenture also contains covenants regarding the purchase of the Fiscal 2020 Senior Notes upon a change of control triggering event.

The indenture also contains covenants regarding the purchase of the Fiscal 2020 Senior Notes

upon a change of control triggering event.

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

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The fair value of the fixed-rate Fiscal 2021 Senior Notes at June 30, 2024 and June 30, 2023 was $ 843.5 million and $ 817.4 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”).

The Fiscal 2021 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.

The Fiscal 2021 Revolving Credit Facility, Fiscal 2024 Amended Term Loan, 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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Total $ 550.9 $ 476.0

The Company sponsors a Supplemental Officer Retirement Plan (the “Broadridge SORP”).

The Broadridge SORP is a non-qualified ERISA defined benefit plan pursuant to which the Company will pay supplemental pension benefits to certain key officers upon retirement based upon the officers’ years of service and compensation.

The Broadridge SORP was closed to new participants beginning in fiscal year 2015.

The Company also sponsors a Supplemental Executive Retirement Plan (the “Broadridge SERP”).

The Broadridge SERP is also a non-qualified ERISA defined benefit plan pursuant to which the Company will pay supplemental pension benefits to certain key executives upon retirement based upon the executives’ years of service and compensation.

The Broadridge SERP was closed to new participants beginning in fiscal year 2015.

The SORP and SERP are effectively funded with assets held in a Rabbi Trust.

The assets invested in the Rabbi Trust are to be used in part to fund benefit payments to participants under the terms of the plans.

The Rabbi Trust is irrevocable and no portion of the trust funds may be used for any purpose other than the delivery of those assets to the participants, except that assets held in the Rabbi Trust would be subject to the claims of the Company’s general creditors in the event of bankruptcy or insolvency of the Company.

The Broadridge SORP and SERP are non-qualified plans for federal tax purposes and for purposes of Title I of ERISA.

The Rabbi Trust assets had a value of $ 61.8 million at June 30, 2024 and $ 57.8 million at June 30, 2023 and are included in Other non-current assets in the accompanying Consolidated Balance Sheets.

The SORP and the SERP had a total benefit obligation of $ 61.6 million at June 30, 2024 and $ 58.6 million at June 30, 2023 and are included in Other non-current liabilities in the accompanying Consolidated Balance Sheets.

STOCK-BASED COMPENSATION

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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 did no t repurchase shares in fiscal years 2023 or 2022 under our share repurchase program, 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 repurchased 2.3 million shares in fiscal year 2024 under our share repurchase program as compared to no shares repurchased in fiscal year 2023 under our share repurchase program, 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.

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The Provision for income taxes and effective tax rates for the fiscal year ended June 30, 2024 were $ 179.3 million and 20.4 %, compared to $ 164.3 million and 20.7 %, for the fiscal year ended June 30, 2023, respectively.

The increase in the effective tax rate for the fiscal year ended June 30, 2023 compared to the fiscal year ended June 30, 2022 was driven by lower total discrete benefits, primarily attributable to an ETB of $ 10.4 million for the fiscal year ended June 30, 2023 compared to $ 18.1 million for the fiscal year ended June 30, 2022.

The decrease in the effective tax rate for the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023 was driven by an increase in discrete tax benefits relative to pre-tax income, primarily attributable to an ETB of $ 12.9 million for the fiscal year ended June 30, 2024 compared to $ 10.4 million for the fiscal year ended June 30, 2023.

The Provision for income taxes and effective tax rates for the fiscal year ended June 30, 2023 were $ 164.3 million and 20.7 %, compared to $ 133.1 million and 19.8 %, for the fiscal year ended June 30, 2022, respectively.

The decrease in the effective tax rate for the fiscal year ended June 30, 2022 compared to the fiscal year ended June 30, 2021 was primarily driven by higher total discrete benefits, in addition to higher ETB of $ 18.1 million for the fiscal year ended June 30, 2022 compared to $ 16.9 million for the fiscal year ended June 30, 2021.

As of June 30, 2024, the Company had approximately $ 853.9 million of accumulated earnings and profits attributable to foreign subsidiaries.

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The Company has accrued approximately $ 10.4 million of foreign income and withholding taxes, state income taxes, and tax on exchange gain attributable to such earnings.

In December 2021, the OECD adopted model rules for a global framework to impose a 15% global minimum tax referred to as Pillar Two effective for tax years beginning after January 1, 2024.

The OECD continues to issue additional guidance on the operation of the model rules.

While the United States has not enacted Pillar Two, certain countries in which we operate have adopted their own version of the Pillar Two model rules.

Management continues to monitor additional guidance from the OECD and countries which are implementing Pillar Two.

Based on current guidance, we believe that our net income, cash flows, or financial condition will not be materially impacted by Pillar Two.

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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Research and development expenses 162.1 90.6

Deferred revenue 85.6 29.7

Other 4.3 24.1

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Depreciation 11.9 14.5

Net deferred expenses 329.4 249.5

Deferred expenses 390.6 359.1

Unremitted earnings 10.4 11.5

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in the fiscal year ended June 30, 2023, the Company adjusted accrued interest by $ 0.3 million and recognized a total liability for interest on unrecognized tax positions of $ 4.1 million;

in the fiscal year ended June 30, 2021, 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, 2022, the Company adjusted accrued interest by $ 0.2 million and recognized a total liability for interest on unrecognized tax positions of $ 3.8 million.

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

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The following table summarizes the capitalized costs related to data center agreements as of June 30, 2024:

Amended IT Services Agreement Other Total

Amended and Restated IT Services Agreement Other Total

(in millions)

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The AWS Cloud Agreement expires on December 31, 2026.

Fixed minimum commitments remaining under the AWS Cloud Agreement at June 30, 2023 are $ 186.5 million in the aggregate through December 31, 2026.

Fixed minimum commitments remaining under the AWS Cloud Agreement at June 30, 2024 are $ 136.1 million through December 31, 2026.

The Company has an equity method investment that is a variable interest in a variable interest entity.

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On December 7, 2022, the jury found that BRICS breached the Marketing Agreement and acted with gross negligence and willful misconduct.

Plan Management filed a motion for post-judgment interest, and Mr.

Miller has filed a motion for a new trial on his fraud claim.

BRICS filed post-trial motions to vacate or reduce the verdict.

On July 26, 2023, the trial court vacated the damages award but not the liability finding.

A new trial on damages will be scheduled.

Miller’s motion for a new trial on the fraud claim was denied.

Plan Management’s motion to award post-judgment interest was denied as moot.

In light of these post-trial rulings and the facts and circumstances of the case at this time, the Company does not believe that a material loss is probable in this matter.

A new trial on damages was scheduled.

In July 2024, Broadridge agreed to settle the matter for $ 11.0 million and provided an incremental accrual of $ 10.3 million in the fourth quarter of the 2024 fiscal year.

The settlement is subject to final documentation.

Broadridge Customer Communications (“BRCC”) Machine Operator Claim

A law firm representing a machine operator currently employed by BRCC, a business within the ICS segment in Edgewood, New York sought compensation under the Fair Labor Standards Act and New York Labor Law on behalf of the machine operator and a proposed class of machine operators.

During the third quarter of 2024, Broadridge agreed to settle the matter for $ 9.9 million and provided an incremental accrual of $ 8.2 million.

The settlement is subject to final documentation and court approval.

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

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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.

In January 2022, the Company entered into a series of cross-currency swap transactions which were designated as a net investment hedge against a portion of the Company’s net investment in its Euro functional subsidiaries.

In January 2022, the Company executed a series of cross-currency swap derivative contracts with an aggregate notional amount of EUR 880 million which are designated as net investment hedges to hedge a portion of its net investment in its subsidiaries whose functional currency is the Euro.

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The Company has elected the spot method of accounting whereby the net interest savings from the cross-currency swaps is recognized as a reduction in interest expense in the Company’s Consolidated Statements of Earnings.

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.

In March 2021, 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.

In March 2021, the Company also 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 amortized into Interest expense, net ratably over the ten year term of the Fiscal 2021 Senior Notes.

In May 2021, the Company settled a forward treasury lock agreement that was designated as a cash flow hedge, for a pre-tax loss of $ 11.0 million, after which the final settlement loss is being amortized into Interest expense, net ratably over the 10-year term of the Fiscal 2021 Senior Notes.

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

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.

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.

In the normal course of business, the Company 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.

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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