What changed in this filing

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Item 9A. Controls and Procedures

2020-08-06 compared with 2019-08-01 · 957 added, 928 removed, 2434 unchanged (44% of the section changed)

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In making our assessment, our management used the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Our management has excluded the ICFR of Liaison Technologies Inc.

(Liaison), which we acquired on December 17, 2018 , as discussed in note 18 "Acquisitions" to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Total revenues subject to Liaison's ICFR represented approximately 1.9% of our consolidated total revenues for the fiscal year ended June 30, 2019.

Total assets subject to Liaison's ICFR represented approximately 4.7% of our consolidated total assets as of June 30, 2019 (of which approximately $321.1 million represents goodwill and net intangible assets subject to our internal control over financial reporting as of June 30, 2019).

Our management has excluded the ICFR of Carbonite, Inc.

(Carbonite), which we acquired on December 24, 2019 as discussed in note 19 "Acquisitions" to the Consolidated Financial Statements included elsewhere in this Annual Report on

Total revenues subject to Carbonite's ICFR represented 7.6% of our consolidated total revenues for the fiscal year ended June 30, 2020.

Total assets subject to Carbonite's ICFR represented 17.2% of our consolidated total assets as of June 30, 2020 (of which $1.6 billion, or 15.6% of our consolidated total assets, represents goodwill and net intangible assets subject to our internal control over financial reporting as of June 30, 2020).

Based on the results of our evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our ICFR was effective as of June 30, 2020.

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Based on the evaluation completed by our management, in which our Chief Executive Officer and Chief Financial Officer participated, our management has concluded that there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Matters

As of June 30, 2019, in anticipation of our adoption of ASU No.

2016-02 “Leases (Topic 842)”, we were in the process of finalizing certain changes to our policies, procedures, information systems and the related control activities, to monitor and maintain appropriate internal controls over financial reporting.

These changes in policies and procedures, information systems and the related control activities were implemented in July 2019.

As a result of COVID-19, our employees have shifted to a work from home model beginning in March 2020.

While pre-existing controls were not specifically designed to operate in our current work from home environment, we believe that established internal controls over financial reporting continue to address all identified risk areas.

Other Information

Directors, Executive Officers and Corporate Governance

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Senior Vice President, Cloud Service Delivery

Senior Vice President, Chief Marketing Officer

Executive Vice President, Chief Legal Officer and Corporate Development

Prentiss Donohue

Senior Vice President, Portfolio Group

Senior Vice President, Partners & Alliances

Senior Vice President, Revenue Operations

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Senior Vice President, Chief Information Officer

Aditya Maheshwari

Senior Vice President and Chief Accounting Officer

Executive Vice President, Engineering

Executive Vice President, Chief Product Officer

James McGourlay

Executive Vice President, Customer Operations

Senior Vice President, Chief Marketing Officer

Senior Vice President, Corporate Development

Senior Vice President, Chief Accounting Officer

Craig Stilwell

Executive Vice President and General Manager SMB and Consumer

Brian Sweeney

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Barrenechea was President and Chief Executive Officer of Silicon Graphics International Corporation (SGI), where he also served as a member of the Board.

Barrenechea's tenure at SGI, he led strategy and execution, which included transformative acquisition of assets, as well as penetrating diverse new markets and geographic regions.

Barrenechea's tenure at SGI, he led strategy and execution, which included transformative acquisition of assets, as well as penetrating diverse new markets and

geographic regions.

Barrenechea also served as a director of SGI from 2006 to 2012.

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Before going to CA, Mr.

Barrenechea was the Senior Vice President of Applications Development at Oracle Corporation from 1997 to 2003, managing a multi-thousand person global team while

serving as a member of the executive management team.

Barrenechea was the Senior Vice President of Applications Development at Oracle Corporation from 1997 to 2003, managing a multi-thousand person global team while serving as a member of the executive management team.

From 1994 to 1997, Mr.

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Barrenechea holds a Bachelor of Science degree in computer science from Saint Michael's College.

He has been the recipient of many awards, including the 2011 Best Large Company CEO from the San Francisco Business Times and 2015 Results-Oriented CEO of the year by CEO World Awards.

Barrenechea has authored several books including The Intelligent and Connected Enterprise, The Golden Age of Innovation, Digital Manufacturing, Digital Financial Services, On Digital, Digital:

Disrupt or Die, eGovernment or Out of Government, Enterprise Information Management:

The Next Generation of Enterprise Software, Software Rules and e-Business or out of Business.

The Next Generation of Enterprise Software.

He has also written a number of whitepapers, such as The Resilient Organization:

COVID-19 and New Ways to Work , The Cloud:

Destination for Innovation and Security:

Creating Trust in a Zero Trust World .

Madhu Ranganathan

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Berry holds both a Bachelor and Master’s Degree in Electrical and Computer Engineering and an MBA from Kellogg School of Management at Northwestern University.

Blatt has served as OpenText's Senior Vice President and Chief Marketing Officer since April 2020.

Prior to joining OpenText, Mr.

Blatt served as the Senior Vice President, Strategy and Operations at Genesys from June 2015 to July 2019.

While at Genesys, Mr.

Blatt led strategic efforts, including the company’s transition to the cloud.

From April 2011 to June 2015 Mr.

Blatt served as Senior Vice President at Pega (PEGA) leading its transformation from a business process management company to a customer relationship management company.

Blatt was also the Chief Product Officer at ACI Worldwide (ACIW) from March 2008 to March 2011 where he was responsible for defining and communicating the company's product vision, strategy and the development life cycle.

Blatt holds a Ph.D.

and MA from Boston University and graduated from the Advanced Management Program at Harvard Business School.

Blatt currently serves as Advisory Board Member for Earth PBC, a software company focused on sustainability and fair labor practices in some of the most remote parts of the world.

Davies joined OpenText as Chief Legal Officer in September 2009.

Davies also serves as the Company's Chief Compliance Officer, and has responsibility for Corporate Development and the Corporate Secretary Group.

Davies also has responsibility for Corporate Development, the Office of the Chief Compliance Officer and the Corporate Secretary Group.

Prior to joining OpenText, Mr.

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Davies acted as Deputy General Counsel and Corporate Secretary during 2008, and as interim Chief Legal Officer and Corporate Secretary in 2005 and again in 2007.

He led the Corporate Securities legal team as General Counsel-Corporate from 2003, with responsibility for providing legal support on all corporate and securities law matters, and spent five years in Europe supporting all aspects of the Europe, Middle East and Africa (EMEA) business, ultimately as General Counsel, EMEA.

He led the Corporate Securities legal team as General Counsel-Corporate from 2003, with responsibility for providing legal support on all corporate and securities law matters, and spent five years in

Europe supporting all aspects of the Europe, Middle East and Africa (EMEA) business, ultimately as General Counsel, EMEA.

Prior to joining Nortel, Mr.

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He has completed executive leadership programs at the University of Michigan Ross School of Business and IESE Business School in Barcelona, Spain.

Simon Harrision

Simon Harrison

Harrison has served as the Company’s Executive Vice President of Worldwide Sales since October 2017.

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Jamieson holds a Bachelor of Applied Science, Mechanical Engineering from the University of Toronto and received his Professional Engineer designation in 1990.

Aditya Maheshwari

Maheshwari joined OpenText as Senior Vice President and Chief Accounting Officer in February 2016.

Prior to joining OpenText, Mr.

Maheshwari was an Audit Partner in the Technology, Media and Telecommunications practice at KPMG LLP, Canada until February 5, 2016.

With 15 years of experience at KPMG including international postings in the UK and India, Mr.

Maheshwari has the experience of working with several large multinational companies under U.S.

GAAP and International Financial Reporting Standards.

Maheshwari represented Canada on KPMG's global think-tank for the Technology sector and is the co-author of 11 technical and thought-leadership publications, published by KPMG, on revenue recognition for the Technology, Media and Telecommunications sector.

During his tenure in the UK, Mr.

Maheshwari worked in KPMG's technical accounting group, International Standards Group, specializing in revenue recognition.

Maheshwari is a Chartered Professional Accountant (Ontario), Certified Public Accountant (Colorado) and Chartered Accountant (India).

Majzoub has served as Executive Vice President, Engineering since January 2016.

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McGourlay was the Company's Senior Vice President of Global Technical Services from May 2015 to October 2017 and Senior Vice President of Worldwide Customer Service from February 2012 to May 2015.

McGourlay joined OpenText in 1997 and held progressive positions in information technology, technical support, product support and special projects, including, Director, Customer Service and Vice President, Customer Service.

Patricia Nagle

Nagle has served as Senior Vice President, Chief Marketing Officer since February 2018 and is responsible for all marketing and demand generation initiatives, including field marketing, programs, events, product marketing, industry

marketing, demonstrations, partners and alliances as well as inside sales.

Prior to this role, Ms.

Nagle held various positions within the Company since joining OpenText in 2007, including Vice President of Global Partners and Strategic Alliances, from January 2007 to February 2018.

Prior to joining OpenText, Ms.

Nagle was SVP of World Wide Sales, Services and Marketing at Percussion Software, where she was responsible for direct and indirect sales and all customer facing, external media communications, client satisfaction and demand generation activities globally.

Nagle holds a BA in Business Administration, a BA in Economics and a concentration in Marketing from the University of New Hampshire as well as an MBA in Business Administration & Management from Harvard University.

McGourlay joined OpenText in 1997

and held progressive positions in information technology, technical support, product support and special projects, including, Director, Customer Service and Vice President, Customer Service.

Parker has served as the Company's Senior Vice President, Corporate Development since October 2019.

From January 2018 to October 2019, Mr.

Parker served as President & Chief Executive Officer of Quarterhill Inc., focused on the acquisition, management and growth of companies in dedicated technology areas.

Parker previously served as Senior Vice President, Corporate Development of OpenText from 2015 to 2017.

Prior to this role, Mr.

Parker held the position of Vice President, General Counsel & Assistant Secretary from 2009 to 2015, where he was responsible for a variety of corporate legal, litigation management, and governance activities.

Parker also served as Executive Sponsor to OpenText Brazil operations in 2014.

Prior to joining OpenText, Mr.

Parker worked for Nortel Networks Corporation in a variety of senior legal roles, including Managing Attorney, where he was responsible for the company’s global M&A legal function from 2006 to 2009.

Parker holds an Executive Masters of Business Administration from the Richard Ivey School of Business, The University of Western Ontario, a Bachelor of Laws degree from Queen’s University, and a Bachelor of Arts (Honors) degree from Trinity College, The University of Toronto.

Rosen joined OpenText as Senior Vice President and Chief Accounting Officer in April 2020.

Prior to joining OpenText, Mr.

Rosen served as Vice President, Global Controller and Principal Accounting Officer at Wesco Aircraft from September 2018 to March 2020.

Rosen also served as Vice President and Corporate Controller at Safe-Guard Products International from June 2017 to September 2018, as Senior Vice President and Chief Accounting Officer at RioCan from 2011 to 2016, as Chief Accounting Officer, Global Controller at Husky Injection Moldings Systems from 2010 to 2011 and as Senior Vice President and Chief Accounting Officer at MDS Inc.

from 2007 to 2010.

Rosen is a CPA and holds a BSBA, Accounting from Georgetown University.

Craig Stilwell

Stilwell joined OpenText as the Executive Vice President and General Manager, SMB and Consumer in December 2019 through the acquisition of Carbonite.

Prior to joining OpenText, Mr.

Stilwell was the Chief Revenue Officer of Carbonite from July 2019 to December 2019, where he was responsible for leading the company’s go-to-market efforts, including global sales and marketing.

From February 2000 to July 2019 Mr.

Stilwell held various leadership roles at Citrix Systems, including Senior Vice President of Partner Sales, Vice President of US Commercial Sales and Regional COO of the Americas.

Stilwell holds a BSBA with honors in Finance from the University of Florida and serves on the Board of Trustees for his local Leukemia and Lymphoma Society chapter.

Brian Sweeney

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In addition to his OpenText responsibilities, Mr.

Jenkins is Chair of the World Wide Web Foundation, a Commissioner of the Tri-Lateral Commission, founding Chair of the Ontario Global 100 (OG100) and Canadian Co-Chair of the Atlantik Bruecke.

Currently, Mr.

Jenkins is a board member of Manulife Financial Corporation.

In the past five years, Mr.

Jenkins also served as a board member of Thomson Reuters Inc.

Jenkins is Chair of the World Wide Web Foundation, a Commissioner of the Tri-Lateral Commission.

Jenkins has also served as a board member of Manulife Financial Corporation, Thomson Reuters Inc.

and TransAlta Corporation.

He was also past Chair of the Ontario Global 100 (OG100) and past Canadian Co-Chair of the Atlantik Bruecke.

He was the tenth Chancellor of the University of Waterloo and was the Chair of the National Research Council of Canada (NRC).

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Currently, Mr.

Fowlie is also a director of InvestorCom Inc, and Dye & Durham Corporation.

Fowlie is also a director of Dye & Durham Corporation, which became a public company in July 2020, as well as InvestorCom Inc.

and Sapphire Digital Health Solutions Inc., both privately held companies.

In the last five years, Mr.

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Fraser was commissioned as an Infantry Officer following graduation from Carleton University with a Bachelor of Arts in 1980.

He served in various command and staff positions in the Princess Patricia’s

Canadian Light Infantry from platoon to Division throughout his 30 year career.

He served in various command and staff positions in the Princess Patricia’s Canadian Light Infantry from platoon to Division throughout his 30 year career.

Most notable, he commanded the NATO coalition in southern Afghanistan in 2006.

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In 2016, he founded Aegis Six Corporation, which aims at addressing the needs of capacity building abroad and for the private sector within Canada.

Fraser currently works with the Bank of Montreal on their Canadian Defence Community Banking Program, serves as a director of Route1, Inc and the Canadian Forces College Foundation, is a member of The Prince’s Charities Advisory Council as well as the Conference of Defence Association board.

Fraser currently works with the Bank of Montreal on their Canadian Defence Community Banking Program, serves as a director of Route1, Inc, Antoxa Corp.

and the Canadian Forces College Foundation.

He is a member of The Prince’s Charities Advisory Council as well as the Conference of Defence Association board.

Fraser is also a mentor at the Ivey Business School and is the co-author of Operation Medusa, The Furious Battle that Saved Afghanistan from the Taliban.

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From April 2000 to present, Mr.

Sadler has served as the Chairman and CEO of Enghouse Systems Limited, a publicly traded software engineering company that develops geographic information systems as well as contact center systems.

Sadler has served as the Chairman and CEO of Enghouse Systems Limited, a publicly traded software company that provides enterprise software solutions focusing on remote work, contact centers, visual computing and communications for next generation software defined networks.

Sadler was previously Chief Financial Officer, President and Chief Executive Officer of GEAC Computer Corporation Ltd.

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Sadler is a director of Enghouse Systems Limited.

Sadler holds a B.A.

Sadler has a Business and Security Valuation certificate from the Canadian Association of Business Valuators, holds a B.A.

(Honours) in Industrial Engineering and an M.B.A.

(Dean's List) and he is a Chartered Professional Accountant.

(Dean's List) from York University.

He is also a Chartered Professional Accountant.

Singh has served as a director of OpenText since September 2018.

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Slaunwhite has served as a director of OpenText since March 1998.

Slaunwhite has also been Director and Chairman of Vector Talent Holdings, L.P., the parent holding company of Saba Software, since 2017.

Slaunwhite also currently serves on the board of Vector Talent Holdings, L.P., the parent holding company of Saba Software, since 2017.

Previously, Mr.

Slaunwhite also served as Chairman of the board of Saba Software.

Prior to his appointment at Vector Talent Holdings, Mr.

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Stevenson is director of the Canadian Imperial Bank of Commerce (CIBC) where she chairs its Corporate Governance Committee.

Stevenson is also a director of CAE Inc.

and Capital Power Corporation (Audit Committee Chair).

CIBC, CAE Inc., and Capital Power Corporation are all publicly listed companies.

Stevenson is also a director of CIBC Bancorp USA Inc.

and CIBC USA, and serves on the board of Capital Power Corporation (Audit Committee Chair).

CIBC and Capital Power Corporation are publicly listed companies.

She also serves on the St.

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In the last five years, Ms.

Stevenson also served as a director of Valeant Pharmaceuticals International Inc., currently Bausch Health Companies Inc., and OSI Pharmaceuticals Inc.

Stevenson also served as a director of Valeant Pharmaceuticals International Inc., currently Bausch Health Companies Inc and CAE Inc.

Carl Jürgen Tinggren

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Tinggren gained extensive management experience at Sika AG, a public specialty chemicals company, based out of Switzerland, Sweden and North America, as well as at Booz Allen & Hamilton.

Tinggren is currently the Chairman of the board of Bekaert SA and a member of the board of directors of Johnson Controls International, where he also serves as lead director and as chair of the audit committee.

is currently the Chairman of the board of Bekaert SA and a member of the board of directors of Johnson Controls International, where he also serves as lead director and as chair of the audit committee.

Previously, Mr.

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Weinstein also serves on a number of not-for-profit boards.

Weinstein has been recognized by Martindale- Hubbell (U.S.) with the highest possible rating in both Legal Ability and Ethical Standards.

As well LaBarge Weinstein has been recognized by Canadian Lawyer as one of the Top 10 Corporate Boutiques.

Weinstein holds an LL.B.

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These claims allege, among other things, misrepresentations by Valeant in certain of its public disclosure documents.

Fowlie was a director of Meikle Group Inc.

(Meikle Group), a private company, from June 2009 to April 2010.

Subsequent to Mr.

Fowlie's resignation, as part of a restructuring, creditors appointed a receiver to sell the business assets and transfer employees of Meikle Group, as a going concern, to a newly financed company.

The parties to these class action claims reached settlement agreements which, assuming approval by the respective courts, will resolve and discharge, based on the terms of the settlements, all such class claims against Valeant and the other defendants in the actions without any admissions of liability and with all allegations of wrongdoing denied.

Sadler was a director of Frontline Technologies Inc.

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filed an assignment into bankruptcy under applicable bankruptcy and insolvency laws of Canada.

Stilwell served as the Chief Revenue Officer of Carbonite from July 2019 to December 2019.

During his tenure, Carbonite was, and continues to be, the subject of certain putative securities class action claims in the United States.

See note 14 “Guarantees and Contingencies - Carbonite Class Action Complaint” for more details.

Audit Committee

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The Company has established a Board Diversity Policy recognizing that a Board made up of highly qualified directors from diverse backgrounds, including diversity of gender, age, race, sexual orientation, religion, ethnicity and geographic representation, is important.

The Company has not established a specific target number or date by which to achieve a specific number of women on the Board, as we consider a multitude of factors, including skills, experience, expertise and character, in determining the best nominee at the time and consider the Company’s objectives and challenges at such time.

There are currently three women on the Board which represents approximately 27% of the current Board and of the director nominees, and 33% of the current independent Board members.

In reference to the new disclosure requirements under the CBCA, the Company has not adopted a written policy that specifically relates to the identification and nomination of women, aboriginal peoples in Canada, persons with disabilities and members of visible minorities (the “Designated Groups”) for election as directors.

As discussed above, the Board Diversity Policy of the Company includes consideration of broader categories of diversity beyond those of the Designated Groups but which encompass the Designated Groups and which the Board of Directors considers to be better aligned to achieve the range of perspectives, experience and expertise required by the Company.

As of the date of this Annual Report on Form 10-K, for each of the four Designated Groups, the Company has not established a specific target number or percentage, nor a specific target date by which to achieve a specific target number or percentage of members of each Designated Groups on the Board, as we consider a multitude of factors, including skills, experience, expertise, character and the Company’s objective and challenges at the time in determining the best nominee at such time.

As of the date of this Annual Report on Form 10-K, there are currently three women on the Board which represents approximately 27% of the current Board and of the director nominees, and 33% of the current independent Board members.

One director self-identified to the Company as a person with disabilities.

The Company has not set term limits for independent directors because it values the cumulative experience and comprehensive knowledge of the Company that long serving directors possess.

The Company does not have a director retirement policy, however the Corporate Governance and Nominating Committee considers the results of its director assessment process in determining the nominees to be put forward.

The Company does not have a director retirement policy.

However the Corporate Governance and Nominating Committee considers the results of its director assessment process in determining the nominees to be put forward.

In conducting director evaluations and nominations, the Corporate Governance and Nominating Committee considers the composition of the Board and whether there is a need to include nominees with different skills, experiences and perspectives on the Board.

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The Company is committed to a diverse and inclusive workplace, including advancing women to executive officer positions.

The Company has not adopted specific objectives or targets regarding women at the executive officer level;

however, the Company has adopted a formal written Global Diversity and Inclusion Policy which expresses its commitment to fostering a diverse and inclusive workplace for all employees.

The Company currently has two women (17%) on the executive leadership team (ELT), while approximately 21% of existing positions on the senior leadership team (SLT), exclusive of our ELT, are held by women.

A principal objective of our Global Diversity and Inclusion Policy is to support and monitor the identification, development and retention of diverse employees, including gender diversity at executive and leadership positions.

We will continue to develop a sustainable culture of diversity and inclusion that provides all employees an opportunity to excel.

The Company has not adopted specific objectives or targets regarding Designated Groups at the executive officer level, as we consider a multitude of factors, including skills, experience, expertise, character and the Company’s objectives and challenges at the time in determining the best appointment at such time;

however, the Company has adopted a formal written Global Employment Equity and Diversity Policy which expresses its commitment to fostering a diverse and inclusive workplace for all employees, regardless of culture, national origin, race, color, gender, gender identification, sexual orientation, family status, age, veteran status, disability, or religion, or other basis.

The Company currently has one woman as a Named Executive Officer (20%) and as one of our executive officers part of the executive leadership team (ELT) (7%), while approximately 26% of existing positions on the senior leadership team (SLT), exclusive of our ELT, are held by women.

In addition, two members of the ELT and SLT have self-identified to the Company as a visible minority.

A principal objective of our Global Employment Equity and Diversity Policy is to support and monitor the identification, development and retention of diverse employees, including gender diversity at executive and leadership positions.

We will continue to develop a sustainable culture of diversity and inclusion that provides all employees an opportunity to excel, and strive to present diverse slates of candidates for all our roles and mandate it for our senior leader positions.

Executive Compensation

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Hamilton, Deborah Weinstein.

To the extent that this Annual Report on Form 10-K has been or will be specifically incorporated by reference into any filing by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (Exchange Act), this “Compensation Committee Report” shall not be deemed “soliciting materials”, unless specifically otherwise provided in any such filing.

this “Compensation Committee Report” shall not be deemed “soliciting materials”, unless specifically otherwise provided in any such filing.

COMPENSATION DISCUSSION AND ANALYSIS

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Madhu Ranganathan - Executive Vice President and Chief Financial Officer (CFO)

Muhi Majzoub - Executive Vice President, Engineering

Craig Stilwell - Executive Vice President & General Manager SMB and Consumer

Muhi Majzoub - Executive Vice President, Chief Product Officer

Davies - Executive Vice President, Chief Legal Officer and Corporate Development

Simon Harrison - Executive Vice President, Worldwide Sales

Compensation Oversight Process

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Long-Term Incentive Plan - The Compensation Committee reviewed semi-annual analysis provided by Mercer Canada Limited (Mercer) related to performance under all outstanding Performance Share Unit Programs (for details on the programs, refer to the section titled “Long Term Incentives”).

COVID-19 Compensation Review - In order to mitigate the operational impacts of COVID-19, our Compensation Committee and Board approved the following compensation adjustments, relating to our Named Executive Officers and directors, effective for the period May 15, 2020 through June 30, 2021, subject to review and modification as the situation warrants:

15% base salary reduction and forbearance of any annual variable cash compensation effective May 15, 2020 for the remainder of Fiscal 2020 and for all of Fiscal 2021, totaling an approximate 60% reduction in targeted cash compensation, for our CEO & CTO;

15% base salary reduction and 15% reduction in target annual variable cash compensation for our other Named Executive Officers and members of the executive leadership team (ELT);

15% reduction in cash retainer compensation fees payable to the Board of Directors;

Suspension of employer paid contributions to retirement benefits in the United States and Canada for the remainder of Fiscal 2020 and Fiscal 2021.

Although the Compensation Committee has responsibility for decisions on executive compensation, it may consider input from management, analysis provided from the compensation consultant, as well as other factors that the Committee considers appropriate.

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Hugessen did not provide any other services to the Company during Fiscal 2020 , outside of its capacity as compensation consultants.

In Fiscal 2020, Compensation Committee also had various discussions with Frederic W.

Cook & Co., Inc.

(FW Cook), an independent consulting firm specializing in executive compensation consulting.

During Fiscal 2020, the Chairman and members of the Compensation Committee held discussions from time to time with representatives of FW Cook in connection with compensation market practices in light of COVID-19, and potential impacts on Company's financial performance.

FW Cook reviewed relevant information and industry benchmarks on matters relating to CEO and executive officer compensation, including compensation market practices adopted in light of COVID-19.

The Compensation Committee met five times during Fiscal 2020 .

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The Compensation Committee periodically reviews data related to compensation levels and programs of a peer group of comparable organizations.

Our last peer group analysis was prepared for management by Radford, an AON Hewitt Company (Radford), in July 2018 using the criteria described in the table below, and was presented to and approved by the Compensation Committee at that time.

Our last peer group analysis was prepared for management by Radford, an AON Hewitt Company (Radford), in February 2019 using the criteria described in the table below, and was presented to and approved by the Compensation Committee at that time.

Our peer group consists of 19 companies that include 18 US-based companies and one Israel-based company.

No additional comparable companies were added to our peer group in Fiscal 2019.

In Fiscal 2020, seven new companies were added to our peer group and four were removed.

General Description

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Broadridge Financial Solutions, Inc.

CA Technologies

Cadence Design Systems, Inc.

CDK Global LLC

Check Point Software Technologies Ltd.

Citrix Systems, Inc.

Global Payments Inc.

Nuance Communications, Inc.

Pitney Bowes Inc.

Red Hat, Inc.

Palo Alto Networks, Inc.

Sabre Corporation

Symantec Corporation

SS&C Technologies, Inc.

Synopsys, Inc.

Teradata Corporation

The Dun & Bradstreet Corporation

Taking into account the benchmarking review performed in July 2018, further efforts were made to align our Named Executive Officers' compensation packages more closely with our stated compensation objectives.

Total System Services, Inc.

The following graph compares for each of the five fiscal years ended June 30, 2020, the yearly percentage change in the cumulative total shareholder return on our Common Shares with the average cumulative total return of the NASDAQ Composite Index, the S&P/TSX Composite Index (the Indices) and our peer group listed above.

The graph illustrates the cumulative return on a $100 investment in our Common Shares made on June 30, 2015, as compared with the cumulative return on a $100 investment in the respective Indices and the average cumulative return on a $100 investment in our peer group

made on the same day.

Dividends declared on securities comprising the respective Indices and our peer group and declared on our Common Shares are assumed to be reinvested.

The performance of our Common Shares as set out in the graph is based upon historical data and is not indicative of, nor intended to forecast, future performance of our Common Shares.

The graph lines merely connect measurement dates and do not reflect fluctuations between those dates.

Please also see “Stock Performance Graph and Cumulative Total Return” included elsewhere in this Annual Report on Form 10-K for more details.

Taking into account the benchmarking review performed in February 2019, further efforts were made to align our Named Executive Officers' compensation packages more closely with our stated compensation objectives.

Accordingly, Messrs.

Majzoub and Davies received an adjustment to their respective total cash compensation and Mr.

Harrison received an adjustment to his short-term incentive compensation during Fiscal 2019.

Barrenechea, Davies and Ms.

Ranganathan received an adjustment to their respective long-term incentive compensation during Fiscal 2020 .

Effective May 15, 2020, as a result of the COVID-19 compensation adjustments discussed above, all of our Named Executive Officers', with the exception of Mr.

Barrenechea accepted a 15% base salary reduction and a 15% reduction in target annual variable cash compensation.

Barrenechea accepted a 15% base salary reduction and forbearance of any annual variable cash compensation for the remainder of Fiscal 2020 and for all of Fiscal 2021, totaling an approximate 60% reduction in targeted cash compensation.

These reductions will remain in effect through June 30, 2021, subject to review and modification as the situation warrants.

Please also see "Special Fiscal 2020 Performance Bonus" below.

Aligning Officers' Interests with Shareholders' Interests

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To ensure alignment of the interests of our executive officers with the interests of our shareholders, our executive officers have a significant proportion of compensation “at risk”.

Compensation that is “at risk” means compensation that may or may not be paid to an executive officer depending on whether the Company and such executive officer is able to meet or exceed applicable performance targets.

Compensation that is “at risk” means compensation that may or may

not be paid to an executive officer depending on whether the Company and such executive officer is able to meet or exceed applicable performance targets.

Short-term incentives and long-term incentives meet this definition of compensation which is at risk, and long-term incentives are an additional incentive used to promote the creation of longer-term shareholder value.

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The chart below provides the approximate percentage of target total compensation provided to each Named Executive Officer that was either fixed pay or “at risk” for Fiscal 2020 :

Before COVID-19 Compensation Adjustments

After COVID-19 Compensation Adjustments

Named Executive Officer

Fixed Pay Percentage

(“Not At Risk”)

Short-Term Incentive

Percentage (at 100% target)

(at 100% target)

Long-Term Incentive

Percentage (at 100% target)

(at 100% target)

(“Not At Risk”)

(at 100% target)

Long-Term Incentive

(at 100% target)

Madhu Ranganathan

Simon Harrison

Craig Stilwell

Fixed pay includes:

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Due to his responsibilities relating to sales, Mr.

Harrison's objectives consist of worldwide license and cloud revenues and minimum contract value (MCV) and worldwide adjusted operating income.

Stilwell's objectives consist of SMB and Consumer (SMBC) revenues and SMBC adjusted EBITDA.

Worldwide revenues are derived from the “Total Revenues” line of our audited income statement with certain adjustments relating to the aging of accounts receivable.

Worldwide revenues are an important variable that helps us to assess our Named Executive Officers’ performance in helping us to grow and manage our business.

Worldwide license and cloud revenues are derived from sum of the "License" and "Cloud services and subscriptions" lines of our audited income statement.

MCV is the total projected commissionable incremental revenue defined in a signed and written agreement between the Company and its customer.

It represents the minimum amount of revenue that we expect to receive from a contract.

For the purposes of calculating the achievement of this performance objective, we only consider MCV that is derived from new business.

Worldwide adjusted operating income, which is intended to reflect the operational effectiveness of our leadership, is calculated as total revenues less the total cost of revenues and operating expenses excluding amortization of intangible assets, special charges and stock-based compensation expense.

Worldwide adjusted operating income is also adjusted to remove the impact of foreign exchange.

SMBC revenue is the total revenue earned through Mr.

Stilwell's SMBC team, which has been recognized in the "Total Revenues" line of our audited income statement.

SMBC adjusted EBITDA is the total adjusted earnings before interest, taxes, depreciation and amortization, derived from Mr.

Stilwell's SMBC team.

For Fiscal 2020 , the following table illustrates the total short-term target awards for each Named Executive Officer, along with the associated weighting of the related performance measures.

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Worldwide Adjusted Operating Income

Worldwide License and Cloud Revenues and MCV

SMBC Revenues

SMBC Adjusted EBITDA

Madhu Ranganathan

Simon Harrison

Craig Stilwell (2)

Target amounts have been adjusted to reflect the COVID-19 compensation adjustments discussed above, which became effective May 15, 2020.

Target amount was prorated based on the number of months Mr.

Stilwell was employed with us during Fiscal 2020.

For the short-term incentive award amounts that would be earned at each of threshold, target and maximum levels of performance, for applicable objectives, see “Grants of Plan-Based Awards for Fiscal 2020 ” below.

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The threshold and target levels and payout formula are set forth below as well as actual performance and payout percentages achieved in Fiscal 2020 .

The Board has discretion to make positive or negative adjustments if it considers them to be reasonably appropriate.

The Board did not make any discretionary adjustments for Fiscal 2019 awards.

The Board and the Compensation Committee have broad discretion to make positive or negative adjustments if it considers them to be reasonably appropriate.

No discretionary adjustments were made for Fiscal 2020 awards.

Effective August 5, 2020, a policy addendum was adopted to our short-term and long-term compensation plans that outlines the principles under which the broad discretion may, from time to time, be applied in order to avoid unintended windfalls or penalties for plan participants.

Events that might warrant such discretionary adjustments include, but are not limited to, terrorism, political unrest, war, pandemics and natural disasters.

Objectives (in millions)

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Worldwide Adjusted Operating Income

Worldwide License and Cloud Revenues and MCV

SMBC Revenues

SMBC Adjusted EBITDA

Adjusted to remove the impact of foreign exchange and, in some cases, reflect certain adjustments relating to the aging of accounts receivable.

The table below illustrates the percentage of the target awards paid to our Named Executives Officers, with the exception of Mr.

Harrison, in accordance with our actual results achieved during Fiscal 2019.

Stilwell, in accordance with our actual results achieved during Fiscal 2020 .

Worldwide Revenues and Worldwide Adjusted Operating Income - Attainment and Corresponding Payment

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Linear x25 for every 0.5% over 100%

an attainment of 101.0% results in a payment of 150%

Attainment of 101.0% results in a payment of 150%

In Fiscal 2020 , we achieved 98% of our worldwide revenue target and 102% of our worldwide adjusted operating income target.

The “Worldwide Revenues and Worldwide Adjusted Operating Income Calculations” table above illustrates under the “% Attainment” column that an achievement of 98% of target for the worldwide revenue performance criteria results in an award payment of 85% of the target award amount and an achievement of 102% of target for the worldwide adjusted operating income performance criterion results in an award payment of 200% of the target award amount.

The table below illustrates the percentage of the target awards paid to Mr.

Harrison, as a result of more direct responsibilities relating to sales, in accordance with our actual results achieved during Fiscal 2019.

Worldwide License and Cloud Revenues and MCV and Worldwide Adjusted Operating Income -

Attainment and Corresponding Payment

The tables below illustrates the percentage of the target awards paid to Mr.

Stilwell, as a result of more direct responsibilities relating to SMBC sales, in accordance with our actual results achieved during Fiscal 2020 .

SMBC Revenues - Attainment and Corresponding Payment

105% and above

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Linear x20 for every 1.0% over 100%

an attainment of 101% results in a payment of 125%

Attainment of 101% results in a payment of 120%

SMBC Adjusted EBITDA - Attainment and Corresponding Payment

110% and above

Actual / Budget = % of Attainment

Linear x10 for every 1.0% over 100%

Attainment of 101% results in a payment of 110%

In Fiscal 2020 , Mr.

Harrison achieved 96% of his worldwide license and cloud revenue and MCV target and 104% of his worldwide adjusted operating income target.

The “Worldwide License and Cloud Revenue and MCV and Worldwide Adjusted Operating Income Calculation” table above illustrates under the “% Attainment” column that an achievement of 96% of target for the worldwide license and cloud revenue and MCV performance criteria results in an award payment of 70% of the target award amount and an achievement of 104% of target for the worldwide adjusted operating income performance criterion results in an award payment of 200% of the target award amount.

Stilwell achieved 99% of his SMBC revenue target and 111% of his SMBC adjusted EBITDA target.

The “SMBC Revenue Calculation" and "SMBC Adjusted EBITDA Calculation” tables above illustrates under the “% Attainment” column that an achievement of 99% of target for the SMBC revenue performance criteria results in an award payment of 85% of the target award amount and an achievement of 111% of target for the SMBC adjusted EBITDA performance criterion results in an award payment of 200% of the target award amount.

The actual short-term incentive award earned by each Named Executive Officer for Fiscal 2020 was determined in accordance with the formulas described above.

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Worldwide Adjusted Operating Income

Craig Stilwell

Performance Measure:

(% of Target)

Worldwide Revenues

Worldwide Adjusted Operating Income

SMBC Revenues

SMBC Adjusted EBITDA

The target amount and resulting amount payable was prorated based on the number of months Mr.

Stilwell was employed with the Company during Fiscal 2020.

Performance Measure:

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Worldwide Adjusted Operating Income

Simon Harrison

Performance Measure:

(% of Target)

Worldwide License and Cloud Revenues and MCV

Worldwide Revenues

Worldwide Adjusted Operating Income

Special Fiscal 2020 Performance Bonus

Despite the impact of COVID-19, we were able to deliver strong financial results for Fiscal 2020, including our fourth fiscal quarter, as a result of the hard work and commitment of our employees.

In recognition of their contributions, following the end of Fiscal 2020, the Compensation Committee decided to grant a special performance bonus to those employees whose pay had been cut as a result of the COVID-19 compensation adjustments described above.

Employees, including our Named Executive Officers, will receive an amount equal to the reductions in their Fiscal 2020 salary and annual incentive payout made pursuant to such compensation adjustments.

The special performance bonus will be paid in September 2020.

However, as it relates to performance in Fiscal 2020, the bonus received by each of the Named Executive Officers is included in the Bonus column of the Summary Compensation Table below.

The special performance bonuses were determined to be made in respect of Fiscal 2020 only and the COVID-19 compensation adjustments will remain in place throughout Fiscal 2021, subject to review and modification as the situation warrants.

Long-Term Incentives

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Madhu Ranganathan

Simon Harrison

Craig Stilwell (1)

The target amount was prorated based on the number of months Mr.

Stilwell was employed with us during Fiscal 2020

Awards granted in Fiscal 2020 under the Fiscal 2022 LTIP were in addition to the awards granted in Fiscal 2019, Fiscal 2018, and prior years.

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Then the percentage of the PSU target award that will be paid out will be:

1st percentile

Below 25th percentile

25th percentile

50th percentile

Any target percentile achieved between 1 and 100th percentile will be interpolated to determine a payout that can range from 1.5% to 150% of the target award.

80th percentile

Any target percentile achieved between 25th and 80th percentile will be interpolated to determine a payout that can range from 50% to 200% of the target award.

The amounts that may be realized for PSU awards under the Fiscal 2022 LTIP are as follows, calculated based on the market price of our Common Shares on the NASDAQ as of June 30, 2020 , and applied to the number of PSUs to be issued to the Named Executive Officers based on the levels of achievement disclosed above.

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Madhu Ranganathan

Simon Harrison

Craig Stilwell (1)

Grants made to Mr.

Stilwell under the LTIP 2022 plan were prorated based on the number of months Mr.

Stilwell was employed with the Company during Fiscal 2020.

Fiscal 2022 LTIP - RSUs

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Madhu Ranganathan

Simon Harrison

Craig Stilwell (1)

Grants made to Mr.

Stilwell under the LTIP 2022 plan were prorated based on the number of months Mr.

Stilwell was employed with the Company during Fiscal 2020.

Fiscal 2022 LTIP - Stock Options

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In addition to grants made in connection with our LTIP program, from time to time, we may grant stock options and/or RSUs to new strategic hires and to our employees in recognition of their service, such as for promotions, retention, or other reasons.

In Fiscal 2019, we granted stock options to two of our Named Executive Officers, namely, Mr.

Majzoub and Mr.

Davies in recognition of their service.

In Fiscal 2020 , we granted stock options and RSUs to one of our Named Executive Officers, namely, Mr.

Stilwell in connection with the commencement of his employment.

Details of these grants are contained in the table below under "Grants of Plan Based Awards".

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Ranganathan and Mr.

Harrison, have five years from becoming subject to these guidelines to achieve the equity ownership guidelines required by their position.

Stilwell, have five years from becoming subject to these guidelines to achieve the equity ownership guidelines required by their position, which in the case of Ms.

Ranganathan is 2023 and Mr Stilwell is 2025.

With respect to non-management directors, both Common Shares and deferred stock units (DSUs) are counted towards the achievement of the Share Ownership Guidelines.

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The Tax Cuts and Jobs Act amended Section 162(m) to expand the corporations and executives to which it applies.

Beginning in Fiscal 2019, we are no longer able to deduct under Section 162(m) compensation paid in excess of $1,000,000 to any person who served as CEO or CFO during the taxable year and any other Named Executive Officer serving as an executive at the end of the taxable year (each, a “covered employee”) as well any person who was a covered employee in a preceding taxable year, subject to limited transition relief.

Effective Fiscal 2019, we are no longer able to deduct under Section 162(m) compensation paid in excess of $1,000,000 to any person who served as CEO or CFO during the taxable year and any other Named Executive Officer serving as an executive at the end of the taxable year (each, a “covered employee”) as well any person who was a covered employee in a preceding taxable year, subject to limited transition relief.

Summary Compensation Table

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dollars at an annual average rate of 0.746217 , 0.756489, and 0.786589, for Fiscal 2020 , Fiscal 2019, and Fiscal 2018, respectively.

Any British pounds sterling payments included herein have been converted to U.S.

dollars at an annual average rate of 1.342283 for Fiscal 2018.

Incentive Plan

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EVP, Chief Financial Officer

Executive Vice President, Engineering

Craig Stilwell

EVP & General Manager SMB and Consumer

Executive Vice President, Chief Product Officer

Executive Vice President, Chief Legal Officer and Corporate Development

Simon Harrison

Executive Vice President, Worldwide Sales

Amounts reflect the COVID-19 compensation adjustments discussed above, which became effective May 15, 2020.

Amounts set forth in this column represent a special performance bonus, approved by the Board, equal to an amount equal to the reductions in their Fiscal 2020 salary and annual incentive payout made pursuant to the COVID-19 compensation adjustments described above.

The special performance bonus will be paid in September 2020;

however, as it relates to performance in Fiscal 2020, the bonus received by each of the Named Executive Officers is included herein.

PSUs and RSUs were granted pursuant to the Fiscal 2022 LTIP.

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The total value of all perquisites and personal benefits for this Named Executive Officer was less than $10,000, and, therefore, excluded.

The executive officer was not a Named Executive Officer during the fiscal year, and, therefore compensation details have been excluded.

Represents amounts we paid or reimbursed for:

Club membership fees ($3,505)

Taxable benefit on annual sales event ($11,225)

Represents amounts we paid or reimbursed for:

Tax equalization in respect of taxes incurred in 2015-2017 in connection with Mr.

Harrison's transition from the UK to the United States ($549,403).

Housing allowance ($101,368)

Taxable benefit on annual sales event ($4,558)

The executive officer was not a Named Executive Officer, nor an employee of the Company, during the fiscal year, and, therefore compensation details have been excluded.

Grants of Plan-Based Awards in Fiscal 2020

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August 5, 2019

August 6, 2018

Craig Stilwell

February 3, 2020

August 5, 2019

Simon Harrison

August 5, 2019

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August 5, 2019

August 6, 2018

Craig Stilwell

February 3, 2020

August 5, 2019

Simon Harrison

August 5, 2019

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For further information, see “Compensation Discussion and Analysis - Aligning Officers' Interests with Shareholders' Interests - Long-Term Incentives - Fiscal 2022 LTIP” above.

On February 3, 2020 Mr.

Stilwell was granted 5,400 PSUs and 2,700 RSUs under our Fiscal 2021 LTIP plan.

Additionally, on February 3, 2020, Mr.

Stilwell was granted 10,000 RSUs in accordance with his employment agreement, which vest 2 years from the date of grant.

Outstanding Equity Awards at End of Fiscal 2020

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rights that have not vested ($) (3)

August 1, 2014

August 1, 2021

January 29, 2015

January 29, 2022

January 29, 2015

January 29, 2022

July 29, 2016

July 29, 2023

July 29, 2016

July 29, 2023

August 7, 2017

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August 6, 2018

Madhu Ranganathan

August 5, 2019

August 6, 2018

November 2, 2012

November 2, 2019

August 2, 2013

August 2, 2020

August 1, 2014

August 1, 2021

July 31, 2015

July 31, 2022

July 29, 2016

July 29, 2023

Madhu Ranganathan

August 6, 2018

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August 5, 2019

Craig Stilwell

February 3, 2020

February 3, 2027

February 3, 2020

August 2, 2013

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August 6, 2018

Simon Harrison

August 5, 2019

July 29, 2016

July 29, 2023

August 7, 2017

August 7, 2024

November 6, 2017

November 6, 2024

August 6, 2018

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August 6, 2018

August 5, 2019

Options in the table above vest annually over a period of 4 years starting from the date of grant, with the exception of (i) 1,200,000 options granted to the CEO in Fiscal 2015 and 600,000 options granted to the CEO in Fiscal 2017.

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Madhu Ranganathan

Simon Harrison

Craig Stilwell

“Value realized on exercise” is the excess of the market price, at date of exercise, of the shares underlying the options over the exercise price of the options.

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Pursuant to our employment agreements with our Named Executive Officers and the terms of our LTIP, each Named Executive Officer’s entitlement upon termination of employment without cause or following a change in the Named Executive Officer’s relationship with the Company, both absent a change in control event and within twelve months of a change in control event, are set forth below.

These amounts have not been adjusted to reflect the COVID-19 compensation adjustments discussed above, which became effective May 15, 2020.

No Change in Control

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Termination without cause or Change in relationship

Craig Stilwell

Termination without cause or Change in relationship

Simon Harrison

Termination without cause or Change in relationship

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These benefits will be provided at the cost of the Company, provided that Mr.

Barrenechea continues to be responsible for funding an amount that is equal to his

employee contribution as Vice Chair, Chief Executive Officer and Chief Technology Officer, unless he becomes employed elsewhere, at which point this benefit will terminate.

Barrenechea continues to be responsible for funding an amount that is equal to his employee contribution as Vice Chair, Chief Executive Officer and Chief Technology Officer, unless he becomes employed elsewhere, at which point this benefit will terminate.

In the event that the employee or company contribution funding increases, Mr.

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Termination without cause or Change in relationship

Craig Stilwell

Termination without cause or Change in relationship

Simon Harrison

Termination without cause or Change in relationship

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Amounts (i) potentially payable under plans which are generally available to all salaried employees, such as life and disability insurance, and (ii) earned but unpaid, in both cases, are excluded from the table.

The values related to vesting of stock options and awards are based upon the fair market value of our Common Shares of $41.20 per share as reported on the

NASDAQ on June 30, 2019, the last trading day of our fiscal year.

The values related to vesting of stock options and awards are based upon the fair market value of our Common Shares of $42.48 per share as reported on the NASDAQ on June 30, 2020 , the last trading day of our fiscal year.

The other material assumptions made with respect to the numbers reported in the table below are:

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The salary and incentive payments are calculated based on the amounts of salary, incentive and benefit payments which were payable to each Named Executive Officer as of June 30, 2020 ;

Payments under the LTIPs are calculated as though 100% of Fiscal 2021 LTIP (granted in Fiscal 2019), Fiscal 2020 LTIP (granted in Fiscal 2018), and Fiscal 2019 LTIP (granted in Fiscal 2017) have vested with respect to a termination without cause or change in relationship following a change in control event, and as though a pro-rated amount have vested with respect to no change in control event.

Payments under the LTIPs are calculated as though 100% of Fiscal 2022 LTIP (granted in Fiscal 2020 ), Fiscal 2021 LTIP (granted in Fiscal 2019), and Fiscal 2020 LTIP (granted in Fiscal 2018) have vested with respect to a termination

without cause or change in relationship following a change in control event, and as though a pro-rated amount have vested with respect to no change in control event.

Actual payments made at any future date may vary, including the amount the Named Executive Officer would have accrued under the applicable benefit or compensation plan as well as the price of our Common Shares.

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Termination Without Cause / Change in Relationship, within 12 months following a Change in Control

Craig Stilwell

Termination Without Cause / Change in Relationship with no Change in Control

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Termination Without Cause / Change in Relationship, within 12 months following a Change in Control

Simon Harrison

Termination Without Cause / Change in Relationship with no Change in Control

20 unchanged sentences

Deborah Weinstein (12)

Brain Jackman (14)

Non-management directors may elect to defer all or a portion of their retainer and/or fees in the form of Common Share equivalent units under our Directors' Deferred Share Unit Plan (DSU Plan) based on the value of the Company's shares as of the date fees would otherwise be paid.

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Sadler abstained from voting on all transactions from which he would potentially derive consulting fees.

Jackman retired from the board of directors effective September 5, 2019, being the date of our annual general meeting.

Directors who are salaried officers or employees receive no compensation for serving as directors.

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$6,000 per year payable at $1,500 at the beginning of each quarterly period.

Effective May 15, 2020, as a result of the COVID-19 compensation adjustments discussed above, all of our non-management directors accepted a 15% reduction in cash retainer compensation fees payable.

For Fiscal 2020, all cash related payments were completed prior to this announcement, and therefore did not result in an adjustment to compensation in Fiscal 2020.

These reductions will remain in effect through June 30, 2021, subject to review and modification as the situation warrants.

The Board has adopted a DSU Plan which is available to any non-management director of the Company.

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For Fiscal 2020 , the annual DSU grant was approximately $225,000 for each non-management director and approximately $295,000 for the Chairman of the Board.

As newly elected members of our board, Mr.

Singh and Mr.

Fraser each also received a pro rata portion of the annual DSU grant to compensate for their initial month of service of approximately $18,750.

DSUs granted as compensation for directors fees vest immediately whereas the annual DSU grant vests at the Company’s next annual general meeting.

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Hamilton and Weinstein.

None of the members of the Compensation Committee have been or are an officer or employee of the Company, or any of our subsidiaries, or had any relationship requiring disclosure herein.

None of our executive officers served as a member of the

compensation committee of another entity (or other committee of the board of directors performing equivalent functions, or in the absence of any such committee, the entire board of directors) one of whose executive officers served as a director of ours.

None of the members of the Compensation Committee have been or are an officer or employee of the Company, or any of our

subsidiaries, or had any relationship requiring disclosure herein.

None of our executive officers served as a member of the compensation committee of another entity (or other committee of the board of directors performing equivalent functions, or in the absence of any such committee, the entire board of directors) one of whose executive officers served as a director of ours.

Board's Role in Risk Oversight

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Shares Outstanding

Caisse de Depot et Placement du Quebec (1)

1000 Place Jean-Paul Riopelle, Montreal H2Z 2B3

Jarislowsky, Fraser Ltd.

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West, Montreal QC H3A 2R7

Caisse de Depot et Placement du Quebec (1)

1000 Place Jean-Paul Riopelle, Montreal H2Z 2B3

Thomas Jenkins (2)

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Muhi Majzoub (6)

Madhu Ranganathan (8)

Stevenson (9)

Deborah Weinstein (10)

Madhu Ranganathan (11)

Hamilton (12)

Simon Harrison (13)

Carl Jürgen Tinggren (13)

David Fraser (15)

Harmit Singh (14)

David Fraser (15)

Craig Stilwell

All executive officers and directors as a group (16)

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Includes 135,000 Common Shares owned and 86,758 DSUs which are exercisable.

Includes 52,615 Common Shares owned and 75,587 DSUs which are exercisable.

Includes 1,834 Common Shares owned, 153,906 options which are exercisable and 17,875 options which will become exercisable within 60 days of June 30, 2020.

Includes 52,615 Common Shares owned and 86,275 DSUs which are exercisable.

Includes 1,087 Common Shares owned, 73,378 options which are exercisable and 7,150 options which will become exercisable within 60 days of June 30, 2019.

Includes 20,000 Common Shares owned and 101,010 DSUs which are exercisable.

Includes 54,084 Common Shares owned, 7,150 options which are exercisable and 35,855 options which will become exercisable within 60 days of June 30, 2020.

Includes 10 Common Shares owned and 71,103 DSUs which are exercisable.

Includes 17,884 DSUs which are exercisable.

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During Fiscal 2020, Mr.

Sadler received approximately CAD $0.9 million in consulting fees from OpenText (equivalent to $0.6 million USD), inclusive of CAD $0.8 million bonus fees for assistance with acquisition-related business activities.

Sadler received CAD $0.9 million in consulting fees from OpenText (equivalent to $0.7 million USD), inclusive of CAD $0.86 million bonus fees for assistance with acquisition-related business activities.

Sadler abstained from voting on all transactions from which he would potentially derive consulting fees.

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All other fees (4)

Audit fees were primarily for professional services rendered for (a) the annual audits of our consolidated financial statements and the accompanying attestation report regarding our ICFR contained in our Annual Report on Form 10-K, (b) the review of quarterly financial information included in our Quarterly Reports on Form 10-Q, (c) audit services related to mergers and acquisitions and offering documents, and (d) annual statutory audits where applicable.

Audit-related fees were primarily for assurance and related services, such as the review of non-periodic filings with the SEC.

Audit fees were primarily for professional services rendered for (a) the annual audits of our consolidated financial statements and the accompanying attestation report regarding our ICFR contained in our Annual Report on Form 10-K, (b) the review of quarterly financial information included in our Quarterly Reports on Form 10-Q, (c) audit services related to mergers and acquisitions, and (d) annual statutory audits where applicable.

Audit related fees were primarily for assurance and related services, such as the review of offering documents and non-periodic filings with the SEC.

Tax fees were for services related to tax compliance, including the preparation of tax returns, tax planning and tax advice.

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The Audit Committee has determined that the provision of the services as set out above is compatible with the maintaining of KPMG LLP's independence in the conduct of its auditing functions.

Exhibits and Financial Statements Schedules

Exhibits and Financial Statement Schedules

(a) Financial Statements and Schedules

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Agreement and Plan of Merger, dated September 12, 2016, by and among Open Text Corporation, EMC Corporation, EMC International Company, and EMC (Benelux) B.V.

Agreement and Plan of Merger, dated November 10, 2019, by and among Open Text Corporation, Coral Merger Sub Inc.

and Carbonite, Inc.

Articles of Amalgamation of the Company.

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trustee, and BNY Trust Company of Canada, as Canadian trustee.

Amended and Restated Shareholder Rights Plan Agreement between Open Text Corporation and Computershare Investor Services, Inc.

dated September 4, 2019 (42)

Indenture (including form of Note), dated as of April 4, 2017, by and between Carbonite, Inc.

Bank National Association, as trustee (43)

First Supplemental Indenture, dated as of December 24, 2019, by and between Carbonite, Inc.

Bank National Association, as trustee (43)

Indenture, dated as of February 18, 2020, between Open Text Corporation and the Bank of NY Mellon, as U.S.

Trustee, and BNY Trust Company of Canada, as Canadian trustee (44)

Indenture, dated as of February 18, 2020, between Open Text Holdings, Inc.

and the Bank of NY Mellon, as U.S.

Trustee, and BNY Trust Company of Canada, as Canadian trustee (44)

1998 Stock Option Plan.

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Employment Agreement, dated October 1, 2017, between Simon (Ted) Harrison and the Company (40)

Fourth Amended and Restated Credit Agreement dated as of October 31, 2019, by and among Open Text ULC, Open Text Holdings, Inc.

and Open Text Corporation, as borrowers, the guarantors party thereto, each of the lenders party thereto, Barclays Bank PLC, as administrative agent, collateral agent and swing line lender and Royal Bank of Canada as documentary credit lender (45)

Employment Agreement, dated December 24, 2019, among the Company, Open Text Inc.

and Craig Stilwell

Preferability letter dated February 2, 2012 from the Company's auditors, KPMG LLP, regarding a change in the Company's accounting policy relating to the income statement classification of tax related interest and penalties.

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(40) Filed as an Exhibit to the Company's Annual Report on Form 10-K, as filed with the SEC on August 2, 2018 and incorporated herein by reference.

(41) Filed as an Exhibit to the Company's Current Report on Form 8-K, as filed with the SEC on November 12, 2019 and incorporated herein by reference.

Filed as an Exhibit to the Company's Current Report on Form 8-K, as filed with the SEC on September 4, 2019 and incorporated herein by reference.

Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q, as filed with the SEC on January 30, 2020 and incorporated herein by reference.

Filed as an Exhibit to the Company's Current Report on Form 8-K, as filed with the SEC on February 18, 2020 and incorporated herein by reference.

Filed as an Exhibit to Company's Current Report on Form 8-K, as filed with the SEC on November 5, 2019 and incorporated herein by reference.

(46) Filed as an Exhibit to the Company's Annual Report on Form 10-K, as filed with the SEC on August 1, 2019 and incorporated herein by reference.

Report of Independent Registered Public Accounting Firm

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated July 31, 2019 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated August 5, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Changes in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, Open Text Corporation adopted two new accounting standards, “Revenues from Contracts with Customers” and "Income Taxes:

Intra-Entity Transfers of Assets Other Than Inventory" on a modified retrospective basis through a cumulative-effect adjustment to opening retained earnings, in the year ended June 30, 2019.

As discussed in Note 1 to the consolidated financial statements, in the year ended June 30, 2020, Open Text Corporation adopted the new accounting standard, "Leases" on a modified retrospective basis through a cumulative-effect adjustment to opening retained earnings.

In the year ended June 30, 2019, Open Text Corporation adopted two new accounting standards, "Revenues from Contracts with Customers" and "Income Taxes:

Intra-Entity Transfers of Assets Other Than Inventory" on a modified retrospective basis through a cumulative-effect adjustment to opening retained earnings.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allocation of the contract’s transaction price to identified performance obligations

As discussed in Note 3 to the consolidated financial statements, the Company generally sells or licenses its software in combination with other products and services such as customer support and professional services.

The accounting for contracts with multiple performance obligations (units of accounting) which include a software license requires an allocation of the contract’s transaction price to the identified performance obligations based on whether the product or service is distinct from some or all of the other products or services in the contract.

The Company generally does not sell or license its products on a standalone basis and as such is required to estimate standalone selling price (SSP) for each performance obligation within these customer contracts with the residual of the contract’s transaction price allocated to the software license performance obligation.

This allocation affects the amount and timing of revenue recognized for each performance obligation.

SSP for a performance obligation in a contract is an estimate of the price that would be charged for the specific product or service if it was sold separately in similar circumstances and to similar customers.

Considering the nature and volume of contracts with multiple performance obligations including a license product, we identified the evaluation of the allocation of the contract price to the identified performance obligations within these contracts as a critical audit matter because a higher degree of auditor judgment was required in evaluating the methodology and frequency used to establish SSP (observable data, or cost plus margin approach) for the non-license performance obligations of a contract.

In addition there was auditor subjectivity in evaluating the assumptions that were used in determining the SSP for each non-license performance obligation.

The sensitivity of reasonably possible changes to those assumptions could have a significant impact on the determination of SSP thereby impacting the contract’s transaction price allocation conclusion and the amount and timing of revenues recognized for both the license and non-license performance obligations.

Typical assumptions include the basis for stratification of the underlying population for purposes of the SSP evaluation and the impact of geographic or regional specific factors, competitive positioning, internal costs, profit objectives and pricing practices for different performance obligations.

The primary procedures we performed to address the critical audit matter included the following:

We tested certain internal controls over the Company’s process to (1) identify the appropriateness of the methodology used to determine SSP over identified non-license performance obligations in contracts that include software licenses (2) compile a complete listing of historical standalone transactions included in the SSP evaluation (3) stratify the complete population of historical standalone transactions based on factors such as geography and level of employee for professional services and (4) capture the relevant information for purposes of establishing a range of observable pricing for the underlying SSP evaluation.

We evaluated the appropriateness of the methodology used to determine SSP by comparing to historical analysis completed by the Company and practices observed in the industry.

We evaluated whether there was management bias in the selection of the assumptions used to perform the SSP evaluation.

We assessed the stratification of the population used in the SSP evaluation based on our knowledge of factors such as historical period, geography, product category and level of employee for professional services.

We inspected a sample of contracts from the population to assess whether attributes such as price and employee consultant level were properly evaluated.

For software license contracts with multiple performance obligations, we tested the allocation of the transaction price to each performance obligation.

Assessment of recognition of uncertain tax positions

As discussed in Note 14 to the consolidated financial statements, as of June 30, 2019 the Company has recognized uncertain tax positions including associated interest and penalties.

Evaluation of the determination of standalone selling prices of revenue performance obligations for customer contracts with a software license

As discussed in Note 2 and Note 3 to the consolidated financial statements, the Company generally sells or licenses its software in combination with other products and services such as customer support and professional services.

The accounting for customer contracts with a software license requires an allocation of the transaction price to each distinct performance obligation based on the determination of the standalone selling price (SSP).

SSP for a performance obligation in a customer contract is an

estimate of the price that would be charged for the specific product or service if it was sold separately in similar circumstances and to similar customers.

This estimate determines the allocation of the transaction price and affects the amount and timing of revenue recognized for each performance obligation in a customer contract.

SSP is estimated based on the impact of geographic or regional specific factors, internal costs, profit objectives and pricing practices for different performance obligations.

We identified the evaluation of the determination of the SSP of revenue performance obligations for customer contracts with a software license as a critical audit matter.

A higher degree of auditor judgment was required to evaluate the methodology used to establish SSP for each performance obligation which could be offered in a customer contract.

The primary procedures we performed to address this critical audit matter included the following.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s revenue process, including controls over the methodology used to determine SSP for identified performance obligations in customer contracts which include a software license.

We evaluated the methodology used to determine SSP based on current pricing patterns in relevant customer contracts, historical analysis of renewal contract pricing completed by the Company and pricing practices observed in the industry.

We inspected a selection of contracts from the SSP population and compared attributes such as price and employee consultant level to historical information.

For a sample of software license contracts with multiple performance obligations, we tested that the determined SSP was correctly applied in the allocation of the transaction price to each performance obligation.

Assessment of uncertain tax positions

As discussed in Note 2 and Note 15 to the consolidated financial statements, the Company has recognized uncertain tax positions including associated interest and penalties.

The Company’s tax positions are subject to audit by local taxing authorities across multiple global subsidiaries and the resolution of such audits may span multiple years.

Tax law is complex and often subject to varied interpretations, accordingly, the ultimate outcome with respect to taxes the Company may owe may differ from the amounts recognized.

We identified the evaluation of uncertain tax positions as a critical audit matter because a higher degree of auditor judgment was required in evaluating the Company’s interpretation of, and compliance with tax law globally across its multiple subsidiaries.

In addition, a higher degree of auditor judgment was required in evaluating the Company’s estimate of the ultimate resolution of its tax positions.

Tax law is complex and often subject to varied interpretations.

Accordingly, the ultimate outcome with respect to taxes the Company may owe may differ from the amounts recognized.

We identified the assessment of uncertain tax positions as a critical audit matter.

The assessment of tax exposures and the ultimate resolution of uncertain tax positions requires a higher degree of auditor judgment in evaluating the Company’s interpretation of, and compliance with, tax law globally across multiple jurisdictions.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s process to assess uncertain tax positions to (1) interpret tax law and identify uncertain tax

positions (2) evaluate which of the Company’s tax positions may not be sustained upon audit and (3) estimate the uncertain tax positions.

We involved domestic and international tax professionals with specialized skills and knowledge who assisted in obtaining an understanding and assessing tax filed positions, transfer pricing studies and the Company’s compliance with applicable laws and regulations.

We evaluated the Company’s interpretation of tax laws by developing an independent assessment based on our understanding and interpretation of tax laws.

We inspected settlement documents with applicable taxing authorities, and assessed the expiration of statutes of limitations.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to assess uncertain tax positions, including controls related to the interpretation of tax law and identification of uncertain tax positions, the evaluation of which of the Company’s tax positions may not be sustained upon audit and the estimation of exposures associated with uncertain tax positions.

We involved domestic and international tax professionals with specialized skills and knowledge who assisted in assessing filed tax positions and transfer pricing studies, and evaluating the Company’s interpretation of tax law and its assessment of certain tax uncertainties and expected outcomes, including, if applicable, the measurement thereof, by reading advice obtained from the Company’s external specialists and correspondence with taxation authorities.

Chartered Professional Accountants, Licensed Public Accountants

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Toronto, Canada

July 31, 2019

August 5, 2020

Report of Independent Registered Public Accounting Firm

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2019 and 2018, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2019 and related notes (collectively, the consolidated financial statements), and our report dated July 31, 2019 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Liaison Technologies, Inc.

on December 17, 2018, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2019, Liaison Technology, Inc.’s internal control over financial reporting associated with total assets of $376.8 million (of which approximately $321.1 million represents goodwill and net intangible assets included within the scope of the assessment) and total revenues of $53.4 million included in the consolidated financial statements of the Company as of and for the year ended June 30, 2019.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Liaison Technologies, Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2020 and 2019, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2020 and related notes (collectively, the consolidated financial statements), and our report dated August 5, 2020 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Carbonite, Inc.

on December 24, 2019, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2020, Carbonite, Inc’s internal control over financial reporting associated with 7.6% of consolidated total revenues and 17.2% of consolidated total assets (of which $1.6 billion, or 15.6% of consolidated total assets, represents goodwill and net intangible assets included within the scope of the assessment) included in the consolidated financial statements of the Company as of and for the year ended June 30, 2020.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Carbonite, Inc.

Basis for Opinion

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Toronto, Canada

July 31, 2019

August 5, 2020

OPEN TEXT CORPORATION

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Property and equipment (note 5)

Operating lease right of use assets (note 6)

Long-term contract assets (note 3)

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Other assets (note 9)

Deferred charges

Long-term income taxes recoverable (note 15)

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Current portion of long-term debt (note 11)

Deferred revenues

Operating lease liabilities (note 6)

Deferred revenues (note 3)

Income taxes payable (note 15)

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Accrued liabilities (note 10)

Deferred credits

Pension liability (note 12)

Long-term debt (note 11)

Deferred revenues

Long-term operating lease liabilities (note 6)

Deferred revenues (note 3)

Long-term income taxes payable (note 15)

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authorized Common Shares:

Accumulated other comprehensive income

Accumulated other comprehensive income (note 21)

Retained earnings

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Related party transactions (note 25)

Subsequent event (note 23)

Subsequent events (note 26)

See accompanying Notes to Consolidated Financial Statements

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Year Ended June 30,

Revenues (note 3):

Cloud services and subscriptions

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Income from operations

Other income (expense), net

Other income (expense), net (note 23)

Interest and other related expense, net

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Provision for (recovery of) income taxes (note 15)

Net income for the period

Net (income) loss attributable to non-controlling interests

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Earnings per share—diluted attributable to OpenText (note 24)

Weighted average number of Common Shares outstanding—

basic (in '000's)

Weighted average number of Common Shares outstanding—basic (in '000's)

Weighted average number of Common Shares outstanding—diluted (in '000's)

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Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $520, $292 and $183 for the year ended June 30, 2020, 2019 and 2018, respectively

Unrealized net gain (loss) on marketable securities - net of tax effect of nil for the year ended June 30, 2019, 2018 and 2017 respectively

Release of unrealized gain on marketable securities - net of tax effect of nil for the year ended June 30, 2020, 2019, and 2018 respectively

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Under employee stock purchase plans

Under the public Equity Offering

Income tax effect related to public Equity offering

Equity issuance costs

Share-based compensation

Income tax effect related to share-based compensation

Purchase of treasury stock

Issuance of treasury stock

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Other comprehensive income - net

Non-controlling interest

Net income for the year

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Share-based compensation

Purchase of treasury stock

Issuance of treasury stock

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($0.6300 per Common Share)

Cumulative effect of ASU 2016-16

Cumulative effect of Topic 606

Other comprehensive income - net

Non-controlling interest

Net income for the year

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($0.6984 per Common Share)

Cumulative effect of ASU 2016-16

Cumulative effect of Topic 606

Other comprehensive income - net

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Share-based compensation expense

Excess tax (benefits) expense on share-based compensation expense

Pension expense

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Amortization of deferred charges and credits

Accelerated amortization of right of use assets (note 18)

Loss on extinguishment of debt

Loss on sale and write down of property and equipment

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Write off of unamortized debt issuance costs

Other non-cash charges

Changes in operating assets and liabilities:

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Deferred revenue

Operating lease assets and liabilities, net

Net cash provided by operating activities

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Additions of property and equipment

Proceeds from maturity of short-term investments

Purchase of XMedius

Purchase of Carbonite, Inc., net of cash and restricted cash acquired

Purchase of Dynamic Solutions Group Inc.

Purchase of Catalyst Repository Systems Inc.

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Purchase of Covisint Corporation, net of cash acquired

Purchase of ECD Business

Purchase of HP Inc.

Purchase of Recommind, Inc.

Purchase consideration for acquisitions completed prior to Fiscal 2017

Other investing activities

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Cash flows from financing activities:

Excess tax benefits (expense) on share-based compensation expense

Proceeds from long-term debt and Revolver

Proceeds from issuance of Common Shares from exercise of stock options and ESPP

Proceeds from issuance of Common Shares under the public Equity Offering

Proceeds from long-term debt and Revolver

Repayment of long-term debt and Revolver

Debt extinguishment costs (note 23)

Debt issuance costs

Equity issuance costs

Purchase of Treasury Stock

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Cash and cash equivalents

Restricted cash included in Other assets

Restricted cash (1)

Total cash, cash equivalents and restricted cash

(1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Consolidated Balance Sheets

Supplemental cash flow disclosures (note 22)

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(GXS Singapore), which as of June 30, 2020 , were 70 % and 81 % owned, respectively, by OpenText.

All inter-company balances and transactions have been eliminated.

Previously, our ownership in GXS Inc.

(GXS Korea) was 85 % .

During the first quarter of Fiscal 2019, we acquired all of the outstanding non-controlling interests in GXS Korea for $ 0.6 million in cash.

All intercompany balances and transactions have been eliminated.

Throughout this Annual Report on Form 10-K:

(i) the term "Fiscal 2021" means our fiscal year beginning on July 1, 2020 and ending June 30, 2021;

(ii) the term “Fiscal 2020” means our fiscal year beginning on July 1, 2019 and ended June 30, 2020;

(iii) the term “Fiscal 2019” means our fiscal year beginning on July 1, 2018 and ended June 30, 2019;

(iv) the term “Fiscal 2018” means our fiscal year beginning on July 1, 2017 and ended June 30, 2018;

and (v) the term “Fiscal 2017” means our fiscal year beginning on July 1, 2016 and ended June 30, 2017.

These Consolidated Financial Statements are expressed in U.S.

dollars and are prepared in accordance with United States generally accepted accounting principles (U.S.

The information furnished reflects all adjustments necessary for a fair presentation of the results for the periods presented and includes the financial results of Liaison Technologies, Inc.

(Liaison), with effect from December 17, 2018, and Catalyst Repository Systems Inc.

(Catalyst), with effect from January 31, 2019 (see note 18 "Acquisitions").

The information furnished reflects all adjustments necessary for a fair presentation of the results for the periods presented and includes certain assets and liabilities of Dynamic Solutions Group Inc.

(The Fax Guys), with effect from December 2, 2019 , the financial results of Carbonite, Inc.

(Carbonite), with effect from December 24, 2019 and the financial results of XMedius with effect from March 9, 2020 (see note 19 "Acquisitions").

Use of estimates

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(i) revenue recognition, (ii) accounting for income taxes, (iii) testing of goodwill for impairment, (iv) the valuation of acquired intangible assets, (v) the valuation of long-lived assets, (vi) the recognition of contingencies, (vii) restructuring accruals, (viii) acquisition accruals and pre-acquisition contingencies, (ix) the realization of investment tax credits, (x) the valuation of stock options granted and obligations related to share-based payments, including the valuation of our long-term incentive plans, and (xi) the valuation of pension obligations.

In March 2020, COVID-19 was characterized as a pandemic by the World Health Organization.

The spread of COVID-19 continues to significantly impact the global economy.

As the impacts of the pandemic continue to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment.

As of June 30, 2020, we have recorded certain estimates resulting from the pandemic, particularly with respect to the COVID-19 Restructuring Plan and allowance for doubtful accounts, based on management's estimates and assumptions utilizing the most currently available information.

Such estimates may be subject to change particularly given the unprecedented nature of the COVID-19 pandemic.

We will continue to monitor the potential impact of COVID-19 on our financial statements and related disclosures, including the need for additional estimates going forward, which could include costs related to potential items such as special charges, restructurings, asset impairments and other non-recurring costs.

Please see note 18 "Special Charges (Recoveries)" and "Risk Factors" included within Part I Item 1A of this Annual Report on Form 10-K.

Impact of Recently Adopted Accounting Pronouncements

Revenue Recognition

Effective July 1, 2018, we adopted Accounting Standards Codification (ASC) Topic 606 "Revenue from Contracts with Customers" (Topic 606) using the cumulative effect approach.

We applied the accounting standard to contracts that were not completed as of the date of the initial adoption.

Results for reporting periods commencing on July 1, 2018 are presented under the new revenue standard, while prior period results continue to be reported under the previous revenue standard.

As a result of this adoption, we recorded a net increase of approximately $ 30 million to retained earnings as of July 1, 2018 on the Consolidated Balance Sheets, with the following corresponding impacts:

A decrease to deferred revenues of approximately $ 31 million ;

A decrease to other assets of approximately $ 22 million in connection with deferred implementation costs;

An increase to other assets of approximately $ 14 million in connection with the capitalization of sales commission costs;

An increase in contract assets of approximately $ 18 million representing future billings in excess of revenues;

An increase in net deferred tax liabilities of approximately $ 11 million .

Please refer to Note 3 "Revenues" for additional information relating to Topic 606, including our updated revenue recognition policies.

Additionally, certain prior period balances have been reclassified within other assets on the Consolidated Balance Sheets, to conform to the current period presentation as a result of this adoption.

Please refer to Note 8 "Other Assets" for details.

Effective July 1, 2019, we adopted Accounting Standards Update (ASU) No.

2016-16, "Income Taxes (Topic 740):

Intra-Entity Transfers of Assets Other Than Inventory" (ASU 2016-16) which requires entities to recognize the income tax consequence of an intra-entity transfer of an asset, other than inventory, when the transfer occurs.

We adopted ASU 2016-16 on a modified retrospective basis through a cumulative-effect adjustment to opening retained earnings.

Results for reporting periods effective as of July 1, 2018 are presented under the new standard, while prior period results continue to be reported under the previous standard.

As a result of this adoption, we recorded a net decrease of approximately $ 27 million to retained earnings as of July 1, 2018 on the Consolidated Balance Sheets, with the following corresponding impacts:

A decrease to deferred charges of approximately $ 38 million ;

An increase to deferred tax assets of approximately $ 8 million ;

A decrease to deferred credits of approximately $ 3 million .

There was no impact to the Consolidated Statements of Income, Consolidated Statements of Comprehensive Income or Consolidated Statements of Cash Flows as a result of this adoption.

Restricted Cash

Effective July 1, 2018, we adopted ASU No.

2016-18, “Statement of Cash Flows (Topic 230):

Restricted Cash” (ASU 2016-18), which requires amounts described as restricted cash and cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts in the statement of cash flows.

We adopted ASU 2016-18 using the retrospective method.

As a result, certain prior period comparative figures in the Consolidated Statements of Cash Flows have been adjusted to conform to current period presentation as follows:

Year Ended June 30, 2018

Year Ended June 30, 2017

As Previously Reported

Net cash provided by operating activities

Cash, cash equivalents and restricted cash at beginning of period

Increase (decrease) in cash, cash equivalents and restricted cash during the period

Cash, cash equivalents and restricted cash at end of period

There was no impact to the Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Shareholders' Equity or Consolidated Statements of Comprehensive Income as a result of this adoption.

Pension Expense

Effective July 1, 2018, we adopted ASU No.

2017-07, “Retirement Benefits - Presentation of Net Period Pension Costs (Topic 715)” (ASU 2017-07), which provides guidance on the capitalization, presentation and disclosure of net benefit costs related to postretirement benefit plans.

Upon adoption, only service-related net periodic pension costs will be recorded within operating expense.

All other non-service related net periodic pension costs will be classified under "Interest and other related expense" on our Condensed Consolidated Statements of Income.

We adopted ASU 2017-07 on a retrospective basis.

As a result, certain prior period comparative figures in the Consolidated Statements of Income have been adjusted to conform to current period presentation as follows:

Year Ended June 30, 2018

Year Ended June 30, 2017

As Previously Reported

Cost of revenues - Cloud services

Cost of revenues - Customer Support

Cost of revenues - Professional service and other

Total cost of revenues

Research and Development

Sales and Marketing

General and administrative

Total operating expense

Income from operations

Interest and other related expense, net

There was no change to net income or net earnings per share in any of the periods presented as a result of this adoption.

Additionally, there was no impact to the Consolidated Balance Sheets, Consolidated Statements of Comprehensive Income, Consolidated Statements of Shareholders' Equity or Consolidated Statements of Cash Flows as a result of this adoption.

2016-02 “Leases (Topic 842)” (Topic 842) using the modified retrospective transition approach.

In accordance with this adoption method, results for reporting periods as of July 1, 2019 are presented under the new standard, while prior period results continue to be reported under the previous standard.

Additionally, we elected the package of practical expedients permitted under the transition guidance within Topic 842, which allowed us to (i) carry forward the historical lease classification for any expired or existing leases, (ii) not reassess

whether any expired or existing contracts contain leases and (iii) not reassess any initial direct cost for existing leases.

We did not elect the practical expedient of hindsight when determining the lease term of existing contracts at the effective date.

As a result of this adoption, we recorded the following adjustments as of July 1, 2019 on the Consolidated Balance Sheets:

An increase in operating lease right of use assets of $ 217.5 million ;

An increase in total operating lease liabilities of $ 253.5 million ;

A decrease in prepaid expenses and other current assets of $ 6.6 million in connection with lease fair value adjustments and prepaid rent;

A decrease in other assets of $ 0.2 million in connection with lease fair value adjustments;

A decrease in total accrued liabilities of $ 42.8 million in connection with tenant allowances, deferred rent, lease fair value adjustments, and amounts payable in respect of restructured facilities.

The adoption of Topic 842 had no impact to the Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Consolidated Statement of Shareholders' Equity or Consolidated Statements of Cash Flows.

Please refer to note 2 "Accounting Policies and Recent Accounting Pronouncements" and note 6 “Leases” for additional information.

NOTE 2— ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

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From time to time, we may sell certain accounts receivable to a financial institution on a non-recourse basis for cash, less a discount.

Proceeds from the sale of receivables approximate their discounted book value are included in operating cash flows on the Consolidated Statement of Cash Flows.

Proceeds from the sale of receivables approximate their discounted book value and are included in operating cash flows on the Consolidated Statement of Cash Flows.

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make payments.

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Gains and losses on asset disposals are taken into income in the year of disposition.

Fully depreciated property and equipment are retired from the consolidated balance sheet when they are no longer in use.

We did not recognize any significant property and equipment impairment charges in Fiscal 2019, Fiscal 2018, or Fiscal 2017.

Fully depreciated property and equipment are retired from the Consolidated Balance Sheets when they are no longer in use.

Please see the "Impairment of long-lived assets" section below for policy on property and equipment impairments.

The following represents the estimated useful lives of property and equipment as of June 30, 2020:

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Our additions, relating to capitalized software development costs, incurred during Fiscal 2020 and Fiscal 2019 were $ 15.4 million and $ 14.3 million , respectively.

We enter into operating leases, both domestically and internationally, for certain facilities, automobiles, data centers and equipment for use in the ordinary course of business.

Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets and we do not have any material finance leases.

In accordance with ASC Topic 842 "Leases" (Topic 842), we account for a contract as a lease when we have the right to direct the use of the asset for a period of time while obtaining substantially all of the asset’s economic benefits.

We determine the initial classification and measurement of our right of use (ROU) assets and lease liabilities at the lease commencement date and thereafter if modified.

Refer to note 6 "Leases" for our full policy.

Acquired intangibles

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We account for the impairment and disposition of long-lived assets in accordance with ASC Topic 360, “Property, Plant, and Equipment” (Topic 360).

We test long-lived assets or asset groups, such as property and equipment and definite lived intangible assets, for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable.

We test long-lived assets or asset groups, such as property and equipment, ROU assets and definite lived intangible assets, for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable.

Circumstances which could trigger a review include, but are not limited to:

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Furthermore, when valuing certain intangible assets that we have acquired, critical estimates may be made relating to, but not limited to:

(i) future expected cash flows from software license sales, cloud SaaS, DaaS and PaaS contracts, support agreements, consulting agreements and other customer contracts (ii) the acquired company's technology and competitive position, as well as assumptions about the period of time that the acquired technology will continue to be used in the combined company's product portfolio, and (iii) discount rates.

(i) future expected cash flows from software license sales, cloud SaaS, "desktop as a service" (DaaS) and PaaS contracts, support agreements, consulting agreements and other customer contracts (ii) the acquired company's technology and competitive position, as well as assumptions about the period of time that the acquired technology will continue to be used in the combined company's product portfolio, and (iii) discount rates.

Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments would be recorded to our Consolidated Statements of Income.

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Our operations are analyzed by management and our chief operating decision maker (CODM) as being part of a single industry segment:

the design, development, marketing and sales of Enterprise Information Management (EIM) software and solutions.

the design, development, marketing and sales of Information Management software and solutions.

Therefore, our goodwill impairment assessment is based on the allocation of goodwill to a single reporting unit.

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Based on our qualitative assessment, if we determine that the fair value of our reporting unit is more likely than not (i.e.

a likelihood of more than 50 percent) to be less than its carrying amount, the second step of the impairment test is performed.

In the second step of the impairment test, we compare the fair value of our reporting unit to its carrying value.

a likelihood of more than 50 percent) to be less than its carrying amount, the quantitative assessment of the impairment test is performed.

In the quantitative assessment, we compare the fair value of our reporting unit to its carrying value.

If the fair value of the reporting unit exceeds its carrying value, goodwill is not considered impaired and we are not required to perform further testing.

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Topic 410 requires that a liability be initially recognized for the estimated fair value of the obligation when it is incurred.

The associated asset retirement cost is capitalized as part of the carrying amount of the long-lived asset and depreciated over the remaining life of the underlying asset and the associated liability is accreted to the estimated fair value of the obligation at the settlement date through periodic accretion charges recorded within general and administrative expenses.

The associated asset retirement cost is capitalized as part of the carrying amount of the long-lived asset and depreciated over the remaining life of the underlying asset and the associated liability is accreted to the estimated fair value of the obligation at the settlement date through periodic accretion charges which are generally recorded within " General and administrative " expense in our Consolidated Statements of Income.

When the obligation is settled, any difference between the final cost and the recorded amount is recognized as income or loss on settlement in our Consolidated Statements of Income.

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We report revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue producing transactions.

Refer to note 3 "Revenues" for our full revenue recognition policy.

Research and development costs

Research and development costs internally incurred in creating computer software to be sold, licensed or otherwise marketed are expensed as incurred unless they meet the criteria for deferral and amortization, as described in ASC Topic 985-20, “Costs of Software to be Sold, Leased, or Marketed” (Topic 985-20).

In accordance with Topic 985-20, costs related to research, design and development of products are charged to expense as incurred and capitalized between the dates that the product is considered to be technologically feasible and is considered to be ready for general release to customers.

In our historical experience, the dates relating to the achievement of technological feasibility and general release of the product have substantially coincided.

In addition, no significant costs are incurred subsequent to the establishment of technological

As a result, we do not capitalize any research and development costs relating to internally developed software to be sold, licensed or otherwise marketed.

We account for income taxes in accordance with ASC Topic 740, “Income Taxes” (Topic 740).

Deferred tax assets and liabilities arise from temporary differences between the tax bases of assets and liabilities and their reported amounts in the Consolidated Financial Statements that will result in taxable or deductible amounts in future years.

These temporary differences are measured using enacted tax rates.

A valuation allowance is recorded to reduce deferred tax assets to the extent that we consider it is more likely than not that a deferred tax asset will not be realized.

In determining the valuation allowance, we consider factors such as the reversal of deferred income tax liabilities, projected taxable income, and the character of income tax assets and tax planning strategies.

A change to these factors could impact the estimated valuation allowance and income tax expense.

We account for our uncertain tax provisions by using a two-step approach to recognizing and measuring uncertain tax positions.

The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, based solely on the technical merits, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.

The second step is to measure the appropriate amount of the benefit to recognize.

The amount of benefit to recognize is measured as the maximum amount which is more likely than not to be realized.

The tax position is derecognized when it is no longer more likely than not that the position will be sustained on audit.

On subsequent recognition and measurement the maximum amount which is more likely than not to be recognized at each reporting date will represent the Company's best estimate, given the information available at the reporting date, although the outcome of the tax position is not absolute or final.

We recognize both accrued interest and penalties related to liabilities for income taxes within the "Provision for (recovery of) income taxes" line of our Consolidated Statements of Income (see note 14 "Income Taxes" for more details).

Fair value of financial instruments

Carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable and accounts payable (trade and accrued liabilities) approximate their fair value due to the relatively short period of time between origination of the instruments and their expected realization.

The fair value of our total long-term debt approximates its carrying value since the interest rate is at market.

We apply the provisions of ASC 820, “Fair Value Measurements and Disclosures”, to our derivative financial instruments that we are required to carry at fair value pursuant to other accounting standards (see note 15 "Fair Value Measurement" for more details).

Foreign currency

Our Consolidated Financial Statements are presented in U.S.

In general, the functional currency of our subsidiaries is the local currency.

For each subsidiary, assets and liabilities denominated in foreign currencies are translated into U.S dollars at the exchange rates in effect at the balance sheet dates and revenues and expenses are translated at the average exchange rates prevailing during the previous month of the transaction.

The effect of foreign currency translation adjustments not affecting net income are included in Shareholders' equity under the “Cumulative translation adjustment” account as a component of “Accumulated other comprehensive income”.

Transactional foreign currency gains (losses) included in the Consolidated Statements of Income under the line item “Other income (expense), net” for Fiscal 2019, Fiscal 2018 and Fiscal 2017 were $( 4.3 ) million , $ 4.8 million and $ 3.1 million , respectively.

Restructuring charges

We record restructuring charges relating to contractual lease obligations and other exit costs in accordance with ASC Topic 420, “Exit or Disposal Cost Obligations” (Topic 420).

Topic 420 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at its fair value in the period in which the liability is incurred.

In order to incur a liability pursuant to Topic 420, our management must have established and approved a plan of restructuring in sufficient detail.

A liability for a cost associated with involuntary termination benefits is recorded when benefits have been communicated and a liability for a cost to terminate an operating lease or other contract is incurred, when the contract has been terminated in accordance with the contract terms or we have ceased using the right conveyed by the contract, such as vacating a leased facility.

The recognition of restructuring charges requires us to make certain judgments regarding the nature, timing and amount associated with the planned restructuring activities, including estimating sub-lease income and the net recoverable amount of

equipment to be disposed of.

At the end of each reporting period, we evaluate the appropriateness of the remaining accrued balances (see note 17 "Special Charges (Recoveries)" for more details).

Loss Contingencies

We are currently involved in various claims and legal proceedings.

Quarterly, we review the status of each significant legal matter and evaluate such matters to determine how they should be treated for accounting and disclosure purposes in accordance with the requirements of ASC Topic 450-20 "Loss Contingencies" (Topic 450-20).

Specifically, this evaluation process includes the centralized tracking and itemization of the status of all our disputes and litigation items, discussing the nature of any litigation and claim, including any dispute or claim that is reasonably likely to result in litigation, with relevant internal and external counsel, and assessing the progress of each matter in light of its merits and our experience with similar proceedings under similar circumstances.

If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss in accordance with Topic 450-20.

As of the date of this filing on Form 10-K for the year ended June 30, 2019, we do not believe that the outcomes of any of these matters not already disclosed, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized (see note 13 "Guarantees and Contingencies" for more details).

Net income per share

Basic net income per share is computed using the weighted average number of Common Shares outstanding including contingently issuable shares where the contingency has been resolved.

Diluted net income per share is computed using the weighted average number of Common Shares and stock equivalents outstanding using the treasury stock method during the year (see note 21 "Earnings Per Share" for more details).

Share-based payment

We measure share-based compensation costs, in accordance with ASC Topic 718, “Compensation - Stock Compensation” (Topic 718) on the grant date, based on the calculated fair value of the award.

We have elected to treat awards with graded vesting as a single award when estimating fair value.

Compensation cost is recognized on a straight-line basis over the employee requisite service period, which in our circumstances is the stated vesting period of the award, provided that total compensation cost recognized at least equals the pro-rata value of the award that has vested.

Compensation cost is initially based on the estimated number of options for which the requisite service is expected to be rendered.

This estimate is adjusted in the period once actual forfeitures are known (see note 12 "Share Capital, Option Plans and Share-based Payments" for more details).

Accounting for Pensions, post-retirement and post-employment benefits

Pension expense is accounted for in accordance with ASC Topic 715, “Compensation-Retirement Benefits” (Topic 715).

Pension expense consists of:

actuarially computed costs of pension benefits in respect of the current year of service, imputed returns on plan assets (for funded plans) and imputed interest on pension obligations.

The expected costs of post retirement benefits, other than pensions, are accrued in the Consolidated Financial Statements based upon actuarial methods and assumptions.

The over-funded or under-funded status of defined benefit pension and other post retirement plans are recognized as an asset or a liability (with the offset to “Accumulated other comprehensive income”, net of tax, within “Shareholders' equity”), respectively, on the Consolidated Balance Sheets (see note 11 "Pension Plans and Other Post Retirement Benefits" for more details).

Accounting Pronouncements Adopted in Fiscal 2019

During Fiscal 2019, we adopted the following ASU's, in addition to those discussed in note 1 "Basis of Presentation".

These ASU's did not have a material impact to our reported financial position, results of operations or cash flows:

ASU 2016-15 "Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments".

When classifying distributions received from equity method investees, the Company uses the cumulative earnings approach.

ASU 2017-01 "Business Combinations (Topic 805):

Clarifying the Definition of a Business"

ASU 2018-05 "Income Taxes (Topic 740):

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

Accounting Pronouncements Not Yet Adopted

Retirement Benefits

In August 2018, the Financial Accounting Standards Board (FASB) issued ASU No.

2018-14 “Compensation-Retirement Benefits-Defined Benefit Plans - General (Topic 715-20):

Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans” (ASU 2018-14), which modifies the disclosure requirements for defined benefit pension plans and other post retirement plans.

ASU 2018-14 is effective for us in the first quarter of our fiscal year ending June 30, 2021.

We are currently evaluating the impact of our pending adoption of ASU 2018-14 on our consolidated financial statements.

Implementation Costs in a Cloud Computing Arrangement

In August 2018, the FASB issued ASU No.

2018-15 “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract” (ASU 2018-15).

ASU 2018-15 clarifies the accounting treatment for implementation costs incurred as a customer in cloud computing arrangements.

We will adopt ASU 2018-15 in the first quarter of our fiscal year ending June 30, 2020.

We do not expect the adoption of ASU 2018-15 will have a material impact to our consolidated financial statements.

Financial Instruments

In June 2016, the FASB issued ASU No.

2016-13 “Financial Instruments - Credit Losses (Topic 326)” and also issued subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively Topic 326).

Topic 326 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

This replaces the existing incurred loss model with an expected loss model and requires the use of forward looking information to calculate credit loss estimates.

Topic 326 is effective for us in our first quarter of our fiscal year ending June 30, 2021 with earlier adoption permitted beginning in the first quarter of our fiscal year ending June 30, 2020.

Topic 326 must be adopted by applying a cumulative effect adjustment to retained earnings.

We are currently evaluating Topic 326, including its potential impact to our process and controls.

We believe the effect on our consolidated financial statements will largely depend on the composition and credit quality of our financial assets and the economic conditions at the time of adoption.

In February 2016, the FASB issued ASU No.

2016-02 “Leases (Topic 842)” and issued subsequent amendments to the initial guidance under ASU 2017-13, ASU 2018-10, ASU 2018-11 and ASU 2018-20 (collectively, Topic 842).

Topic 842 supersedes the guidance in former ASC Topic 840 “Leases”.

Topic 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use (ROU) assets.

For OpenText, the most significant change will result in the recognition of lease assets for the right to use the underlying asset and lease liabilities for the obligation to make lease payments by lessees, for those leases classified as operating leases under current guidance.

Upon adoption, we expect to recognize ROU assets ranging from approximately $ 218 million to $ 228 million and lease liabilities ranging from approximately $ 255 million to $ 265 million .

The new guidance will also require significant additional disclosures about the amount, timing and uncertainty of cash flows related to leases.

We will adopt Topic 842 in the first quarter of our fiscal year ending June 30, 2020 using the modified retrospective transition and by applying the new standard to all leases existing at the date of initial adoption and not restating comparative periods, as allowed for under Topic 842.

Upon adoption, we will also elect the transition provisions of permitted practical expedients, which among other things, allows the carryforward of the historical lease classification.

Furthermore, upon adoption, we will make an accounting policy election that will keep leases with an initial term of 12 months or less off our Consolidated Balance Sheets and we will recognize these short-term lease payments in the Consolidated Statements of Operations on a straight-line basis over the lease term.

NOTE 3— REVENUES

In accordance with Topic 606, we account for a customer contract when we obtain written approval, the contract is committed, the rights of the parties, including the payment terms, are identified, the contract has commercial substance and consideration is probable of collection.

Revenue is recognized when, or as, control of a promised product or service is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for our products and services (at its transaction price).

Estimates of variable consideration and the determination of whether to include estimated amounts in the transaction price are based on readily available information, which may include historical, current and forecasted information, taking into consideration the type of customer, the type of transaction and specific facts and circumstances of each arrangement.

We report revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue producing transactions.

We have four revenue streams:

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License revenue

Our license revenue can be broadly categorized as perpetual licenses, term licenses and subscription licenses, all of which are deployed on the customer’s premises (on-premise).

Our license revenue can be broadly categorized as perpetual licenses, term licenses and subscription licenses, all of which are deployed on the customer’s premise (on-premise).

Perpetual licenses:

We sell perpetual licenses which provide customers the right to use software for an indefinite period of time in exchange for a one-time license fee, which is generally paid at contract inception.

Our perpetual licenses provide a right to use intellectual property (IP) that is functional in nature and have significant stand-alone functionality.

Accordingly, for perpetual licenses of functional IP, revenue is recognized at the point-in-time when control has been transferred to the customer, which normally occurs once software activation keys have been made available for download.

Our perpetual licenses provide a right to use IP that is functional in nature and have significant stand-alone functionality.

Accordingly, for perpetual licenses of functional IP, revenue is recognized at the point-in-time

when control has been transferred to the customer, which normally occurs once software activation keys have been made available for download.

Term licenses and Subscription licenses:

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Cloud services and subscriptions revenue

Cloud services and subscriptions revenue are from hosting arrangements where in connection with the licensing of software, the end user doesn’t take possession of the software, as well as from end-to-end fully outsourced business-to-business (B2B) integration solutions to our customers (collectively referred to as cloud arrangements).

Cloud services and subscriptions revenue are from hosting arrangements where in connection with the licensing of software, the end user does not take possession of the software, as well as from end-to-end fully outsourced B2B integration solutions to our customers (collectively referred to as cloud arrangements).

The software application resides on our hardware or that of a third party, and the customer accesses and uses the software on an as-needed basis.

Our cloud arrangements can be broadly categorized as "platform as a service" (PaaS), "software as a service" (SaaS), cloud subscriptions and managed services.

Our cloud arrangements can be broadly categorized as PaaS, SaaS, cloud subscriptions and managed services.

PaaS/ SaaS/ Cloud Subscriptions (collectively referred to here as cloud-based solutions):

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Our cloud-based solutions represent a series of distinct services that are substantially the same and have the same pattern of transfer to the customer.

These services are made available to the customer continuously throughout the contractual period, however, the extent to which the customer uses the services may vary at the customer’s discretion.

These services are made available to the customer continuously throughout the contractual period.

However, the extent to which the customer uses the services may vary at the customer’s discretion.

The payment for cloud-based solutions may be received either at inception of the arrangement, or over the term of the arrangement.

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Customers using these managed services are not permitted to take possession of our software and the contract is for a defined period, where customers pay a monthly or quarterly fee.

Our performance obligation is satisfied as we provide services of operating and managing a customer's electronic data interchange (EDI) environment.

Our performance obligation is satisfied as we provide services of operating and managing a customer's EDI environment.

Revenue relating to these services is recognized using an output method based on the expected level of service we will provide over the term of the contract.

In connection with cloud subscription and managed service contracts, we often agree to perform a variety of services before the customer goes live, such as for example, converting and migrating customer data, building interfaces and providing training.

In connection with cloud subscription and managed service contracts, we often agree to perform a variety of services before the customer goes live, such as, converting and migrating customer data, building interfaces and providing training.

These services are considered an outsourced suite of professional services which can involve certain project-based activities.

These services can be provided at the initiation of a contract, during the implementation or on an ongoing basis as part of the customer life cycle.

These services can be provided at the initiation of a contract, during the

implementation or on an ongoing basis as part of the customer life cycle.

These services can be charged separately on a fixed fee or time and materials basis, or the costs associated may be recovered as part of the ongoing cloud subscription or managed services fee.

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(i) the customer simultaneously receives and consumes the benefits as we perform them, (ii) our performance creates or enhances an asset the customer controls as we perform, and (iii) our performance does not create an asset with alternative use and we have enforceable right to payment.

If all of the above criteria are met, we use an input-based measure of progress for recognizing professional service revenue.

If all the above criteria are met, we use an input-based measure of progress for recognizing professional service revenue.

For example, we may consider total labor hours incurred compared to total expected labor hours.

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To the extent that we grant our customer an option to acquire additional products or services in one of our arrangements, we will account for the option as a distinct performance obligation in the contract only if the option provides a material right to the customer that the customer would not receive without entering into the contract.

For example if we give the customer an option to acquire additional goods or services in the future at a price that is significantly lower than the current price, this would be a material right as it allows the customer to, in effect, pay in advance for the option to purchase future products or services.

For example if we give the customer an option to acquire additional goods or services in the future at a price that is

significantly lower than the current price, this would be a material right as it allows the customer to, in effect, pay in advance for the option to purchase future products or services.

If a material right exists in one of our contracts, then revenue allocated to the option is deferred and we would recognize revenue only when those future products or services are transferred or when the option expires.

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If these criteria are not met, we determine an appropriate measure of progress based on the nature of our overall promise for the single performance obligation.

If these criteria are met, each product or service is separately accounted for as a distinct performance obligation and the total transaction price is allocated to each performance obligation on a relative standalone selling price (SSP) basis.

Standalone selling price

The SSP reflects the price we would charge for a specific product or service if it was sold separately in similar circumstances and to similar customers.

In most cases we are able to establish the SSP based on observable data.

The SSP reflects the price we would charge for a specific product or service if it were sold separately in similar circumstances and to similar customers.

In most cases we can establish the SSP based on observable data.

We typically establish a narrow SSP range for our products and services and assess this range on a periodic basis or when material changes in facts and circumstances warrant a review.

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We execute certain sales contracts through resellers, distributors and channel partners (collectively referred to as resellers).

For these type of agreements, we assess whether we are considered the principal or the agent in the arrangement.

We consider factors such as, but not limited to, whether or not the reseller has the ability to set the price for which they sell our software products to end users and whether or not resellers distribution rights are limited such that any potential sales are subject to OpenText’s review and approval before delivery of the software product can be made.

If we determine that we are the

principal in the arrangement, then revenue is recognized based on the transaction price for the sale of the software product to the end user at the gross amount.

If that is not known, then the net amount received from the reseller is the transaction price.

If we determine that we are the agent in the agreement, then revenue is recognized based on the transaction price for the sale of the software product to the reseller, less any applicable commissions paid or discounts or rebates, if offered.

Costs or commissions paid to the reseller would be recognized as a reduction of revenue unless we received a distinct good or service in return.

Similarly, any discounts or rebates offered by the reseller would be recognized as a reduction of revenue.

Typically, we conclude that we are the principal in our reseller agreements, as we have control over the service and products prior to being transferred to the end customer.

We also assess the creditworthiness of each reseller and if they are newly formed, undercapitalized or in financial difficulty, we defer any revenues expected to emanate from such reseller and recognize revenue only when cash is received, and all other revenue recognition criteria under Topic 606 are met.

Typically, we conclude that the resellers are Open Text customers in our reseller agreements.

The resellers have control over the pricing, service and products prior to being transferred to the end customer.

We also assess the creditworthiness of each reseller and if they are newly formed, undercapitalized or in financial difficulty, we defer any

revenues expected to emanate from such reseller and recognize revenue only when cash is received, and all other revenue recognition criteria under Topic 606 are met.

Rights of return and other incentives

We do not generally offer rights of return or any other incentives such as concessions, product rotation, or price protection and, therefore, do not provide for or make estimates of rights of return and similar incentives.

In some contracts, however, discounts may be offered to the customer for future software purchases and other additional products or services.

However, we do offer consumers who purchase certain of our products on-line directly from us an unconditional full 70-days money-back guarantee.

Distributors and resellers are also permitted to return the consumer products, subject to certain limitations.

Revenue is reduced for such rights based on the estimate of future returns originating from contractual agreements with these customers.

Additionally, in some contracts, however, discounts may be offered to the customer for future software purchases and other additional products or services.

Such arrangements grant the customer an option to acquire additional goods or services in the future at a discount and therefore are evaluated under guidance related to “material rights” as discussed above.

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In determining whether an adjustment is appropriate, we evaluate whether the incremental consideration is consistent with the prices previously paid by the customer or similar customers.

Certain of our subscription services and product support arrangements generally contain performance response time guarantees.

For subscription services arrangements, we estimate variable consideration using a portfolio approach because performance penalties are tied to standard response time requirements.

For product support arrangements, we estimate variable consideration on a contract basis because such arrangements are customer-specific.

For both subscription services and product support arrangements, we use an expected value approach to estimate variable consideration based on historical business practices and current and future performance expectations to determine the likelihood of incurring penalties.

Performance Obligations

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As the services are provided (over time)

Managed Services / Ongoing Hosting

Managed Services / Ongoing Hosting / SaaS

Over the contract term, beginning on the date that service is made available (i.e.

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As the services are provided (over time)

Incremental Costs of Obtaining a Contract with a Customer

Incremental costs of obtaining a contract include only those costs that we incur to obtain a contract that we would not have incurred if the contract had not been obtained, such as sales commissions.

We have determined that certain of our commission programs meet the requirements to be capitalized.

Some commission programs are not subject to capitalization as the commission expense is paid and recognized as the related revenue is recognized.

In assessing costs to obtain a contract, we apply a practical expedient that allows us to assess our incremental costs on a portfolio of contracts with similar characteristics instead of assessing the incremental costs on each individual contract.

We do not expect the financial statement effects of applying this practical expedient to the portfolio of contracts to be materially different than if we were to apply the new standard to each individual contract.

We pay commissions on the sale of new customer contracts as well as for renewals of existing contracts to the extent the renewals generate incremental revenue.

Commissions paid on renewal contracts are limited to the incremental new revenue and therefore these payments are not commensurate with the commission paid on the original sale.

We allocate commission costs to the performance obligations in an arrangement consistent with the allocation of the transaction price.

Commissions allocated to the license performance obligation are expensed at the time the license revenue is recognized.

Commissions allocated to professional service performance obligations are expensed as incurred, as these contracts are generally for one year or less and we apply a practical expedient to expense costs as incurred if the amortization period would have been one year or less.

Commissions allocated to maintenance, managed services, on-going hosting arrangements or other recurring services, are capitalized and amortized consistent with the pattern of transfer to the customer of the services over the period expected to benefit from the commission payment.

As commissions paid on renewals are not commensurate with the original sale, the period of benefit considers anticipated renewals.

The benefit period is estimated to be approximately six years which is based on our customer contracts and the estimated life of our technology.

Expenses for incremental costs associated with obtaining a contract are recorded within " Sales and marketing " expense in the Consolidated Statements of Income .

Our short-term capitalized costs to obtain a contract are included in " Prepaid expenses and other current assets ", while our long-term capitalized costs to obtain a contract are included in "Other assets" on our Consolidated Balance Sheets .

Research and development costs

In our historical experience, the dates relating to the achievement of technological feasibility and general release of the product have substantially coincided.

In addition, no significant costs are incurred subsequent to the establishment of technological

As a result, we do not capitalize any research and development costs relating to internally developed software to be sold, licensed or otherwise marketed.

We account for income taxes in accordance with ASC Topic 740, “Income Taxes” (Topic 740).

These temporary differences are measured using enacted tax rates.

A valuation allowance is recorded to reduce deferred tax assets to the extent that we consider it is more likely than not that a deferred tax asset will not be realized.

A change to these factors could impact the estimated valuation allowance and income tax expense.

We account for our uncertain tax provisions by using a two-step approach.

The first step is to evaluate the tax position for recognition by determining if the weight of the available evidence indicates it is more likely than not, based solely on the technical merits, that the position will be sustained on audit, including the resolution of related appeals or litigation processes, if any.

The second step is to measure the appropriate amount of the benefit to recognize.

The amount of benefit to recognize is measured as the maximum amount which is more likely than not to be realized.

The tax position is derecognized when it is no longer more likely than not that the position will be sustained on audit.

Fair value of financial instruments

The fair value of our total long-term debt approximates its carrying value since the interest rate is at market.

Foreign currency

Our Consolidated Financial Statements are presented in U.S.

In general, the functional currency of our subsidiaries is the local currency.

The effect of foreign currency translation adjustments are recorded as a component of "Accumulated other comprehensive income".

Transactional foreign currency gains (losses) included in the Consolidated Statements of Income under the line item “Other income (expense), net” for Fiscal 2020, Fiscal 2019 and Fiscal 2018 were $( 4.2 ) million , $( 4.3 ) million , and $ 4.8 million , respectively.

Restructuring charges

We record restructuring charges relating to contractual lease obligations, not accounted for under ASC 842, and other exit costs in accordance with ASC Topic 420, “Exit or Disposal Cost Obligations” (Topic 420).

Topic 420 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at its fair value in the period in which the liability is incurred.

In order to incur a liability pursuant to Topic 420, our management must have established and approved a plan of restructuring in sufficient detail.

At the end of each reporting period, we evaluate the appropriateness of the remaining accrued balances (see note 18 "Special Charges (Recoveries)" for more details).

Loss Contingencies

We are currently involved in various claims and legal proceedings.

As of the date of this Annual Report on Form 10-K, the aggregate of such accrued liabilities was not material to our consolidated financial position or results of operations and we do not believe as of the date of this filing that it is reasonably possible that a loss exceeding the amounts already recognized will be incurred that would be material to our consolidated financial position or results of operations.

As described more fully below, we are unable at this time to estimate a possible loss or range of losses in respect of certain disclosed matters (see note 14 "Guarantees and Contingencies" for more details).

Net income per share

Basic net income per share is computed using the weighted average number of Common Shares outstanding including contingently issuable shares where the contingency has been resolved.

Share-based payment

We measure share-based compensation costs, in accordance with ASC Topic 718, “Compensation - Stock Compensation” (Topic 718) on the grant date, based on the calculated fair value of the award.

We have elected to treat awards with graded vesting as a single award when estimating fair value.

Compensation cost is initially based on the estimated number of options for which the requisite service is expected to be rendered.

This estimate is adjusted in the period once actual forfeitures are known (see note 13 "Share Capital, Option Plans and Share-based Payments" for more details).

Accounting for Pensions, post-retirement and post-employment benefits

Pension expense is accounted for in accordance with ASC Topic 715, “Compensation-Retirement Benefits” (Topic 715).

Pension expense consists of actuarially computed costs of pension benefits in respect of the current year of service, imputed returns on plan assets (for funded plans) and imputed interest on pension obligations.

The expected costs of post retirement benefits, other than pensions, are accrued in the Consolidated Financial Statements based upon actuarial methods and assumptions.

The over-funded or under-funded status of defined benefit pension and other post retirement plans are recognized as an asset or a liability (with the offset to “Accumulated other comprehensive income”, net of tax, within “Shareholders' equity”), respectively, on the Consolidated Balance Sheets (see note 12 "Pension Plans and Other Post Retirement Benefits" for more details).

Accounting Pronouncements Adopted in Fiscal 2020

During Fiscal 2020, we have adopted the following ASUs, in addition to those discussed in note 1 "Basis of Presentation".

The ASUs listed below did not have a material impact to our reported financial position, results of operations or cash flows:

2017-12 “Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities” (ASU 2017-12)

2018-15 “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract”

Accounting Pronouncements Not Yet Adopted

Retirement Benefits

In August 2018, the Financial Accounting Standards Board (FASB) issued ASU No.

2018-14 “Compensation-Retirement Benefits-Defined Benefit Plans - General (Topic 715-20):

We will adopt ASU 2018-14 in the first quarter of our fiscal year ending June 30, 2021.

The effect on our Consolidated Financial Statements and related disclosures is not expected to be material.

Financial Instruments

In June 2016, the FASB issued ASU No.

2016-13 “Financial Instruments - Credit Losses (Topic 326)” and also issued subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, and ASU 2020-02 (collectively Topic 326).

Topic 326 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

This replaces the existing incurred loss model with an expected loss model and requires the use of forward-looking information to calculate credit loss estimates.

We will adopt Topic 326 in the first quarter of our fiscal year ending June 30, 2021 by applying a cumulative effect adjustment to retained earnings.

The effect on our Consolidated Financial Statements and related disclosures is not expected to be material.

NOTE 3— REVENUES

Disaggregation of Revenue

We have four revenue streams:

license, cloud services and subscriptions, customer support, and professional service and other.

The following table disaggregates our revenue by significant geographic area, based on the location of our end customer, and by type of performance obligation and timing of revenue recognition for the periods indicated:

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Total revenues

Year Ended June 30,

Total Revenues by Type of Performance Obligation:

Recurring revenue (4)

Recurring revenues (4)

Cloud services and subscriptions revenue

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(2) EMEA primarily consists of countries in Europe, the Middle East and Africa.

(3) Asia Pacific primarily consists of the countries Japan, Australia, China, Korea, Philippines, Singapore and New Zealand.

(3) Asia Pacific primarily consists of Japan, Australia, China, Korea, Philippines, Singapore and New Zealand.

(4) Recurring revenue is defined as the sum of cloud services and subscriptions revenue and customer support revenue.

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As of June 30, 2020

As of July 1, 2018

As of June 30, 2019

Short-term contract assets

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We fulfill our obligations under a contract with a customer by transferring products and services in exchange for consideration from the customer.

During the year ended June 30, 2019 , we reclassified $ 19.2 million of contract assets to receivables as a result of the right to the transaction consideration becoming unconditional.

During the year ended June 30, 2019 , there was no significant impairment loss recognized related to contract assets.

During the year ended June 30, 2020 , we reclassified $ 33.0 million ( year ended June 30, 2019 — $ 19.2 million ) of contract assets to receivables as a result of the right to the transaction consideration becoming unconditional.

During the year ended June 30, 2020 and 2019, there was no significant impairment loss recognized related to contract assets.

We recognize deferred revenue when we have received consideration or an amount of consideration is due from the customer for future obligations to transfer products or services.

Our deferred revenues primarily relate to customer support agreements which have been paid for by customers prior to the performance of those services.

The amount of revenue that was recognized during the year ended June 30, 2019 that was included in the deferred revenue balances at July 1, 2018 was approximately $ 617 million .

The amount of revenue that was recognized during the year ended June 30, 2020 that was included in the deferred revenue balances at June 30, 2019 was $ 631 million ( year ended June 30, 2019 — $ 617 million ).