What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-08-05 compared with 2021-08-05 · 366 added, 308 removed, 895 unchanged (43% of the section changed)

1 unchanged sentence

This Annual Report on Form 10-K, including this Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A), contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the U.S.

Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A

Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the U.S.

Securities Act of 1933, as amended (the Securitie s Act ), and is subject to the safe harbors created by those sections.

8 unchanged sentences

(vi) the Company’s presence in the cloud and in growth markets;

(vii) product and solution developments, enhancements and releases and the timing thereof;

(viii) the Company’s financial conditions, results of operations and earnings;

(ix) the basis for any future growth and for our financial performance;

(x) declaration of quarterly dividends;

(xi) future tax rates;

(xii) the changing regulatory environment;

(xiii) annual recurring revenues;

(xiv) research and development and related expenditures;

(xv) our building, development and consolidation of our network infrastructure;

(xvi) competition and changes in the competitive landscape;

(xvii) our management and protection of intellectual property and other proprietary rights;

(xviii) existing and foreign sales and exchange rate fluctuations;

(xix) cyclical or seasonal aspects of our business;

(xx) capital expenditures;

(xxi) potential legal and/or regulatory proceedings;

(xxii) acquisitions and their expected impact;

(xxiii) tax audits, including expected payments in connection with the IRS Settlement (as defined below);

and (xxiv) other matters.

(vii) our expectation to grow MSPs;

(viii) product and solution developments, enhancements and releases, the timing thereof and the customers targeted;

(ix) the Company’s financial condition, results of operations and earnings;

(x) the basis for any future growth and for our financial performance;

(xi) declaration of quarterly dividends;

(xii) future tax rates;

(xiii) the changing regulatory environment;

(xiv) annual recurring revenues;

(xv) research and development and related expenditures;

(xvi) our building, development and consolidation of our network infrastructure;

(xvii) competition and changes in the competitive landscape;

(xviii) our management and protection of intellectual property and other proprietary rights;

(xix) existing and foreign sales and exchange rate fluctuations;

(xx) cyclical or seasonal aspects of our business;

(xxi) capital expenditures;

(xxii) potential legal and/or regulatory proceedings;

(xxiii) acquisitions and their expected impact, including our ability to successfully integrate the assets we acquire or utilize such assets to their full capacity, including those acquired in connection with the acquisition of Zix Corporation (see Note 19 “Acquisitions” to our Consolidated Financial Statements for more details);

(xxiv) tax audits;

(xxv) the expected impact of our decision to cease all direct business in Russia and Belarus and with known Russian-owned companies;(xxvi) expected costs of the restructuring plans;

(xxvii) targets regarding greenhouse gas emissions, waste diversion, energy consumption and ED&I initiatives;

and (xxviii) other matters.

In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate.

3 unchanged sentences

(ii) our continued operation of a secure and reliable business network;

(iii) the stability of general economic and market conditions, currency exchange rates, and interest rates, including potential for inflation and rising interest rates;

(iv) equity and debt markets continuing to provide us with access to capital;

(v) our continued ability to identify, source and finance attractive and executable business combination opportunities;

and (vi) our continued ability to avoid infringing third party intellectual property rights.

(iii) the stability of general political, economic and market conditions, including any potential recession;

(iv) our ability to manage inflation, including increased labour costs associated with attracting and retaining employees, and rising interest rates;

(v) our continued ability to manage certain foreign currency risk through hedging;

(vi) equity and debt markets continuing to provide us with access to capital;

(vii) our continued ability to identify, source and finance attractive and executable business combination opportunities;

(viii) our continued ability to avoid infringing third party intellectual property rights;

and (ix) our ability to successfully implement our restructuring plans.

Management’s estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change.

2 unchanged sentences

The risks and uncertainties that may affect forward-looking statements include, but are not limited to:

(i) actual and potential risks and uncertainties relating to the ultimate geographic spread of COVID-19, the severity of the disease and the duration of the COVID-19 pandemic and issues relating to its resurgence, including potential material adverse effects on our business, operations and financial performance;

(ii) actions that may be taken by governmental authorities to contain the COVID-19 pandemic or to treat its impact on our business (or failure to implement additional stimulus programs) and the availability, effectiveness and use of treatments and vaccines;

(i) actual and potential risks and uncertainties relating to the ultimate geographic spread of COVID-19, the severity of the disease and the duration of the COVID-19 pandemic and issues relating to the resurgence of COVID-19 and/or new strains of COVID-19, including potential material adverse effects on our business, operations and financial performance;

(ii) actions that have been and may be taken by governmental authorities to contain the COVID-19 pandemic or to treat its impact on our business (or failure to implement additional stimulus programs) and the availability, effectiveness and use of treatments and vaccines (including the effectiveness of boosters);

(iii) the actual and potential negative impacts of COVID-19 on the global economy and financial markets;

and (iv) the actual and potential risk and uncertainties relating to the implementation of our COVID-19 Restructuring Plan (as defined herein), including the possibility that the actual cash or non-cash cost of restructuring might exceed the estimated amounts;

(v) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof;

(vi) the potential for the incurrence of or assumption of debt in connection with acquisitions and the impact on the ratings or outlooks of rating agencies on our outstanding debt securities;

(iv) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof;

(v) the possibility that we may be unable to successfully integrate the assets we acquire or fail to utilize such assets to their full capacity and not realize the benefits we expect from our acquired portfolios and businesses, including the acquisition of Zix Corporation, (vi) the potential for the incurrence of or assumption of debt in connection with acquisitions and the impact on the ratings or outlooks of rating agencies on our

outstanding debt securities;

(vii) the possibility that the Company may be unable to meet its future reporting requirements under the Exchange Act, and the rules promulgated thereunder, or applicable Canadian securities regulation;

(viii) the risks associated with bringing new products and services to market;

(ix) fluctuations in currency exchange rates (including as a result of the impact of Brexit and any policy changes resulting from trade and tariff disputes);

(ix) fluctuations in currency exchange rates (including as a result of the impact of any policy changes resulting from trade and tariff disputes);

(x) delays in the purchasing decisions of the Company’s customers;

(xi) competition the Company faces in its industry and/or marketplace;

(xii) the final determination of litigation, tax audits (including tax examinations in the United States, Canada or elsewhere) and other legal proceedings;

(xii) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, U.S.

or international tax regimes;

(xii) the final determination of litigation, tax audits (including tax examinations in Canada, the United States or elsewhere) and other legal proceedings;

(xiii) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, United States or international tax regimes;

(xiv) the possibility of technical, logistical or planning issues in connection with the deployment of the Company’s products or services;

1 unchanged sentence

(xvi) demand for the Company’s products and services;

(xvii) increase in exposure to international business risks (including as a result of the impact of Brexit and any policy changes resulting from the transition from the North American

Free Trade Agreement to the United States-Mexico-Canada Agreement) as we continue to increase our international operations;

(xviii) inability to raise capital at all or on not unfavorable terms in the future;

(xix) downward pressure on our share price and dilutive effect of future sales or issuances of equity securities (including in connection with future acquisitions);

and (xx) potential changes in ratings or outlooks of rating agencies on our outstanding debt securities.

(xvii) increase in exposure to international business risks (including the impact of geopolitical instability, political unrest, war and other global conflicts) as we continue to increase our international operations;

(xviii) adverse macroeconomic conditions, including inflation, disruptions in global supply chains and increased labour costs;

(xix) inability to raise capital at all or on not unfavorable terms in the future;

(xx) downward pressure on our share price and dilutive effect of future sales or issuances of equity securities (including in connection with future acquisitions);

and (xxi) potential changes in ratings or outlooks of rating agencies on our outstanding debt securities.

Other factors that may affect forward-looking statements include, but are not limited to:

4 unchanged sentences

(v) infringement of third-party proprietary rights triggering indemnification obligations and resulting in significant expenses or restrictions on our ability to provide our products or services;

(vi) failure to comply with privacy laws and regulations that are extensive, open to various interpretations and complex to implement including General Data Protection Regulation (GDPR), California Consumer Privacy Act (CCPA), and Country by Country Reporting (including with respect to transferring personal data outside of the EEA, as a result of the recent ruling of the Court of Justice of the European Union that the EU-US Privacy Shield is an invalid data transfer mechanism and that Standard Contractual Clauses are a valid transfer mechanism unless the country to which personal data is exported restricts the ability to comply with such Clauses);

(vi) failure to comply with privacy laws and regulations that are extensive, open to various interpretations and complex to implement including GDPR, California Consumer Privacy Act, California Privacy Rights Act, Virginia Consumer Data Protection Act, Colorado Privacy Act, Connecticut Data Privacy Act, Utah Consumer Privacy Act, and Country by Country Reporting (including with respect to transferring personal data outside of the EEA and the United Kingdom, as a result of the ruling of the Court of Justice of the European Union (CJEU) that the EU-US Privacy Shield is an invalid data transfer mechanism and that Standard Contractual Clauses (SCCs) are a valid transfer mechanism unless the country to which personal data is exported restricts the ability to comply with such Clauses (Schrems II), and with respect to the new SCCs published by the European Commission and the IDTA and Addendum published by the United Kingdom's Information Commissioner's Office to meet the requirements of GDPR and Schrems II);

(vii) the Company’s growth and other profitability prospects;

5 unchanged sentences

(xiii) system or network failures or information security, cybersecurity or other data breaches in connection with the Company's offerings or the information technology systems used by the Company generally, the risk of which may be increased during times of natural disaster or pandemic (including COVID-19) due to remote working arrangements;

and (xiv) failure to attract and retain key personnel to develop and effectively manage the Company's business.

(xiv) failure to achieve our environmental goals on energy consumption, waste diversion and greenhouse gas emissions or our targets relating to ED&I initiatives;

and (xv) failure to attract and retain key personnel to develop and effectively manage the Company's business.

Readers should carefully review Part I, Item 1A “Risk Factors” and other documents we file from time to time with the Securities and Exchange Commission (SEC) and other securities regulators.

4 unchanged sentences

Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The following MD&A is intended to help readers understand our results of operations and financial condition, and is

provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and

the accompanying Notes to our Consolidated Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K.

All dollar and percentage comparisons made herein refer to the year ended June 30, 2021 (Fiscal 2021) compared with the year ended June 30, 2020 (Fiscal 2020), unless otherwise noted.

The following MD&A is intended to help readers understand our results of operations and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes to our Consolidated Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K.

All dollar and percentage comparisons made herein refer to the year ended June 30, 2022 compared with the year ended June 30, 2021, unless otherwise noted.

Please refer to Part II, Item 7 of our Annual Report on Form 10-K for Fiscal 2021 for a comparative discussion of our Fiscal 2021 financial results as compared to Fiscal 2020.

4 unchanged sentences

Our innovations maximize the strategic benefits of data and content for our customers, strengthening their productivity, growth and competitive advantage.

Our comprehensive Information Management platform and services provide secure and scalable solutions for global companies, small and medium-sized businesses (SMB), governments and consumers around the world.

Our comprehensive Information Management platform and services provide secure and scalable solutions for global companies, SMBs, governments and consumers around the world.

We have a complete and integrated portfolio of Information Management solutions delivered at scale in the OpenText Cloud, helping organizations master modern work, power modern experiences and optimize their digital supply chains.

To do this, we bring together our Content Cloud, Business Network Cloud, Experience Cloud, Security and Protection Cloud and Developer Cloud.

To do this, we bring together our Content Cloud, Business Network Cloud, Experience Cloud, Security Cloud and Developer Cloud.

We also accelerate information modernization with intelligent tools and services for moving off paper, automating classification and building clean data lakes for artificial intelligence (AI), analytics and automation.

We are fundamentally integrated into the parts of our customers' businesses that matter, so they can securely manage the complexity of information flow end to end.

Through automation and AI, we connect, synthesize and deliver information where

it is needed to drive new efficiencies, experiences and insights.

Through automation and AI, we connect, synthesize and deliver information where it is needed to drive new efficiencies, experiences and insights.

We make information more valuable by connecting it to digital business processes, enriching it with capture and analytics, protecting and securing it throughout its entire lifecycle, and leveraging it to create engaging digital experiences.

8 unchanged sentences

• Total revenue was $3,493.8 million, up 3.2% compared to the prior fiscal year;

up 6.3% after factoring in the favorable impact of $81.3 million of foreign exchange rate changes.

up 4.3% after factoring in the unfavorable impact of $39.5 million of foreign exchange rate changes.

• Total annual recurring revenue, which we define as the sum of cloud services and subscriptions revenue and customer support revenue, was $2,866.0 million, up 4.5% compared to the prior fiscal year;

up 10.4% after factoring in the favorable impact of $54.9 million of foreign exchange rate changes.

up 5.5% after factoring in the unfavorable impact of $26.0 million of foreign exchange rate changes.

• Cloud services and subscriptions revenue was $1,535.0 million, up 9.1% compared to the prior fiscal year;

up 20.0% after factoring in the favorable impact of $17.8 million of foreign exchange rate changes.

up 9.8% after factoring in the unfavorable impact of $9.7 million of foreign exchange rate changes.

• GAAP-based gross margin was 69.6% compared to 69.4% in the prior fiscal year.

4 unchanged sentences

• Non-GAAP-based EPS, diluted, was $3.22 compared to $3.39 in the prior fiscal year.

• Adjusted EBITDA was $1,315.0 million compared to $1,148.1 million in the prior fiscal year.

• Operating cash flow was $876.1 million compared to $954.5 million in the prior fiscal year, down 8.2%.

• During Fiscal 2021, we made payments of $299.6 million relating to the IRS Settlement (as defined herein) and repaid the $600 million previously drawn under the Revolver (as defined herein) using cash on hand.

• Adjusted EBITDA, a non-GAAP measure, was $1,265.0 million compared to $1,315.0 million in the prior fiscal year.

• Operating cash flow was $981.8 million for the year ended June 30, 2022 compared to $876.1 million in the prior fiscal year, up 12.1%.

• Cash and cash equivalents were $1,693.7 million as of June 30, 2022, compared to $1,607.3 million as of June 30, 2021.

• Enterprise cloud bookings was $465.8 million for the year ended June 30, 2022.

We define Enterprise cloud bookings as the total value from cloud services and subscription contracts entered into in the fiscal year that are new, committed and incremental to our existing contracts, excluding the impact of Carbonite and Zix.

See “Use of Non-GAAP Financial Measures” below for definitions and reconciliations of GAAP-based measures to Non-GAAP-based measures.

See “Acquisitions” below for the impact of acquisitions on the period-to-period comparability of results.

As a result of the continually changing marketplace in which we operate, we regularly evaluate acquisition opportunities within our market and at any time may be in various stages of discussions with respect to such opportunities.

Acquisition of Zix Corporation

On December 23, 2021, we acquired all of the equity interest in Zix Corporation (Zix), a leader in software as a service (SaaS) based email encryption, threat protection and compliance cloud solutions for SMBs.

Total consideration for Zix was $894.5 million paid in cash, inclusive of $38.3 million of cash acquired and $18.6 million relating to the cash settlement of pre-acquisition vested share-based compensation.

We believe the acquisition increases our position in the data protection, threat management, email security and compliance solutions spaces.

The results of operations of Zix have been consolidated with those of OpenText beginning December 23, 2021.

Acquisition of Bricata Inc.

On November 24, 2021, we acquired all of the equity interest in Bricata Inc.

(Bricata) for $17.8 million.

We believe the acquisition strengthens our OpenText Security Cloud with Network Detection and Response technologies.

The results of operations of Bricata have been consolidated with those of OpenText beginning November 24, 2021.

We believe our acquisitions support our long-term strategic direction, strengthen our competitive position, expand our customer base, provide greater scale to accelerate innovation, grow our earnings and provide superior shareholder value.

5 unchanged sentences

The spread of COVID-19 has significantly impacted the global economy and has adversely impacted and may continue to adversely impact our operational and financial performance.

The extent of the adverse impact of the pandemic on the global economy and markets will continue to depend, in part, on the length and severity of the measures taken to limit the spread of the virus, the availability, effectiveness and use of treatments and vaccines and, in part, on the size and effectiveness of the compensating measures taken by governments and on actual and potential resurgences.

We are closely monitoring the potential effects and impact on our operations, businesses and financial performance, including liquidity and capital usage, though the extent is difficult to fully predict at this time due to the rapid evolution of this uncertain situation.

We continue to conduct business with substantial modifications to employee travel and work locations and also virtualization of sales and marketing events, which we expect to remain in place throughout calendar year 2021, along with substantially modified interactions with customers and suppliers, among other modifications.

We will continue to actively monitor the impact of the COVID-19 pandemic on all aspects of our business and geographies, including customer purchasing decisions, and may take further actions that alter our business operations as may be required by governments, or that we determine are in the best interest of our employees, customers, partners, suppliers, and shareholders.

It is uncertain and difficult to predict what the potential effects any such alterations or modifications may have on our business including the effects on our customers and prospects, or our financial results and our ability to successfully execute our business strategies and initiatives.

As previously disclosed, in order to preemptively mitigate the operational impacts of COVID-19, our Compensation Committee and Board approved certain compensation adjustments, effective for the period May 15, 2020 through June 30, 2021, subject to review and modification as the situation warranted.

As a precaution, we also temporarily and significantly reduced all hiring and discretionary spending, while taking note of some savings to be achieved through travel restrictions and the cancellation of certain events.

These cost reduction measures were in addition to other previously disclosed facilities and workforce related actions as part of our COVID-19 Restructuring Plan.

Please see note 18 "Special Charges (Recoveries)" to the Consolidated Financial Statements included in this Annual Report on Form 10-K for more information.

After careful consideration and review, the Compensation Committee and Board approved the restoration, effective December 1, 2020 and ahead of the initially contemplated May 15, 2020 through June 30, 2021 duration described above, of all previously announced compensation adjustments.

We continue to closely monitor discretionary spending, and remain active in our hiring across the organization.

Additionally, despite the global impact of COVID-19, we were able to deliver strong financial results for Fiscal 2021, including our fourth fiscal quarter, as a result of the hard work and commitment of our dedicated employees.

In recognition of their contributions, following the end of Fiscal 2021, the Compensation Committee approved a special one-time cash performance bonus to our broader employee base whose pay had been previously and temporarily reduced, prior to December 1, 2020, as a result of the COVID-19 compensation adjustments described above.

These employees will receive an amount equal to the reductions in their Fiscal 2021 salary and annual incentive payout made pursuant to such compensation adjustments.

Our Named Executive Officers, members of the executive leadership team and senior management are excluded from this special one-time bonus to our broader employee base.

The special performance bonus of approximately $18 million, as it relates to Fiscal 2021 performance and contributions, has been accrued as at June 30, 2021 and will be paid to employees in September 2021.

We continue to conduct business with modifications to employee travel and work locations and also virtualization of certain events, along with modified interactions with customers and suppliers, among other modifications.

In addition, as many local governments and officials have started lifting pandemic restrictions in accordance with the guidance of public health experts, in July 2022, we implemented a Flex-Office program in which a majority of our employees work a portion of their time in the office and a portion remotely.

See “We have implemented a Flex-Office program, which will subject us to certain operational challenges and risks” in Part I, Item 1A “Risk Factors” included elsewhere within this Annual Report on Form 10-K.

We will continue to actively monitor the impact of the COVID-19 pandemic on all aspects of our business and geographies, including customer purchasing decisions, and may take further actions that alter our business operations, including our Flex-Office program, as may be required by governments, or that we determine are in the best interest of our employees, customers, partners, suppliers and shareholders.

It is uncertain and difficult to predict what the potential effects any such alterations or

modifications may have on our business including the effects on our customers and prospects, or our financial results and our ability to successfully execute our business strategies and initiatives.

The ongoing and ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control.

For more information, please see Part I, Item 1A “Risk Factors” included elsewhere within this Annual Report on Form 10-K.

Impacts of Russia-Ukraine Conflict

In response to the Russia-Ukraine conflict, we have ceased all direct business in Russia and Belarus and with known Russian-owned companies.

Sanctions and export controls have also been imposed by the United States, Canada and other countries in connection with Russia's military actions in Ukraine including restrictions on selling or exporting goods, services or technology to certain regions, and travel bans and asset freezes impacting political, military, business and financial organizations and individuals in or connected with Russia.

To support certain of our cloud customers headquartered in the United States or allied countries that rely on our network to manage their global business (including their business in Russia), we have nonetheless allowed these customers to continue to use our services to the extent that it can be done in strict compliance with all applicable sanctions and export controls.

However, we may adjust our business practices as required by applicable rules and regulations.

Our compliance with sanctions and export controls could impact the fulfillment of certain contracts with customers and partners doing business in these affected areas and future revenue streams from impacted parties and certain countries.

While we do not expect our decision to cease all direct business in Russia and Belarus and with known Russian-owned companies to have a material adverse effect on our overall business, results of operations or financial condition, it is not possible to predict the broader consequences of this conflict, including adverse effects on the global economy, on our business and operations as well as those of our customers, partners and third party service providers.

For more information, please see Part I, Item 1A “Risk Factors” included in this Annual Report on Form 10-K.

Outlook for Fiscal 2023

1 unchanged sentence

With an emphasis on increasing recurring revenues and expanding our margins, we believe our Total Growth strategy will ultimately drive overall cash flow generation, thus helping to fuel our disciplined capital allocation approach and further our ability to deepen our account coverage and identify and execute strategic acquisitions.

With strategic acquisitions, we are better positioned to expand our product portfolio and improve our ability to innovate and grow organically, which helps us to meet our long-term growth targets.

We believe this “Total Growth” strategy is a durable model that will create shareholder value over both the near and long-term.

With strategic acquisitions, we are well positioned to expand our product portfolio and improve our ability to innovate and grow organically, which helps us to meet our long-term growth targets.

We believe our Total Growth strategy is a durable model, that we believe will create both near and long-term shareholder value through organic and acquired growth, capital efficiency and profitability.

We are committed to continuous innovation.

Our investments in research and development (R&D) push product innovation, increasing the value of our offerings to our installed customer base, which includes Global 10,000 companies (G10K), SMB and consumers.

The G10K are the world's largest companies, typically those with greater than two billion in revenues, as well as the world's largest governments and organizations.

More valuable products, coupled with our established global partner program, lead to greater distribution and cross-selling opportunities which further help us to achieve organic

Our investments in R&D push product innovation, increasing the value of our offerings to our installed customer base, which includes Global 10,000 companies (G10K), SMB and consumers.

The G10K are the world's largest companies, ranked by estimated total revenues, as well as the world's largest governments and organizations.

More valuable products, coupled with our established global partner program, lead to greater distribution and cross-selling opportunities which further help us to achieve organic growth.

Over the last three fiscal years, we have invested a cumulative total of $1.23 billion in R&D or 12.3% of cumulative revenue for that three-year period.

We typically target to spend 12% to 14% of revenues for R&D each fiscal year.

On an annual basis, we target to spend 12% to 14% of revenues for R&D expense.

Looking ahead, the destination for innovation is indisputably the cloud.

Businesses of all sizes rely on a combination of public and private clouds, managed services and off-cloud solutions.

As a result, we are committed to continue to modernize technology infrastructure and leverage our existing investments in the OpenText Cloud.

As a result, we are committed to continue to modernize our technology infrastructure and leverage our existing investments in the OpenText Cloud.

The combination of OpenText cloud-native applications and managed services, together with the scalability and performance of our partner public cloud providers, offer more secure, reliable and compliant solutions to customers wanting to deploy cloud-based Information Management applications.

1 unchanged sentence

becoming cloud-native, connecting anything, and extending capabilities quickly with multi-tenant SaaS applications and services.

We will continue to closely monitor the global impacts of COVID-19.

We will continue to closely monitor the potential impacts of COVID-19, inflation with respect to wages, services and goods, concerns regarding any potential recession, rising interest rates, financial market volatility, and the Russia-Ukraine conflict on our business.

See Part I, Item 1A, "Risk Factors" included within this Annual Report on Form 10-K.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

2 unchanged sentences

These estimates, judgments and assumptions are evaluated on an ongoing basis.

We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time.

We base our estimates on historical experience and on various other

assumptions that we believe are reasonable at that time.

Actual results may differ materially from those estimates.

Note 2 "Accounting Policies and Recent Accounting Pronouncements" to the Consolidated Financial Statements contains a summary of the policies that involve assumptions, judgments and estimates and have the greatest impact on our Consolidated Financial Statements.

The policies listed below are areas that may contain key components of our results of operations and are based on complex rules requiring us to make judgments and estimates and consequently, we consider these to be our critical accounting policies.

7 unchanged sentences

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 items such as special charges, restructurings, asset impairments and other non-recurring costs.

As of June 30, 2021, we have recorded certain estimates in our Consolidated Financial Statements resulting from the pandemic, particularly with respect to the COVID-19 Restructuring Plan and allowance for credit losses, based on management's estimates and assumptions utilizing the most currently available information.

As of June 30, 2022, we have recorded certain estimates in our Consolidated Financial Statements resulting from the pandemic, particularly with respect to the COVID-19 Restructuring Plan, 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.

Please also see "Risk Factors" included within Part I, Item 1A of this Annual Report on Form 10-K.

Please also see Part I, Item 1A, “Risk Factors” in this Annual Report on Form 10-K.

Revenue recognition

42 unchanged sentences

Customer support for term and subscription licenses is renewable concurrently with such licenses for the same duration of time.

Payments for customer support are generally made at the inception of the contract term or in installments over

the term of the maintenance period.

Payments for customer support are generally made at the inception of the contract term or in installments over the term of the maintenance period.

Our customer support team is ready to provide these maintenance services, as needed, to the customer during the contract term.

11 unchanged sentences

Like perpetual licenses, both our term licenses and subscription licenses are functional IP that have significant stand-alone functionality.

Accordingly, for both term and subscription licenses, revenue is recognized at the point-in-time when the customer is able to use and benefit from the software, which is normally once software activation keys have been made available for download at the commencement of the term.

Accordingly, for both term and subscription licenses, revenue

is recognized at the point-in-time when the customer is able to use and benefit from the software, which is normally once software activation keys have been made available for download at the commencement of the term.

Professional service and other revenue

9 unchanged sentences

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.

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

As a practical expedient, when we invoice a customer at an amount that corresponds directly with the value to the customer of our performance to date, we will recognize revenue at that amount.

17 unchanged sentences

Estimating SSP requires judgment that could impact the amount and timing of revenue recognized.

SSP is a formal process whereby management considers multiple factors including, but not limited to, geographic or region specific factors, competitive positioning, internal costs, profit objectives, and pricing practices.

SSP is a formal

process whereby management considers multiple factors including, but not limited to, geographic or region-specific factors, competitive positioning, internal costs, profit objectives and pricing practices.

Transaction Price Allocation

6 unchanged sentences

Where the contracts are negotiated as a package, we will account for them as a single arrangement and allocate the consideration for the combined contracts among the performance obligations accordingly.

We believe there are significant assumptions, judgments and estimates involved in the accounting for revenue recognition as discussed above and these assumptions, judgment and estimates could impact the timing of when revenue is recognized and could have a material impact on our Consolidated Financial Statements.

We believe there are significant assumptions, judgments and estimates involved in the accounting for revenue recognition as discussed above and these assumptions, judgments and estimates could impact the timing of when revenue is recognized and could have a material impact on our Consolidated Financial Statements.

Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired.

4 unchanged sentences

We perform a qualitative assessment to test our reporting unit's goodwill for impairment.

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 quantitative assessment of the impairment test is performed.

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 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.

If the carrying value

of the net assets of our reporting unit exceeds its fair value, then an impairment loss equal to the difference, but not exceeding the total carrying value of goodwill allocated to the reporting unit, would be recorded.

If the carrying value of the net assets of our reporting unit exceeds its fair value, then an impairment loss equal to the difference, but not exceeding the total carrying value of goodwill allocated to the reporting unit, would be recorded.

Our annual impairment analysis of goodwill was performed as of April 1, 2022.

32 unchanged sentences

Since tax law is complex and often subject to varied interpretations, it is uncertain whether some of the Company’s tax positions will be sustained upon audit.

Our assumptions, judgments and

estimates relative to the current provision for income taxes considers current tax laws, our interpretations of current tax laws and possible outcomes of current and future audits conducted by domestic and foreign tax authorities.

Our assumptions, judgments and estimates relative to the current provision for income taxes considers current tax laws, our interpretations of current tax laws and possible outcomes of current and future audits conducted by domestic and foreign tax authorities.

While we believe the assumptions and estimates that we have made are reasonable, such assumptions and estimates could have a material impact to our Consolidated Financial Statements upon ultimate resolution of the tax positions.

59 unchanged sentences

$ 1,264,986 $ 1,315,033 $ 1,148,080

(1) Total revenues by geography are determined based on the location of our end customer.

_______________________________

(1) Total revenues by geography are determined based on the location of our direct end customer.

(2) Americas consists of countries in North, Central and South America.

7 unchanged sentences

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

For the year ended June 30, 2021, our cloud renewal rate, excluding the impact of Carbonite Inc.

(Carbonite), was approximately 93%, compared to approximately 96% for the year ended June 30, 2020.

For the year ended June 30, 2022, our cloud renewal rate, excluding the impact of Carbonite and Zix, was approximately 94% compared to approximately 93% for the year ended June 30, 2021.

Cost of Cloud services and subscriptions revenues is comprised primarily of third-party network usage fees, maintenance of in-house data hardware centers, technical support personnel-related costs and some third party royalty costs.

16 unchanged sentences

Cloud services and subscriptions revenues increased by $127.6 million or 9.1% during the year ended June 30, 2022 as compared to the prior fiscal year;

up 20.0% after factoring in the favorable impact of $17.8 million of foreign exchange rates.

The increase was primarily driven by incremental Cloud services and subscriptions revenues from acquisitions in the comparative period.

up 9.8% after factoring in the unfavorable impact of $9.7 million of foreign exchange rate changes.

The increase was primarily driven by the impact of recent acquisitions, along with organic growth over the comparative period.

Geographically, the overall change was attributable to an increase in Americas of $107.5 million, an increase in EMEA of $18.6 million and an increase in Asia Pacific of $1.5 million.

1 unchanged sentence

Cost of Cloud services and subscriptions revenues increased by $29.9 million during the year ended June 30, 2022 as compared to the prior fiscal year.

This was due to an increase in labour-related costs of $16.8 million and an increase in third party network fees of $14.9 million, both primarily the result of recent acquisitions.

This was primarily due to an increase in third party network usage fees of $19.9 million, an increase in labour-related costs of $8.1 million and an increase in payroll taxes of $1.5 million.

Overall, the gross margin percentage on Cloud services and subscriptions revenues increased to 67% from 66%.

24 unchanged sentences

Asia Pacific 8.4 % 8.2 % 8.0 %

Customer support revenues increased by $58.5 million or 4.6% during the year ended June 30, 2021 as compared to the prior fiscal year;

up 1.7% after factoring in the favorable impact of $37.1 million of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase in EMEA of $43.1 million, an increase in Americas of $9.1 million and an increase in Asia Pacific of $6.2 million.

Customer support revenues decreased by $3.1 million or 0.2% during the year ended June 30, 2022 as compared to the prior fiscal year;

up 1.0% after factoring in the unfavorable impact of $16.3 million of foreign exchange rate changes.

Geographically, the overall change was attributable to a decrease in EMEA of $5.9 million and a decrease in Americas of $0.2 million, partially offset by an increase in Asia Pacific of $3.0 million.

Cost of Customer support revenues decreased by $1.3 million during the year ended June 30, 2022 as compared to the prior fiscal year.

This was due to a decrease in third party costs of $0.7 million and a decrease in labour-related costs of $0.6 million, partially offset by an increase in other miscellaneous costs of $0.2 million.

Overall, the gross margin percentage on Customer support revenues increased to 91% from 90%.

This was primarily due to a decrease in labour-related costs of $1.9 million and a decrease in third party network usage fees of $0.3 million, partially offset by an increase in other miscellaneous costs of $1.0 million.

Overall, the gross margin percentage on Customer support revenues remained stable at 91%.

Our License revenue can be broadly categorized as perpetual licenses, term licenses and subscription licenses.

18 unchanged sentences

License revenues decreased by $26.4 million or 6.9% during the year ended June 30, 2022 as compared to the prior fiscal year;

down 8.6% after factoring in the favorable impact of $16.6 million of foreign exchange rate changes.

Geographically, the overall change was attributable to a decrease in Americas of $40.1 million and a decrease in Asia Pacific of $1.3 million, partially offset by an increase in EMEA of $23.3 million.

During Fiscal 2021, we closed 122 license contracts greater than $0.5 million, of which 45 deals were greater than $1.0 million, contributing $131.6 million of License revenues.

This was compared to 120 license contracts greater than $0.5 million during Fiscal 2020, of which 48 deals were greater than $1.0 million, contributing $137.8 million of License revenues.

Cost of License revenues increased by $2.6 million during the year ended June 30, 2021 as compared to the prior fiscal year as a result of higher third party technology costs.

Overall, the gross margin percentage on License revenues decreased to 96% from 97%.

down 4.6% after factoring in the unfavorable impact of $8.7 million of foreign exchange rate changes.

Geographically, the overall change was attributable to a decrease in EMEA of $16.8 million and a decrease in Asia Pacific of $13.8 million, partially offset by an increase in Americas of $4.2 million.

During Fiscal 2022, we closed 122 license contracts greater than $0.5 million, of which 46 contracts were greater than $1.0 million, contributing $131.7 million of License revenues.

This was compared to 122 license contracts greater than $0.5 million during Fiscal 2021, of which 45 contracts were greater than $1.0 million, contributing $131.6 million of License revenues.

Cost of License revenues decreased by $0.4 million during the year ended June 30, 2022 as compared to the prior fiscal year as a result of lower third-party technology costs.

Overall, the gross margin percentage on License revenues remained stable at 96%.

4) Professional Service and Other:

21 unchanged sentences

Asia Pacific 11.5 % 10.4 % 10.2 %

Professional service and other revenues decreased by $13.7 million or 5.0% during the year ended June 30, 2021 as compared to the prior fiscal year;

down 8.6% after factoring in the favorable impact of $9.9 million of foreign exchange rate changes.

Geographically, the overall change was attributable to a decrease in the Americas of $12.6 million, a decrease in Asia Pacific of $0.7 million and a decrease in EMEA of $0.4 million.

Cost of Professional service and other revenues decreased by $15.7 million during the year ended June 30, 2021 as compared to the prior fiscal year.

This was due to a decrease in labour and travel-related expenses of $15.8 million resulting from the travel limitations triggered by the COVID-19 pandemic.

Overall, the gross margin percentage on Professional service and other revenues increased to 24% from 22%.

Professional service and other revenues increased by $9.6 million or 3.7% during the year ended June 30, 2022 as compared to the prior fiscal year;

up 5.5% after factoring in the unfavorable impact of $4.8 million of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase in Americas of $7.1 million and an increase in Asia Pacific of $3.9 million, partially offset by a decrease in EMEA of $1.4 million.

Cost of Professional service and other revenues increased by $19.7 million during the year ended June 30, 2022 as compared to the prior fiscal year.

This was primarily due to an increase in labour-related costs of $19.4 million and an increase in other miscellaneous costs of $0.3 million.

Overall, the gross margin percentage on Professional service and other revenues decreased to 20% from 24%.

Amortization of Acquired Technology-based Intangible Assets

3 unchanged sentences

increase (decrease) 2020

Amortization of acquired technology-based

intangible assets $ 218,796 $ 13,079 $ 205,717 $ 22,332 $ 183,385

Amortization of acquired technology-based intangible assets increased by $13.1 million during the year ended June 30, 2021 as compared to the prior fiscal year.

This was primarily due to an increase of $45.5 million relating to amortization of newly acquired technology-based intangible assets from recent acquisitions, partially offset by a reduction of $32.4 million relating to intangible assets from certain previous acquisitions becoming fully amortized.

Amortization of acquired technology-based intangible assets $ 198,607 $ (20,189) $ 218,796 $ 13,079 $ 205,717

Amortization of acquired technology-based intangible assets decreased during the year ended June 30, 2022 by $20.2 million as compared to the prior fiscal year.

This was due to a reduction of $27.9 million relating to intangible assets from previous acquisitions becoming fully amortized, partially offset by an increase of $7.7 million relating to amortization of newly acquired customer-based intangible assets from recent acquisitions.

Operating Expenses

20 unchanged sentences

The primary drivers are typically software upgrades and development.

Change between Fiscal Years increase (decrease)

Change between Fiscal Years

increase (decrease)

(In thousands)

7 unchanged sentences

Total change in research and development expenses $ 19,001 $ 51,036

Research and development expenses increased by $51.0 million during the year ended June 30, 2021 as compared to the prior fiscal year as a result of recent acquisitions, partially offset by the impact of the COVID-19 travel and spending reduction discussed under "Outlook for Fiscal 2022" above.

Payroll and payroll-related benefits, which includes salaries, benefits and variable short-term incentives, increased by $40.8 million, and facility-related expenses increased by $8.3 million.

Additionally, share-based compensation expense increased by $4.6 million.

These increases were partially offset by reductions in travel and communication expenses of $1.5 million and contract labour and consulting expenses of $0.8 million.

Research and development expenses increased by $19 million during the year ended June 30, 2022 as compared to the prior fiscal year, primarily as a result of recent acquisitions.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $17.1 million.

Additionally, share-based compensation expense increased by $7.3 million and contract labour and consulting increased by $2.6 million.

These increases were partially offset by reductions in facility-related expenses of $9.1 million.

Overall, our research and development expenses, as a percentage of total revenues, remained stable compared to the prior fiscal year at 13%.

1 unchanged sentence

Sales and marketing expenses consist primarily of personnel expenses and costs associated with advertising, marketing events and trade shows.

Change between Fiscal Years increase (decrease)

Change between Fiscal Years

increase (decrease)

(In thousands) 2022 and 2021 2021 and 2020

6 unchanged sentences

Facilities (3,991) (4,151)

Credit loss expense (4,329) (2,000)

Credit loss expense (recovery) (9,045) (4,329)

Other miscellaneous 4,624 (209)

Total change in sales and marketing expenses $ 54,897 $ 37,177

Sales and marketing expenses increased by $37.2 million during the year ended June 30, 2021 as compared to the prior fiscal year as a result of recent acquisitions, partially offset by the impact of the COVID-19 travel and spending reduction discussed under "Outlook for Fiscal 2022" above.

Payroll and payroll-related benefits, which includes salaries, benefits and variable short-term incentives, increased by $28.3 million, commissions increased by $11.5 million, marketing expenses increased by $11.5 million and share-based compensation expense increased by $9.0 million.

These increases were partially offset by reductions in travel and communications of $14.6 million resulting from travel limitations triggered by the COVID-19 pandemic, reductions in credit loss expense of $4.3 million and reductions in facility related expenses of $4.2 million.

Overall, our sales and marketing expenses, as a percentage of total revenues, decreased to 18% from 19% in the prior fiscal year.

Our sales and marketing labour resources decreased by 3 employees, from 2,457 employees at June 30, 2020 to 2,454 employees at June 30, 2021.

Sales and marketing expenses increased by $54.9 million during the year ended June 30, 2022 as compared to the prior fiscal year, partially as a result of recent acquisitions.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $38.6 million.

Additionally, marketing expenses increased by $9.6 million, commissions increased by $7.0 million, other miscellaneous costs increased by $4.6 million, share-based compensation expense increased by $4.3 million and travel and communication expenses increased by $3.8 million.

These increases were partially offset by reductions in credit loss expense of $9.0 million and reductions in facility-related expenses of $4.0 million.

Overall, our sales and marketing expenses, as a percentage of total revenues, increased to 19% from 18% the prior fiscal year.

Our sales and marketing labour resources increased by 256 employees, from 2,454 employees at June 30, 2021 to 2,710 employees at June 30, 2022.

General and administrative expenses consist primarily of payroll and payroll related benefits expenses, related overhead, audit fees, other professional fees, contract labour and consulting expenses and public company costs.

Change between Fiscal Years increase (decrease)

Change between Fiscal Years

increase (decrease)

(In thousands) 2022 and 2021 2021 and 2020

6 unchanged sentences

Total change in general and administrative expenses $ 53,564 $ 25,989

General and administrative expenses increased by $26.0 million during the year ended June 30, 2021 as compared to the prior fiscal year as a result of recent acquisitions.

Other miscellaneous costs, which include professional fees such as legal, audit and tax related expenses, increased by $16.5 million, payroll and payroll-related benefits, which includes salaries, benefits and variable short-term incentives increased by $11.6 million, and share-based compensation expense increased by $5.2 million.

These increases were partially offset by reductions in travel and communication of $3.9 million and facility related expenses of $3.8 million, due to the impact of the COVID-19 spending reduction discussed under "Outlook for Fiscal 2022" above.

Overall, general and administrative expenses, as a percentage of total revenues, remained stable compared to the prior fiscal year at 8%.

Our general and administrative labour resources decreased by 48 employees, from 1,914 employees at June 30, 2020 to 1,866 employees at June 30, 2021.

General and administrative expenses increased by $53.6 million during the year ended June 30, 2022 as compared to the prior fiscal year, partially as a result of recent acquisitions.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $47.8 million.

Additionally, travel and communication expenses increased by $5.8 million, contract labour and consulting increased by $5.3 million and share-based compensation expense increased by $2.5 million.

These increases were partially offset by reductions in other miscellaneous costs, which include professional fees such as legal, audit and tax related expenses, of $8.2 million.

Overall, general and administrative expenses, as a percentage of total revenues, increased to 9% from 8% in the prior fiscal year.

Our general and administrative labour resources increased by 105 employees, from 1,866 employees at June 30, 2021 to 1,971 employees at June 30, 2022.

Depreciation expenses:

4 unchanged sentences

Depreciation $ 88,241 $ 2,976 $ 85,265 $ (4,193) $ 89,458

Depreciation expenses decreased by $4.2 million during the year ended June 30, 2021 as compared to the prior fiscal year.

Depreciation expenses, as a percentage of total revenue, remained stable at 3% for the year ended June 30, 2021 as compared to the prior fiscal year.

Depreciation expenses increased during the year ended June 30, 2022 by $3.0 million compared to the prior fiscal year.

Depreciation expenses as a percentage of total revenue remained stable for the year ended June 30, 2022 at 3% compared to the prior fiscal year.

Amortization of acquired customer-based intangible assets:

4 unchanged sentences

Amortization of acquired customer-based intangible assets $ 217,105 $ 561 $ 216,544 $ (3,015) $ 219,559

Amortization of acquired customer-based intangible assets decreased by $3.0 million during year ended June 30, 2021 as compared to the prior fiscal year.

This was due to a reduction of $59.0 million relating to intangible assets from certain previous acquisitions becoming fully amortized, partially offset by an increase of $56.0 million relating to amortization of newly acquired customer-based intangible assets from recent acquisitions.

Amortization of acquired customer-based intangible assets increased during the year ended June 30, 2022 by $0.6 million as compared to the prior fiscal year.

This was due to an increase of $9.4 million relating to amortization of newly acquired customer-based intangible assets from recent acquisitions, partially offset by a reduction of $8.8 million relating to intangible assets from previous acquisitions becoming fully amortized.

Special charges (recoveries):

Special charges (recoveries) typically relate to amounts that we expect to pay in connection with restructuring plans, acquisition-related costs and other similar charges and recoveries.

Generally, we implement such plans in the context of integrating acquired entities with existing OpenText operations and most recently in response to the COVID-19 pandemic.

Generally, we implement such plans in the context of integrating acquired entities with existing OpenText operations and most recently in response to our return to office planning.

Actions related to such restructuring plans are typically completed within a period of one year.

1 unchanged sentence

Year Ended June 30,

(In thousands) 2021 Change increase (decrease) 2020 Change increase (decrease) 2019

(In thousands) 2022 Change

increase (decrease) 2021 Change

increase (decrease) 2020

Special charges (recoveries) $ 46,873 $ 45,125 $ 1,748 $ (98,680) $ 100,428

Special charges (recoveries) decreased by $98.7 million during the year ended June 30, 2021 as compared to the prior fiscal year.

This was due to a decrease in restructuring activities of $87.0 million, primarily related to the COVID-19 and Fiscal 2020 restructuring plans which were initiated during the second half of Fiscal 2020.

Included in the special charges for Fiscal 2021 were net recoveries of $29.5 million associated with the reversal of lease liabilities from facilities abandoned in the prior fiscal year, which have since been assigned or early terminated as well as the release of other facility charges accrued for under the plans.

Additionally, acquisition-related costs decreased by $7.8 million and other miscellaneous charges decreased by $3.9 million.

Special charges (recoveries) increased by $45.1 million during the year ended June 30, 2022 as compared to the prior fiscal year.

This was primarily due to an increase in restructuring activities of $27.2 million related to abandoned facilities and a decrease in comparative period recoveries for the Fiscal 2022 Restructuring Plan, COVID-19 Restructuring Plan and Fiscal 2020 Restructuring Plan.

Additionally, acquisition related costs increased by $1.0 million and other miscellaneous charges increased by $17.0 million, primarily driven by pre-acquisition equity incentives, which upon acquisition were replaced by equivalent value cash settlements (see Note 19 “Acquisitions” to our Consolidated Financial Statements) compared to the same period in the prior fiscal year.

For more details on Special charges (recoveries), see Note 18 “Special Charges (Recoveries)” to our Consolidated Financial Statements.

2 unchanged sentences

Year Ended June 30,

(In thousands) 2021 Change increase (decrease) 2020 Change increase (decrease) 2019

(In thousands) 2022 Change

increase (decrease) 2021 Change

increase (decrease) 2020

Foreign exchange gains (losses)

2 unchanged sentences

58,702 (4,195) 62,897 54,197 8,700

Loss debt extinguishment (2)

Loss on debt extinguishment (2)

(27,413) (27,413) — 17,854 (17,854)

1 unchanged sentence

Total other income (expense), net $ 29,118 $ (32,316) $ 61,434 $ 73,380 $ (11,946)

(1) OpenText’s share in net income of equity investees relates to our share of net income, which is based on changes in approximate fair value, at our interest in certain investment funds in which we are a limited partner.

Our interests in each of these investees range from 4% to below 20% and these investments are accounted for using the equity method (see note 9 "Prepaid Expenses and Other Assets" for more details).

(2) On March 5, 2020, we redeemed in full $800 million aggregate principal amount of our 5.625% Senior Notes due 2023 (Senior Notes 2023), which resulted in a loss on debt extinguishment of $17.9 million.

__________________________

(1) Represents our share in net income of equity investees, which approximates fair value and subject to volatility based on market trends and business conditions, based on our interest in certain investment funds in which we are a limited partner.

Our interests in each of these investees range from 4% to below 20% and these investments are accounted for using the equity method (see Note 9 “Prepaid Expenses and Other Assets” to our Consolidated Financial Statements for more details).

(2) On December 9, 2021, we redeemed Senior Notes 2026 in full, which resulted in a loss on debt extinguishment of $27.4 million.

Of this, $25.0 million related to the early termination call premium, $6.2 million related to unamortized debt issuance costs and ($3.8) million related to unamortized premium (see Note 11 “Long-Term Debt” to our Consolidated Financial Statements for more details).

On March 5, 2020, we redeemed

in full $800 million aggregate principal amount of our 5.625% Senior Notes due 2023 (Senior Notes 2023), which resulted in a loss on debt extinguishment of $17.9 million.

Of this, $6.7 million related to unamortized debt issuance costs and the remaining $11.2 million related to the early termination call premium.

2 unchanged sentences

Year Ended June 30,

(In thousands) 2021 Change increase (decrease) 2020 Change increase (decrease) 2019

(In thousands) 2022 Change

increase (decrease) 2021 Change

increase (decrease) 2020

Interest expense related to total outstanding debt (1)

3 unchanged sentences

Total interest and other related expense, net $ 157,880 $ 6,313 $ 151,567 $ 5,189 $ 146,378

__________________________

(1) For more details see Note 11 “Long-Term Debt” to our Consolidated Financial Statements.

Provision for (Recovery of) Income Taxes

Provision for Income Taxes

We operate in several tax jurisdictions and are exposed to various foreign tax rates.

Year Ended June 30,

(In thousands) 2021 Change increase (decrease) 2020 Change increase (decrease) 2019

Provision for (recovery of) income taxes $ 339,906 $ 229,069 $ 110,837 $ (44,100) $ 154,937

The effective tax rate increased to a provision of 52.2% for the year ended June 30, 2021, compared to a provision of 32.1% for the year ended June 30, 2020.

Tax expense increased by $229.1 million from $110.8 million during the year ended June 30, 2020 to $339.9 million during the year ended June 30, 2021.

This was primarily due to (i) an increase of $300.5 million relating to the IRS Settlement (as defined herein), (ii) an increase of $76.4 million relating to higher net income including the impact of foreign rates and (iii) an increase of $7.0 million related to the one-time benefit from the US CARES Act in Fiscal 2020 that did not recur in Fiscal 2021.

These were partially offset by (i) a decrease of $66.9 million for changes in unrecognized tax benefits, (ii) a decrease of $34.1 million related to tax benefits of internal reorganizations that occurred in Fiscal 2021 (iii) a decrease of $33.2 million related to the US Base Erosion Anti-Abuse Tax (US BEAT), (iv) a decrease of $5.7 million for net changes in valuation allowance, (v) a decrease of $3.1 million related to permanent differences and (vi) a decrease of $3.1 million related to differences in tax filings being higher than estimates.

(In thousands) 2022 Change

increase (decrease) 2021 Change

increase (decrease) 2020

Provision for income taxes $ 118,752 $ (221,154) $ 339,906 $ 229,069 $ 110,837

The effective tax rate decreased to a provision of 23.0% for the year ended June 30, 2022, compared to a provision of 52.2% for the year ended June 30, 2021.

Tax expense decreased from $339.9 million during the year ended June 30, 2021 to $118.8 million during the year ended June 30, 2022.

This was primarily due to (i) a decrease of $300.6 million related to Internal Revenue Service (IRS) settlements in Fiscal 2021, (ii) a decrease of $37.5 million related to lower net income before taxes, (iii) a decrease of $10.8 million related to passive income from foreign subsidiaries, (iv) a decrease of $9.6 million related to tax accruals on unremitted earnings and (v) a decrease of $8.0 million for base erosion and anti-abuse tax (BEAT).

These were partially offset by (i) an increase of $94.3 million for changes in unrecognized tax benefits, (ii) a net increase of $46.8 million related to internal reorganizations and (iii) an increase of $3.5 million for change in valuation allowance.

The remainder of the difference was due to normal course movements and non-material items.

For information on the IRS Settlement and certain other potential tax contingencies, including the CRA matter, see note 14 "Guarantees and Contingencies" and note 15 "Income Taxes" to our Consolidated Financial Statements.

For information on certain potential tax contingencies, including the CRA matter, see Note 14 “Guarantees and Contingencies” and Note 15 “Income Taxes” to our Consolidated Financial Statements.

Please also see Part I, Item 1A, “Risk Factors” within this Annual Report on Form 10-K.

23 unchanged sentences

The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of Non-GAAP measures, which in certain cases adjust for the impact of amortization of intangible assets and the related tax effects that are primarily related to acquisitions, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company’s operating results and underlying operational trends.

Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and most recently in response to the COVID-19 pandemic, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company’s “Special charges (recoveries)” caption on the Consolidated Statements of Income.

Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and most recently in response to our return to office planning, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company’s “Special charges (recoveries)” caption on the Consolidated Statements of Income.

Each restructuring activity is a discrete event based on a unique set of business objectives or circumstances, and each differs in terms of its operational implementation, business impact and scope, and the size of each restructuring plan can vary significantly from period to period.

17 unchanged sentences

Amortization of acquired technology-based intangible assets 198,607 (198,607) (2) —

GAAP-based gross profit and gross margin (%) /

Non-GAAP-based gross profit and gross margin (%) 2,351,649 69.4% 226,690 (3) 2,578,339 76.1%

GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 2,431,643 69.6% 210,031 (3) 2,641,674 75.6%

Operating expenses

6 unchanged sentences

Other income (expense), net 29,118 (29,118) (6) —

Provision for (recovery of) income taxes 339,906 (188,931) (7) 150,975

Provision for income taxes 118,752 23,913 (7) 142,665

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 397,090 479,110 (8) 876,200

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 1.14 $ 2.25 (8) $ 3.39

GAAP-based EPS / Non-GAAP-based EPS-diluted, attributable to OpenText $ 1.46 $ 1.76 (8) $ 3.22

_________________________________

(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.

9 unchanged sentences

(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 23% and a Non-GAAP-based tax rate of approximately 14%;

these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income.

these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based net income.

Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net.

2 unchanged sentences

In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

The GAAP-based tax provision rate for the year ended June 30, 2021 includes the income tax provision charge from the IRS Settlement partially offset by a tax benefit from the release of unrecognized tax benefits due to the conclusion of relevant tax audits that was recognized during the second quarter of Fiscal 2021.

(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:

6 unchanged sentences

Other (income) expense, net (29,118) (0.11)

GAAP-based provision for (recovery of) income taxes 339,906 1.23

GAAP-based provision for income taxes 118,752 0.44

Non-GAAP-based provision for income taxes (142,665) (0.52)

3 unchanged sentences

GAAP-based net income, attributable to OpenText $ 397,090

Provision for (recovery of) income taxes 339,906

Provision for income taxes 118,752

Interest and other related expense, net 157,880

18 unchanged sentences

Amortization of acquired technology-based intangible assets 218,796 (218,796) (2) —

GAAP-based gross profit and gross margin (%) /

Non-GAAP-based gross profit and gross margin (%) 2,105,961 67.7% 209,860 (3) 2,315,821 74.5%

GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 2,351,649 69.4% 226,690 (3) 2,578,339 76.1%

Operating expenses

6 unchanged sentences

Other income (expense), net 61,434 (61,434) (6) —

Provision for (recovery of) income taxes 110,837 16,897 (7) 127,734

Provision for income taxes 339,906 (188,931) (7) 150,975

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 310,672 616,554 (8) 927,226

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.86 $ 2.03 (8) $ 2.89

GAAP-based EPS / Non-GAAP-based EPS-diluted, attributable to OpenText $ 1.14 $ 2.25 (8) $ 3.39

_________________________________________

(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.

9 unchanged sentences

(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 52% and a Non-GAAP-based tax rate of approximately 14%;

these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income.

these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based net income.

Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net.

2 unchanged sentences

The GAAP-based tax provision rate for the year ended June 30, 2021 includes an income tax provision charge from IRS settlements partially offset by a tax benefit from the release of unrecognized tax benefits due to the conclusion of relevant tax audits that was recognized during the second quarter of Fiscal 2021.

(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:

6 unchanged sentences

Other (income) expense, net (61,434) (0.22)

GAAP-based provision for (recovery of) income taxes 110,837 0.41

GAAP-based provision for income taxes 339,906 1.23

Non-GAAP-based provision for income taxes (150,975) (0.55)

3 unchanged sentences

GAAP-based net income, attributable to OpenText $ 310,672

Provision for (recovery of) income taxes 110,837

Provision for income taxes 339,906

Interest and other related expense, net 151,567

30 unchanged sentences

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 234,225 550,285 (8) 784,510

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 1.06 $ 1.70 (8) $ 2.76

GAAP-based EPS/ Non-GAAP-based EPS-diluted, attributable to OpenText $ 0.86 $ 2.03 (8) $ 2.89

_________________________________________

(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.

9 unchanged sentences

(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 32% and a Non-GAAP-based tax rate of approximately 14%;

these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income.

these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based net income.

Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net.

35 unchanged sentences

Total cash, cash equivalents and restricted cash $ 1,695,911 $ 86,111 $ 1,609,800 $ (87,463) $ 1,697,263

(1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Consolidated Balance Sheets (note 9).

__________________________

(1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Consolidated Balance Sheets (see Note 9 “Prepaid Expenses and Other Assets” to our Consolidated Financial Statements for more details).

Year Ended June 30,

9 unchanged sentences

For more details, see “Long-term Debt and Credit Facilities” below.

During the year ended June 30, 2021, we made payments for U.S.

federal taxes and interest of $288.6 million and state taxes and interest of $11.0 million as a result of the IRS Settlement.

As of June 30, 2021, the outstanding settlement amount of approximately $0.9 million is recorded within "Income taxes payable" in our Consolidated Balance Sheets.

As of June 30, 2022, we have recognized a provision of $19.9 million (June 30, 2021—$27.5 million) in respect of both additional foreign taxes or deferred income tax liabilities for temporary differences related to the undistributed earnings of certain non-United States subsidiaries and planned periodic repatriations from certain German subsidiaries, that will be subject to withholding taxes upon distribution.

We have deferred a total of approximately $99 million of tax payments under the CARES Act and other COVID-19 related tax relief programs in EMEA.

We have deferred a total of approximately $99.0 million of tax payments under the CARES Act and other COVID-19 related tax relief programs in EMEA since our fourth quarter of Fiscal 2020.

During the year ended June 30, 2022, we made repayments of approximately $16.0 million related to amounts previously deferred.

As of June 30, 2021, we have remaining deferrals of $39 million which will become payable throughout Fiscal 2022 and Fiscal 2023.

As of June 30, 2022, we have remaining deferrals of $23.0 million which will become payable throughout Fiscal 2023.

Cash flows provided by operating activities

Cash flows from operating activities decreased by $78.4 million, due to a decrease in changes from working capital of $89.7 million, partially offset by an increase in net income before the impact of non-cash items of $11.3 million.

The decrease in operating cash flow from changes in working capital was primarily due to the net impact of the following decreases:

Cash flows from operating activities increased by $105.7 million, due to an increase in net income after the impact of non-cash items of $25.9 million and a increase in changes from working capital of $80.0 million.

The increase in operating cash flow from changes in working capital was primarily due to the net impact of the following increases:

(i) $175.4 million relating to income taxes payable, net of receivables;

1 unchanged sentence

(iii) $21.0 million relating to accounts receivable;

(iv) $4.5 million relating to accounts payable and accrued liabilities.

These decreases in operating cash flows were partially offset by the following increases:

(iv) $5.4 million relating to other assets;

(v) $1.4 million relating to contract assets.

These increases in operating cash flows were partially offset by the following decreases:

(i) $51.7 million relating to prepaid expenses and other current assets;

(ii) $14.0 million relating to deferred revenues;

(iii) $10.8 million relating to other assets;

(iv) $1.0 million relating to contract assets.

During the fourth quarter of Fiscal 2021 our days sales outstanding (DSO) was 44 days, compared to a DSO of 51 days during the fourth quarter of Fiscal 2020, largely as a result of strong improvement in collections efficiency.

The per day impact of our DSO in the fourth quarter of Fiscal 2021 and Fiscal 2020 on our cash flows was $9.9 million and $9.2 million, respectively.

(ii) $50.3 million relating to accounts payable and accrued liabilities;

(iii) $44.5 million relating to deferred revenues.

During the fourth quarter of Fiscal 2022 our days sales outstanding (DSO) was 43 days compared to a DSO of 44 days during the fourth quarter of Fiscal 2021, largely a result of improvement in collections efficiency.

The per day impact of our

DSO in the fourth quarter of Fiscal 2022 and Fiscal 2021 on our cash flows was $10.0 million and $9.9 million, respectively.

In arriving at DSO, we exclude contract assets as these assets do not provide an unconditional right to the related consideration from the customer.

1 unchanged sentence

Our cash flows used in investing activities is primarily on account of acquisitions and additions of property and equipment.

Cash flows used in investing activities decreased by $1.4 billion, primarily due to consideration paid for acquisitions during Fiscal 2020, which included the acquisitions of Carbonite for $1.3 billion and XMedius for $73.3 million.

Cash flows used in investing activities increased by $902.2 million, primarily due to consideration paid for acquisitions during Fiscal 2022, which includes cash paid for the acquisitions of Zix of $856.2 million and Bricata of $17.8 million.

Cash flows provided by (used in) financing activities

1 unchanged sentence

These inflows are typically offset by scheduled and non-scheduled repayments of our long-term debt financing and, when applicable, the payment of dividends and/or repurchases of our Common Shares.

Cash flows used in financing activities increased by $2.2 billion, primarily due to the net impact of the following long-term debt financing activities that occurred in Fiscal 2020 and did not reoccur in Fiscal 2021:

(i) $1.8 billion relating to proceeds from the issuance of Senior Notes 2028 and Senior Notes 2030 (both defined below), of which a portion of the proceeds were used to redeem $800 million of our Senior Notes 2023;

(ii) $750 million in proceeds for amounts drawn and subsequently repaid under the Revolver (defined below);

(iii) $153.6 million repayment of convertible notes, inherited through our acquisition of Carbonite, that were surrendered and converted offset by;

(iv) $600 million in proceeds for amounts drawn on the Revolver in the third quarter of Fiscal 2020, subsequently repaid during the second quarter of Fiscal 2021.

Additionally, cash flows used in financing increased due to the following activities that occurred during Fiscal 2021:

(i) $119.1 million relating to the repurchase and cancellation of 2,500,000 Common Shares under the Repurchase Plan (defined herein);

(ii) $52.4 million relating to the repurchase Common Shares on the open market for potential reissuance under our stock compensation plans;

(iii) $22.0 million relating to cash dividends paid to shareholders.

Cash flows provided by financing activities increased by $1.1 billion.

This is primarily due to the net impact of the following activities:

(i) $1.5 billion relating to proceeds from the issuance of Senior Notes 2031 and Senior Notes 2029 (both defined below), of which a portion of the net proceeds was used to redeem $850 million of our Senior Notes 2026 (as defined below).

The increases in cash flows provided by financing activities were partially offset by the following decreases:

(i) $250.0 million relating to higher repayments of our long-term debt and Revolver (as defined below), which is inclusive of $850 million redemption of Senior Notes 2026 (as defined below) during our second quarter of Fiscal 2022, partially offset by $600.0 million repaid on amounts previously drawn on our Revolver in the second quarter of Fiscal 2021;

(ii) $177.0 million relating to the repurchase and cancellation of 3,809,559 Common Shares under our share repurchase plans authorized on both November 5, 2020 and November 4, 2021 (as discussed below);

(iii) $25.0 million relating to early call termination premium upon redemption of Senior Notes 2026 and $17.2 million relating to debt issuance costs for the issuance of Senior Notes 2031 and Senior Notes 2029;

(iv) $27.0 million relating to higher cash dividends paid to shareholders;

(v) $12.9 million lower proceeds from the issuance of Common Shares for the exercise of options and the OpenText Employee Stock Purchase Plan (ESPP);

(vi) $46.8 million relating to cash used in the repurchase of Common Shares on the open market for potential reissuance under our Long-Term Incentive Plans (LTIP) or other stock compensation plans;

(vii) $0.4 million relating to a cash distribution to non-controlling interests holder.

Cash Dividends

1 unchanged sentence

Future declarations of dividends and the establishment of future record and payment dates are subject to final determination and discretion of the Board.

See Item 5 "Dividend Policy" in this Annual Report on Form 10-K for more information.

See Item 5 “Dividend Policy” included in this Annual Report on Form 10-K for more information.

Long-term Debt and Credit Facilities

1 unchanged sentence

Senior Notes 2031

On November 24, 2021, OpenText Holdings, Inc.

(OTHI), a wholly-owned indirect subsidiary of the Company, issued $650 million in aggregate principal amount of 4.125% Senior Notes due 2031 guaranteed by the Company (Senior Notes 2031) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to certain non-U.S.

persons in offshore transactions pursuant to Regulation S under the Securities Act.

Senior Notes 2031 bear interest at a rate

of 4.125% per annum, payable semi-annually in arrears on June 1 and December 1, commencing on June 1, 2022.

Senior Notes 2031 will mature on December 1, 2031, unless earlier redeemed, in accordance with their terms, or repurchased.

OTHI may redeem all or a portion of the Senior Notes 2031 at any time prior to December 1, 2026 at a redemption price equal to 100% of the principal amount of the Senior Notes 2031 plus an applicable premium, plus accrued and unpaid interest, if any, to the redemption date.

OTHI may also redeem up to 40% of the aggregate principal amount of the Senior Notes 2031, on one or more occasions, prior to December 1, 2024, using the net proceeds from certain qualified equity offerings at a redemption price of 104.125% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, subject to compliance with certain conditions.

OTHI may, on one or more occasions, redeem the Senior Notes 2031, in whole or in part, at any time on and after December 1, 2026 at the applicable redemption prices set forth in the indenture governing the Senior Notes 2031, dated as of November 24, 2021, among OTHI, the Company, the subsidiary guarantors party thereto, The Bank of New York Mellon, as U.S.

trustee, and BNY Trust Company of Canada, as Canadian trustee (the 2031 Indenture), plus accrued and unpaid interest, if any, to the redemption date.

If we experience one of the kinds of change of control triggering events specified in the 2031 Indenture, OTHI will be required to make an offer to repurchase the Senior Notes 2031 at a price equal to 101% of the principal amount of the Senior Notes 2031, plus accrued and unpaid interest, if any, to the date of purchase.

The 2031 Indenture contains covenants that limit OTHI, the Company and certain of the Company’s subsidiaries’ ability to, among other things:

(i) create certain liens and enter into sale and lease-back transactions;

(ii) in the case of our non-guarantor subsidiaries, create, assume, incur or guarantee additional indebtedness of OTHI, the Company or the guarantors without such subsidiary becoming a subsidiary guarantor of Senior Notes 2031;

and (iii) consolidate, amalgamate or merge with, or convey, transfer, lease or otherwise dispose of its property and assets substantially as an entirety to, another person.

These covenants are subject to a number of important limitations and exceptions as set forth in the 2031 Indenture.

The 2031 Indenture also provides for events of default, which, if any of them occurs, may permit or, in certain circumstances, require the principal, premium, if any, interest and any other monetary obligations on all the then-outstanding Senior Notes 2031 to be due and payable immediately.

Senior Notes 2031 are guaranteed on a senior unsecured basis by the Company and the Company’s existing and future wholly-owned subsidiaries (other than OTHI) that borrow or guarantee the obligations under our existing senior credit facilities.

Senior Notes 2031 and the guarantees rank equally in right of payment with all of the Company’s, OTHI’s and the guarantors’ existing and future senior unsubordinated debt and will rank senior in right of payment to all of the Company’s, OTHI’s and the guarantors’ future subordinated debt.

Senior Notes 2031 and the guarantees will be effectively subordinated to all of the Company’s, OTHI’s and the guarantors’ existing and future secured debt, including the obligations under the senior credit facilities, to the extent of the value of the assets securing such secured debt.

The foregoing description of the 2031 Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the 2031 Indenture, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on November 24, 2021.

Senior Notes 2030

On February 18, 2020 Open Text Holdings, Inc.

(OTHI), a wholly-owned indirect subsidiary of the Company, issued $900 million in aggregate principal amount of 4.125% Senior Notes due 2030 guaranteed by the Company (Senior Notes 2030) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (Securities Act), and to certain persons in offshore transactions pursuant to Regulation S under the Securities Act.

persons in offshore transactions pursuant to Regulation S under the Securities Act.

Senior Notes 2030 bear interest at a rate of 4.125% per annum, payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2020.

Senior Notes 2030 will mature on February 15, 2030, unless earlier redeemed, in accordance with their terms, or repurchased.

We may redeem all or a portion of the Senior Notes 2030 at any time prior to February 15, 2025 at a redemption price equal to 100% of the principal amount of the Senior Notes 2030 plus an applicable premium, plus accrued and unpaid interest, if any, to the redemption date.

We may also redeem up to 40% of the aggregate principal amount of the Senior Notes 2030, on one or more occasions, prior to February 15, 2025, using the net proceeds from certain qualified equity offerings at a redemption price of 104.125% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, subject to compliance with certain conditions.

We may, on one or more occasions, redeem the Senior Notes 2030, in whole or in part, at any time on and after February 15, 2025 at the applicable redemption prices set forth in the indenture governing the Senior Notes 2030, dated as of February 18, 2020, among OTHI, the Company, the subsidiary guarantors party thereto, The Bank of New York Mellon, as U.S.

OTHI may redeem all or a portion of the Senior Notes 2030 at any time prior to February 15, 2025 at a redemption price equal to 100% of the principal amount of the Senior Notes 2030 plus an applicable premium, plus accrued and unpaid interest, if any, to the redemption date.

OTHI may also redeem up to 40% of the aggregate principal amount of the Senior Notes 2030, on one or more occasions, prior to February 15, 2025, using the net proceeds from certain qualified equity offerings at a redemption price of 104.125% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, subject to compliance with certain conditions.

OTHI may, on one or more occasions, redeem the Senior Notes 2030, in whole or in part, at any time on and after February 15, 2025 at the applicable redemption prices set forth in the indenture governing the Senior Notes 2030, dated as of February 18, 2020, among OTHI, the Company, the subsidiary guarantors party thereto, The Bank of New York Mellon, as U.S.

trustee, and BNY Trust Company of Canada, as Canadian trustee (the 2030 Indenture), plus accrued and unpaid interest, if any, to the redemption date.

If we experience one of the kinds of change of control triggering events specified in the 2030 Indenture, we will be required to make an offer to repurchase the Senior Notes 2030 at a price equal to 101% of the principal amount of the Senior Notes 2030, plus accrued and unpaid interest, if any, to the date of purchase.

If we experience one of the kinds of change of control triggering events specified in the 2030 Indenture, OTHI will be required to make an offer to repurchase the Senior Notes 2030 at a price equal to 101% of the principal amount of the Senior Notes 2030, plus accrued and unpaid interest, if any, to the date of purchase.

The 2030 Indenture contains covenants that limit the Company, OTHI and certain of the Company's subsidiaries’ ability to, among other things:

(i) create certain liens and enter into sale and lease-back transactions;

(ii) create, assume, incur or guarantee additional indebtedness of the Company, OTHI or certain of the Company's subsidiaries without such subsidiary becoming a subsidiary guarantor of Senior Notes 2030;

(ii) in the case of our non-guarantor subsidiaries, create, assume, incur or guarantee additional indebtedness of the Company, OTHI or the guarantors without such subsidiary becoming a subsidiary guarantor of Senior Notes 2030;

and (iii) consolidate, amalgamate or merge with, or convey, transfer, lease or otherwise dispose of its property and assets substantially as an entirety to, another person.

6 unchanged sentences

Senior Notes 2029

On February 18, 2020 we issued $900 million in aggregate principal amount of 3.875% Senior Notes due 2028 (Senior Notes 2028) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain persons in offshore transactions pursuant to Regulation S under the Securities Act.

Senior Notes 2028 bear interest at a rate of 3.875% per annum, payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2020.

Senior Notes 2028 will mature on February 15, 2028, unless earlier redeemed, in accordance with their terms, or repurchased.

We may redeem all or a portion of the Senior Notes 2028 at any time prior to February 15, 2023 at a redemption price equal to 100% of the principal amount of the Senior Notes 2028 plus an applicable premium, plus accrued and unpaid interest, if any, to the redemption date.

We may also redeem up to 40% of the aggregate principal amount of the Senior Notes 2028, on one or more occasions, prior to February 15, 2023, using the net proceeds from certain qualified equity offerings at a redemption price of 103.875% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, subject to compliance with certain conditions.

We may, on one or more occasions, redeem the Senior Notes 2028, in whole or in part, at any time on and after February 15, 2023 at the applicable redemption prices set forth in the indenture governing the Senior Notes 2028, dated as of February 18, 2020, among the Company, the subsidiary guarantors party thereto, The Bank of New York Mellon, as U.S.

On November 24, 2021, we issued $850 million in aggregate principal amount of 3.875% Senior Notes due 2029 (Senior Notes 2029) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S.

persons in offshore transactions pursuant to Regulation S under the Securities Act.

Senior Notes 2029 bear interest at a rate of 3.875% per annum, payable semi-annually in arrears on June 1 and December 1, commencing on June 1, 2022.

Senior Notes 2029 will mature on December 1, 2029, unless earlier redeemed, in accordance with their terms, or repurchased.

We may redeem all or a portion of the Senior Notes 2029 at any time prior to December 1, 2024 at a redemption price equal to 100% of the principal amount of the Senior Notes 2029 plus an applicable premium, plus accrued and unpaid interest, if any, to the redemption date.

We may also redeem up to 40% of the aggregate principal amount of the Senior Notes 2029, on one or more occasions, prior to December 1, 2024, using the net proceeds from certain qualified equity offerings at a redemption price of 103.875% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, subject to compliance with certain conditions.

We may, on one or more occasions, redeem the Senior Notes 2029, in whole or in part, at any time on and after December 1, 2024 at the applicable redemption prices set forth in the indenture governing the Senior Notes 2029, dated as of November 24, 2021, among the Company, the subsidiary guarantors party thereto, The Bank of New York Mellon, as U.S.

trustee, and BNY Trust Company of Canada, as Canadian trustee (the 2029 Indenture), plus accrued and unpaid interest, if any, to the redemption date.

2 unchanged sentences

(i) create certain liens and enter into sale and lease-back transactions;

(ii) create, assume, incur or guarantee additional indebtedness of the Company or the guarantors without such subsidiary becoming a subsidiary guarantor of Senior Notes 2028;

and (iii) consolidate, amalgamate or merge with, or convey, transfer, lease or otherwise dispose of its property and assets

substantially as an entirety to, another person.

(ii) in the case of our non-guarantor subsidiaries, create, assume, incur or guarantee additional indebtedness of the Company or the guarantors without such subsidiary becoming a subsidiary guarantor of Senior Notes 2029;

and (iii) consolidate, amalgamate or merge with, or convey, transfer, lease or otherwise dispose of its property and assets substantially as an entirety to, another person.

These covenants are subject to a number of important limitations and exceptions as set forth in the 2029 Indenture.

3 unchanged sentences

Senior Notes 2029 and the guarantees will be effectively subordinated to all of our and our guarantors’ existing and future secured debt, including the obligations under the senior credit facilities, to the extent of the value of the assets securing such secured debt.

The foregoing description of the 2028 Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the 2028 Indenture, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on February 18, 2020.

The foregoing description of the 2029 Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the 2029 Indenture, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on November 24, 2021.

Senior Notes 2028

On May 31, 2016 we issued $600 million in aggregate principal amount of 5.875% Senior Notes due 2026 (Senior Notes 2026) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to certain persons in offshore transactions pursuant to Regulation S under the Securities Act.

Senior Notes 2026 bear interest at a rate of 5.875% per annum, payable semi-annually in arrears on June 1 and December 1, commencing on December 1, 2016.

Senior Notes 2026 will mature on June 1, 2026, unless earlier redeemed, in accordance with their terms, or repurchased.

On December 20, 2016, we issued an additional $250 million in aggregate principal amount by reopening our Senior Notes 2026 at an issue price of 102.75%.

The additional notes have identical terms, are fungible with and are a part of a single series with the previously issued $600 million aggregate principal amount of Senior Notes 2026.

The outstanding aggregate principal amount of Senior Notes 2026, after taking into consideration the additional issuance, is $850 million.

We may redeem all or a portion of the Senior Notes 2026 at any time prior to June 1, 2021 at a redemption price equal to 100% of the principal amount of Senior Notes 2026 plus an applicable premium, plus accrued and unpaid interest, if any, to the redemption date.

We may also, on one or more occasions, redeem Senior Notes 2026, in whole or in part, at any time on and after June 1, 2021 at the applicable redemption prices set forth in the indenture governing the Senior Notes 2026, dated as of May 31, 2016, among the Company, the subsidiary guarantors party thereto, The Bank of New York Mellon, as U.S.

persons in offshore transactions pursuant to Regulation S under the Securities Act.

Senior Notes 2028 bear interest at a rate of 3.875% per annum, payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2020.

Senior Notes 2028 will mature on February 15, 2028, unless earlier redeemed, in accordance with their terms, or repurchased.

trustee, and BNY Trust Company of Canada, as Canadian trustee (the 2028 Indenture), plus accrued and unpaid interest, if any, to the redemption date.

If we experience one of the kinds of changes of control triggering events specified in the 2026 Indenture, we will be required to make an offer to repurchase Senior Notes 2026 at a price equal to 101% of the principal amount of Senior Notes 2026, plus accrued and unpaid interest, if any, to the date of purchase.

If we experience one of the kinds of change of control triggering events specified in the 2028 Indenture, we will be required to make an offer to repurchase the Senior Notes 2028 at a price equal to 101% of the principal amount of the Senior Notes 2028, plus accrued and unpaid interest, if any, to the date of purchase.

The 2028 Indenture contains covenants that limit our and certain of our subsidiaries’ ability to, among other things:

(i) create certain liens and enter into sale and lease-back transactions;

(ii) create, assume, incur or guarantee additional indebtedness of the Company or the guarantors without such subsidiary becoming a subsidiary guarantor of the notes;

and (iii) consolidate, amalgamate or merge with, or convey, transfer, lease or otherwise dispose of its property and assets substantially as an entirety to, another person.

These covenants are subject to a number of important limitations and exceptions as set forth in the 2028 Indenture.

The 2026 Indenture also provides for events of default, which, if any of them occurs, may permit or, in certain circumstances, require the principal, premium, if any, interest and any other monetary obligations on all the then-outstanding notes to be due and payable immediately.

The 2028 Indenture also provides for events of default, which, if any of them occurs, may permit or, in certain circumstances, require the principal, premium, if any, interest and any other monetary obligations on all the then-outstanding Senior Notes 2028 to be due and payable immediately.

Senior Notes 2028 are guaranteed on a senior unsecured basis by our existing and future wholly-owned subsidiaries that borrow or guarantee the obligations under our existing senior credit facilities.

1 unchanged sentence

Senior Notes 2028 and the guarantees will be effectively subordinated to all of our and our guarantors’ existing and future secured debt, including the obligations under the senior credit facilities, to the extent of the value of the assets securing such secured debt.

The foregoing description of the 2026 Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the 2026 Indenture, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on May 31, 2016.

Senior Notes 2026

persons in offshore transactions pursuant to Regulation S under the Securities Act.

Senior Notes 2026 had interest at a rate of 5.875% per annum, payable semi-annually in arrears on June 1 and December 1, commencing on December 1, 2016.

Senior Notes 2026 would have matured on June 1, 2026.

On December 20, 2016, we issued an additional $250 million in aggregate principal amount by reopening our Senior Notes 2026 at an issue price of 102.75%.

The additional notes have identical terms, are fungible with and are a part of a single series with the previously issued $600 million aggregate principal amount of Senior Notes 2026.

The outstanding aggregate principal amount of Senior Notes 2026, after taking into consideration the additional issuance, was $850 million as of December 9, 2021.

On December 9, 2021, we redeemed Senior Notes 2026 in full at a price equal to 102.9375% of the principal amount plus accrued and unpaid interest to, but excluding, the redemption date.

A portion of the net proceeds from the offerings of Senior

Notes 2029 and Senior Notes 2031 was used to redeem Senior Notes 2026.

Upon redemption, Senior Notes 2026 were cancelled, and any obligation thereunder was extinguished.

The resulting loss of $27.4 million, consisting of $25.0 million relating to the early termination call premium, $6.2 million relating to unamortized debt issuance costs and ($3.8) million relating to unamortized premium, has been recorded as a component of Other income (expense), net in our Consolidated Statements of Income.

See Note 23 “Other Income (Expense), Net” to our Consolidated Financial Statements.

On May 30, 2018, we entered into a credit facility, which provides for a $1 billion term loan facility with certain lenders named therein, Barclays Bank PLC (Barclays), as sole administrative agent and collateral agent, and as lead arranger and joint bookrunner (Term Loan B) and borrowed the full amount on May 30, 2018 to, among other things, repay in full the loans under our prior $800 million term loan credit facility originally entered into on January 16, 2014.

6 unchanged sentences

As of June 30, 2022, the outstanding balance on the Term Loan B bears an interest rate of 2.81%.

For more information regarding the impact of LIBOR, see "Stress in the global financial system may adversely affect our finances and operations in ways that may be hard to predict or to defend against" included within Part I, Item 1A of this Annual Report on Form 10-K.

For more information regarding the impact and discontinuance of LIBOR, see “Stress in the global financial system may adversely affect our finances and operations in ways that may be hard to predict or to defend against” included within Part I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K.

Term Loan B has incremental facility capacity of (i) $250 million plus (ii) additional amounts, subject to meeting a “consolidated senior secured net leverage” ratio not exceeding 2.75:1.00, in each case subject to certain conditions.

7 unchanged sentences

Borrowings under the Revolver bear interest per annum at a floating rate of LIBOR plus a fixed margin dependent on our consolidated net leverage ratio ranging from 1.25% to 1.75%.

Under the Revolver, we must maintain a “consolidated net leverage” ratio of no more than 4:1 at the end of each financial quarter.

Consolidated net leverage ratio is defined for this purpose as the proportion of our total debt reduced by unrestricted cash, including guarantees and letters of credit, over our trailing twelve months net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges.

During the second quarter of Fiscal 2020, we drew down $750 million from the Revolver to partially fund the acquisition of Carbonite.

In February 2020, we repaid $750 million drawn under the Revolver with a portion of the proceeds from the Senior Notes 2030 and Senior Notes 2028.

In March 2020, we drew down $600 million from the Revolver as a preemptive measure in order to increase our cash position and preserve financial flexibility in light of uncertainty in the global markets resulting from the COVID-19 pandemic.

As of June 30, 2020, the proceeds from the $600 million draw down remained outstanding and were presented within "Cash and cash equivalents" and "Current portion of long-term debt" on the Consolidated Balance Sheets.

During the second quarter of Fiscal 2021, we repaid $600 million previously drawn on the Revolver using cash on hand.

As of June 30, 2021, we had no outstanding balance under the Revolver.

As of June 30, 2022, we had no outstanding balance under the Revolver (June 30, 2021—nil).

For further details relating to our debt, please see Note 11 “Long-Term Debt” to our Consolidated Financial Statements.

Shelf Registration Statement

On November 29, 2019, we filed a universal shelf registration statement on Form S-3 with the SEC, which became effective automatically (the Shelf Registration Statement).

The Shelf Registration Statement allows for primary and secondary offerings from time to time of equity, debt and other securities, including Common Shares, Preference Shares, debt securities, depositary shares, warrants, purchase contracts, units and subscription receipts.

A base shelf short-form prospectus qualifying the distribution of such securities was concurrently filed with Canadian securities regulators on November 29, 2019.

On December 6, 2021, we filed a universal shelf registration statement on Form S-3 with the SEC, which became effective automatically (the Shelf Registration Statement).

The Shelf Registration Statement allows for primary and secondary

offerings from time to time of equity, debt and other securities, including Common Shares, Preference Shares, debt securities, depositary shares, warrants, purchase contracts, units and subscription receipts.

A short-form base shelf prospectus qualifying the distribution of such securities was concurrently filed with Canadian securities regulators on December 6, 2021.

The type of securities and the specific terms thereof will be determined at the time of any offering and will be described in the applicable prospectus supplement to be filed separately with the SEC and Canadian securities regulators.

Share Repurchase Plan / Normal Course Issuer Bid

On November 5, 2020, the Board authorized a share repurchase plan, pursuant to which we may purchase in open market transactions, from time to time over the 12 month period commencing November 12, 2020, up to an aggregate of $350 million of our Common Shares on the NASDAQ Global Select Market, the TSX and/or other exchanges and alternative trading systems in Canada and/or the United States, if eligible, subject to applicable law and stock exchange rules (the “Repurchase Plan”).

The price that we will pay for Common Shares in open market transactions will be the market price at the time of purchase or such other price as may be permitted by applicable law or stock exchange rules.

The Repurchase Plan will be effected in accordance with Rule 10b-18 under the U.S.

Securities Exchange Act of 1934.

Purchases made under the Repurchase Plan will be subject to a limit of 13,618,774 shares (representing 5% of the Company’s issued and outstanding Common Shares as of November 4, 2020).

All Common Shares purchased by us pursuant to the Repurchase Plan will be cancelled.

During the year ended June 30, 2021, we repurchased and cancelled 2,500,000 Common Shares for $119.1 million under the Repurchase Plan.

On November 5, 2020, the Board authorized the Fiscal 2021 Repurchase Plan, pursuant to which we were authorized to purchase in open market transactions, from time to time over the 12 month period commencing November 12, 2020, up to an aggregate of $350 million of our Common Shares on the NASDAQ Global Select Market, the TSX and/or other exchanges and alternative trading systems in Canada and/or the United States, if eligible, subject to applicable law and stock exchange rules.

The price that we were authorized to pay for Common Shares in open market transactions was the market price at the time of purchase or such other price as was permitted by applicable law or stock exchange rules.

The Fiscal 2021 Repurchase Plan was effected in accordance with Rule 10b-18 under the Exchange Act (Rule 10b-18).

Purchases made under the Fiscal 2021 Repurchase Plan were subject to a limit of 13,618,774 shares (representing 5% of the Company’s issued and outstanding Common Shares as of November 4, 2020).

All Common Shares purchased by us pursuant to the Fiscal 2021 Repurchase Plan were cancelled.

On November 4, 2021, the Board authorized the Fiscal 2022 Repurchase Plan, pursuant to which we may purchase in open market transactions, from time to time over the 12 month period commencing November 12, 2021, up to an aggregate of $350 million of our Common Shares on the NASDAQ Global Select Market, the Toronto Stock Exchange (as part of a Fiscal 2022 NCIB) and/or other exchanges and alternative trading systems in Canada and/or the United States, if eligible, subject to applicable law and stock exchange rules.

The price that we have paid and will pay for Common Shares in open market transactions has been and will be the market price at the time of purchase or such other price as may be permitted by applicable law or stock exchange rules.

The Fiscal 2022 Repurchase Plan has been and will be effected in accordance with Rule 10b-18.

Purchases made under the Fiscal 2022 Repurchase Plan are subject to a limit of 13,638,008 shares (representing 5% of the Company’s issued and outstanding Common Shares as of October 31, 2021).

All Common Shares purchased by us pursuant to the Fiscal 2022 Repurchase Plan have been and will be cancelled.

During the year ended June 30, 2022, we repurchased and cancelled 3,809,559 Common Shares for $177.0 million (year ended June 30, 2021 and 2020— 2,500,000 and nil Common Shares for $119.1 million and nil, respectively).

Share repurchases during the year ended June 30, 2022 were completed under our share repurchase plans authorized on both November 5, 2020 and November 4, 2021.

Normal Course Issuer Bid

The Company established a Normal Course Issuer Bid (the NCIB) in order to provide it with a means to execute purchases over the TSX as part of the overall Repurchase Plan.

The TSX approved the Company’s notice of intention to commence the NCIB pursuant to which the Company may purchase Common Shares over the TSX for the period commencing November 12, 2020 until November 11, 2021 in accordance with the TSX's normal course issuer bid rules, including that such purchases are to be made at prevailing market prices or as otherwise permitted.

Under the rules of the TSX, the maximum number of Common Shares that may be purchased in this period is 13,618,774 (representing 5% of the Company’s issued and outstanding Common Shares as of November 4, 2020), and the maximum number of Common Shares that may be purchased on a single day is 143,424 Common Shares, which is 25% of 573,699 (the average daily trading volume for the Common Shares on the TSX for the six months ended October 31, 2020), subject to certain exceptions for block purchases, subject in any case to the volume and other limitations under Rule 10b-18.

The Company established the Fiscal 2021 NCIB in order to provide it with a means to execute purchases over the TSX as part of the overall Fiscal 2021 Repurchase Plan.

The TSX approved the Company’s notice of intention to commence the Fiscal 2021 NCIB pursuant to which the Company was authorized to purchase Common Shares over the TSX for the period commencing November 12, 2020 until November 11, 2021 in accordance with the TSX's normal course issuer bid rules, including that such purchases were to be made at prevailing market prices or as otherwise permitted.

Under the rules of the TSX, the maximum number of Common Shares that could be purchased in this period was 13,618,774 (representing 5% of the Company’s issued and outstanding Common Shares as of November 4, 2020), and the maximum number of Common Shares that could be purchased on a single day was 143,424 Common Shares, which was 25% of 573,699 (the average daily trading volume for the Common Shares on the TSX for the six months ended October 31, 2020), subject to certain exceptions for block purchases, subject in any case to the volume and other limitations under Rule 10b-18.

The Company renewed the Fiscal 2022 NCIB in order to provide it with a means to execute purchases over the TSX as part of the overall Fiscal 2022 Repurchase Plan.

The TSX approved the Company's notice of intention to commence the Fiscal 2022 NCIB pursuant to which the Company may purchase Common Shares over the TSX for the period commencing November 12, 2021 until November 11, 2022 in accordance with the TSX's normal course issuer bid rules, including that such purchases are to be made at prevailing market prices or as otherwise permitted.

Under the rules of the TSX, the maximum number of Common Shares that may be purchased in this period is 13,638,008 (representing 5% of the Company’s issued and outstanding Common Shares as of October 31, 2021), and the maximum number of Common Shares that may be purchased on a single day is 112,590 Common Shares, which is 25% of 450,361 (the average daily trading volume for the Common Shares on the TSX for the six months ended October 31,

2021), subject to certain exceptions for block purchases, subject in any case to the volume and other limitations under Rule 10b-18.

As of June 30, 2022, our total unfunded pension plan obligations were $63.5 million, of which $2.5 million is payable within the next twelve months.

25 unchanged sentences

$ 5,746,322 $ 299,895 $ 1,399,864 $ 333,034 $ 3,713,529

__________________________

(1) Includes interest up to maturity and principal payments.

11 unchanged sentences

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 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 more fully described below, we are unable at this time to estimate a possible loss or range of losses in respect of certain disclosed matters.

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.

Contingencies

As we have previously disclosed, the United States Internal Revenue Service (IRS) has been examining certain of our tax returns for our fiscal year ended June 30, 2010 (Fiscal 2010) through our fiscal year ended June 30, 2012 (Fiscal 2012), and in connection with those examinations has been reviewing our internal reorganization in Fiscal 2010 and Fiscal 2012 to consolidate certain intellectual property ownership in Luxembourg and Canada and our integration of certain acquisitions into the resulting structure.

We also previously disclosed that the examinations may lead to proposed adjustments to our taxes that may be material, individually or in the aggregate, and that we had not recorded any material accruals for any such potential adjustments in our Consolidated Financial Statements.

We previously disclosed that, as part of these examinations, on July 17, 2015 we received from the IRS an initial Notice of Proposed Adjustment (NOPA) in draft form, for Fiscal 2010 (the 2010 NOPA), and on July 11, 2018, we also received, consistent with previously disclosed expectations, a draft NOPA for Fiscal 2012 (the 2012 NOPA).

On January 7, 2019, we received from the IRS official notification of proposed adjustments to our taxable income for Fiscal 2010 and Fiscal 2012, together with the 2010 NOPA and 2012 NOPA in final form.

As of December 31, 2020, our estimated potential aggregate liability, as originally proposed by the IRS under the 2010 NOPA and the 2012 NOPA, including additional state income taxes plus penalties and continually accruing interest that may be due, would have been approximately $830 million, comprised of approximately $430 million in U.S.

federal and state taxes, approximately $130 million of penalties, and approximately $270 million of interest.

As previously disclosed, we disagree with the IRS’ positions and have been vigorously contesting the proposed adjustments to our taxable income, along with the proposed penalties and interest.

On December 21, 2020, we entered into a closing agreement with the IRS resolving all of the proposed adjustments to our taxable income for Fiscal 2010 and Fiscal 2012 (the IRS Settlement).

The IRS Settlement resulted in charges of $300.5 million during the year ended June 30, 2021 to "Provision for (recovery of) income taxes".

In connection with the IRS Settlement, during the year ended June 30, 2021, we made aggregate payments to the IRS of $288.6 million in U.S.

federal taxes and interest and $11.0 million of certain associated state tax and interest payments.

As of June 30, 2021, the outstanding settlement amount of approximately $0.9 million is recorded within "Income taxes payable" in our Consolidated Balance Sheets.

Interest at the applicable statutory rates will continue to accrue until the time of payment.

The IRS Settlement also eliminates approximately $90 million in future withholding taxes that we had expected to incur over the next 10 years.

We believe the IRS Settlement to be in the best interest of all stakeholders, as it closes all past, present and future items related to this matter.

The IRS Settlement provides finality to this longstanding matter.

For additional information regarding the history of this IRS matter, please see note 14 "Guarantees and Contingencies" in our Annual Report on Form 10-K for Fiscal 2020.

As part of its ongoing audit of our Canadian tax returns, the Canada Revenue Agency (CRA) has disputed our transfer pricing methodology used for certain intercompany transactions with our international subsidiaries and has issued notices of reassessment for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016.

4 unchanged sentences

Audits by the CRA of our tax returns for fiscal years prior to Fiscal 2012 have been completed with no reassessment of our income tax liability.

We strongly disagree with the CRA's positions and believe the reassessments of Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016 (including any penalties) are without merit.

We have filed notices of objection for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016.

We are currently seeking competent authority consideration under applicable international treaties in respect of these reassessments.

We strongly disagree with the CRA's positions and believe the reassessments of Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016 (including any penalties) are without merit, and we are continuing to contest these reassessments.

On June 30, 2022, we filed a notice of appeal with the Tax Court of Canada seeking to reverse all such reassessments (including any penalties) in full.

Even if we are unsuccessful in challenging the CRA's reassessments to increase our taxable income for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016, we have elective deductions available for those years (including carry-backs from later years) that would offset such increased amounts so that no additional cash tax would be payable, exclusive of any assessed penalties and interest, as described above.

The CRA is also currently auditing Fiscal 2017 on a basis that we strongly disagree with and will vigorously contest.

The CRA has also audited Fiscal 2017 on a basis that we strongly disagree with and are contesting.

The focus of the CRA audit has been the valuation of certain intellectual property and goodwill when one of our subsidiaries continued into Canada from Luxembourg in July 2016.

1 unchanged sentence

In conjunction with the Fiscal 2017 audit, the CRA issued a proposal letter dated April 7, 2021 (Proposal Letter) indicating to us that it proposes to reassess our Fiscal 2017 tax year to reduce the depreciable basis of these assets.

We are currently engaged in dialogue with the CRA regarding the 2017 audit and expect to be making extensive submissions in support of our position shortly.

CRA’s currently-proposed position for Fiscal 2017 relies in significant part on the application of its positions regarding our transfer pricing methodology that are the basis for its reassessment of our fiscal years 2012 to 2016 described above, and that we believe are without merit.

Other aspects of CRA’s currently-proposed position for Fiscal 2017 conflict with the expert valuation prepared by the independent leading accounting and advisory firm that was used to support our original filing position.

If the CRA determines to issue a notice of reassessment in respect of Fiscal 2017 on the basis of its position set forth in the Proposal Letter and we are ultimately unsuccessful in defending our position, the estimated impact of the proposed adjustment could result in us recording an income tax expense, with no immediate cash payment, to reduce the stated value of our deferred tax assets of up to approximately $470 million.

Any such income tax expense could also have a corresponding cash tax impact that would primarily occur over a period of several future years based upon annual income realization in Canada.

We strongly disagree with the CRA’s position for Fiscal 2017 and intend to vigorously defend our original filing position.

We will continue to vigorously contest the proposed adjustments to our taxable income and any penalty and interest assessments, as well as any proposed reduction to the basis of our depreciable property.

We have made extensive submissions in support of our position.

CRA’s position for Fiscal 2017 relies in significant part on the application of its positions regarding our transfer pricing methodology that are the basis for its reassessment of our fiscal years 2012 to 2016 described above, and that we believe are without merit.

Other aspects of CRA’s position for Fiscal 2017 conflict with the expert valuation prepared by the independent leading accounting and advisory firm that was used to support our original filing position.

On January 27, 2022, the CRA issued a notice of reassessment in respect of Fiscal 2017 on the basis of its position set forth in the Proposal Letter.

On April 19, 2022, we filed our notice of objection regarding the reassessment in respect of Fiscal 2017.

If we are ultimately unsuccessful in defending our position, the estimated impact of the proposed adjustment could result in us recording an income tax expense, with no immediate cash payment, to reduce the stated value of our deferred tax assets of up to approximately $470 million.

Any such income tax expense could also have a corresponding

cash tax impact that would primarily occur over a period of several future years based upon annual income realization in Canada.

We strongly disagree with the CRA’s position for Fiscal 2017 and intend to vigorously defend our original filing position, We are not required to provisionally pay any cash amounts to the CRA as a result of the reassessment in respect of Fiscal 2017 due to the utilization of available tax attributes;

however, to the extent the CRA reassesses subsequent fiscal years on a similar basis, we expect to make certain minimum payments required under Canadian legislation, which may need to be provisionally made starting in Fiscal 2024 while the matter is in dispute.

We will continue to vigorously contest the adjustments to our taxable income and any penalty and interest assessments, as well as any reduction to the basis of our depreciable property.

We are confident that our original tax filing positions were appropriate.

Accordingly, as of the date of this Annual Report on Form 10-K, we have not recorded any accruals in respect of these reassessments or proposed reassessment in our Consolidated Financial Statements.

The CRA has also advised us that they are currently in preliminary stages of auditing Fiscal 2018 and Fiscal 2019.

The CRA is currently in preliminary stages of auditing Fiscal 2018 and Fiscal 2019.

Carbonite Class Action Complaint

11 unchanged sentences

1:19- cv-11808-LTS) (together with the Luna Complaint, the “Securities Actions”).

On November 21, 2019, the court consolidated the Securities Actions, appointed a lead plaintiff, and designated a lead counsel.

On November 21, 2019, the district court consolidated the Securities Actions, appointed a lead plaintiff, and designated a lead counsel.

On January 15, 2020, the lead plaintiff filed a consolidated amended complaint generally making the same allegations and seeking the same relief as the complaint filed on August 1, 2019.

1 unchanged sentence

The motion was fully briefed in June 2020 and a hearing on the motion to dismiss the Securities Actions was held on October 15, 2020.

Following the hearing, on October 22, 2020, the court granted with prejudice the defendants’ motion to dismiss the Securities Actions.

Following the hearing, on October 22, 2020, the district court granted with prejudice the defendants’ motion to dismiss the Securities Actions.

On November 20, 2020, the lead plaintiff filed a notice of appeal to the Court of Appeals for the First Circuit.

The appeal has been fully briefed and oral arguments before the Court of Appeals for the First Circuit were held on July 29, 2021.

The court’s decision on the appeal is expected in the coming months and the defendants remain confident in the District Court’s dismissal with prejudice of the Securities Actions.

On December 21, 2021, the First Circuit issued a decision reversing and remanding the Securities Actions to the district court for further proceedings.

The defendants remain confident in their position, believe the Securities Actions are without merit and will continue to vigorously defend the matter.

Carbonite vs Realtime Data

On February 27, 2017, prior to our acquisition of Carbonite, a non-practicing entity named Realtime Data LLC (Realtime Data) filed a lawsuit against Carbonite in the U.S.

On February 27, 2017, before our acquisition of Carbonite, a non-practicing entity named Realtime Data LLC (Realtime Data) filed a lawsuit against Carbonite in the U.S.

District Court for the Eastern District of Texas “Realtime Data LLC v.

Carbonite, Inc.

et al (No 6:17-cv-00121-RWS-JDL)", alleging that certain of Carbonite’s cloud storage services infringe upon certain patents held by Realtime Data.

et al (No 6:17-cv-00121-RWS-JDL).” Therein, it alleged that certain of Carbonite’s cloud storage services infringe upon certain patents held by Realtime Data.

Realtime Data’s complaint against Carbonite sought damages in an unspecified amount and injunctive relief.

On December 19, 2017, the U.S.

District Court for the Eastern District of Texas transferred the case to the U.S District Court for the District of Massachusetts (No.

District Court for the Eastern District of Texas transferred the case to the U.S.

District Court for the District of Massachusetts (No.

1:17-cv-12499).

Realtime Data has also filed numerous other patent suits on the asserted patents against other companies around the country.

In one of those suits, filed in the U.S.

District Court for the District of Delaware, the Delaware Court on July 29, 2019 dismissed the lawsuit after declaring invalid three of the four patents asserted by Realtime Data against Carbonite;

that decision was appealed to the U.S.

Realtime Data has also filed numerous other patent suits on the same asserted patents against other companies.

After a stay pending appeal in one of those suits, on January 21, 2021, the district court held a hearing to construe the claims of the asserted patents.

As to the fourth patent asserted against Carbonite, on September 24, 2019, the U.S.

Patent & Trademark Office Patent Trial and Appeal Board invalidated certain claims of that patent, including certain claims that had been asserted against Carbonite.

The parties then jointly stipulated to dismiss that patent from this action.

On August 23, 2021, in one of the suits against other companies, the District of Delaware (No.

1:17-cv-800), held all of the patents asserted against Carbonite to be invalid.

Realtime Data has appealed that decision to the U.S.

Court of Appeals for the Federal Circuit.

By way of Order dated August 19, 2019, the U.S.

District Court for the District of Massachusetts stayed the action against Carbonite pending the aforementioned appeal of the dismissal in the Delaware lawsuit.

On October 23, 2020, the Appeals Court vacated and remanded the Delaware Court’s decision.

Following the Appeals Court's decision, the Massachusetts District Court lifted the stay on the action against Carbonite.

On January 21, 2021, the Court held a hearing to construe the claims of the asserted patents.

As to the fourth patent asserted against Carbonite, the U.S.

Patent & Trademark Office Patent Trial and Appeal Board on September 24, 2019 invalidated certain claims of that patent, including certain claims that had been asserted against Carbonite, and the parties jointly stipulated to dismiss the patent from the action.

No trial date has been set in the action against Carbonite.

We are vigorously defending the matter.

We continue to vigorously defend the matter, and the U.S.

District Court for the District of Massachusetts has issued a claim construction order.

We anticipate motion practice based upon the result of that order.

We have not accrued a loss contingency related to this matter because litigation related to a non-practicing entity is inherently unpredictable.

Although a loss is reasonably possible, an unfavorable outcome is not considered by management to be probable at this time and we remain unable to reasonably estimate a possible loss or range of loss associated with this litigation.

Please also see Part I, Item 1A "Risk Factors" in this Annual Report on Form 10-K.

Please also see Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2022.

Off-Balance Sheet Arrangements

1 unchanged sentence

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

What changed 10-K

Item 7. Management’s Discussion and Analysis