What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-05-04 · 485 added, 554 removed, 721 unchanged (59% of the section changed)

4 unchanged sentences

dollars, except share data)

March 31, 2022 June 30, 2021

September 30, 2022 June 30, 2022

ASSETS (unaudited)

Cash and cash equivalents $ 1,704,385 $ 1,693,741

Accounts receivable trade, net of allowance for credit losses of $ 16,439 as of March 31, 2022 and $ 22,151 as of June 30, 2021 (note 4)

Accounts receivable trade, net of allowance for credit losses of $ 15,410 as of September 30, 2022 and $ 16,473 as of June 30, 2022 (Note 4)

378,143 426,652

Contract assets (Note 3)

27,802 26,167

Income taxes recoverable (Note 15)

Prepaid expenses and other current assets (Note 9)

124,868 120,552

Total current assets 2,244,054 2,285,367

Property and equipment (Note 5)

251,151 244,709

Operating lease right of use assets (Note 6)

201,374 198,132

Long-term contract assets (Note 3)

18,544 19,719

Goodwill (Note 7)

5,226,814 5,244,653

Acquired intangible assets (Note 8)

974,589 1,075,208

Deferred tax assets (Note 15)

814,471 810,154

Other assets (Note 9)

299,608 256,987

Long-term income taxes recoverable (Note 15)

46,483 44,044

Total assets $ 10,077,088 $ 10,178,973

2 unchanged sentences

Accounts payable and accrued liabilities (Note 10)

$ 601,074 $ 448,607

Current portion of long-term debt (Note 11)

10,000 10,000

Operating lease liabilities (Note 6)

58,969 56,380

Deferred revenues (Note 3)

848,789 902,202

Income taxes payable (Note 15)

58,692 51,069

Total current liabilities 1,577,524 1,468,258

1 unchanged sentence

Accrued liabilities (Note 10)

20,119 18,208

Pension liability (Note 12)

53,202 60,951

Long-term debt (Note 11)

4,208,547 4,209,567

Long-term operating lease liabilities (Note 6)

197,328 198,695

Long-term deferred revenues (Note 3)

85,514 91,144

Long-term income taxes payable (Note 15)

42,087 34,003

Deferred tax liabilities (Note 15)

42,626 65,887

Total long-term liabilities 4,649,423 4,678,455

1 unchanged sentence

Share capital and additional paid-in capital (Note 13)

270,231,166 and 271,540,755 Common Shares issued and outstanding at March 31, 2022 and June 30, 2021, respectively;

269,880,769 and 269,522,639 Common Shares issued and outstanding at September 30, 2022 and June 30, 2022, respectively;

authorized Common Shares:

2,067,881 2,038,674

Accumulated other comprehensive income (note 20) 17,266 66,238

Accumulated other comprehensive income (loss) (Note 20)

( 42,576 ) ( 7,659 )

Retained earnings 1,978,442 2,160,069

Treasury stock, at cost ( 2,776,420 and 1,567,664 shares at March 31, 2022 and June 30, 2021, respectively)

Treasury stock, at cost ( 3,586,014 and 3,706,420 shares at September 30, 2022 and June 30, 2022, respectively)

( 154,792 ) ( 159,966 )

7 unchanged sentences

See accompanying Notes to Condensed Consolidated Financial Statements

Table of C ontents

OPEN TEXT CORPORATION

2 unchanged sentences

dollars, except share and per share data)

Three Months Ended March 31, Nine Months Ended March 31,

2022 2021 2022 2021

Three Months Ended September 30,

Revenues (Note 3):

10 unchanged sentences

Amortization of acquired technology-based intangible assets (Note 8)

42,637 53,167

Total cost of revenues 258,348 258,123

6 unchanged sentences

Amortization of acquired customer-based intangible assets (Note 8)

54,438 51,884

Special charges (recoveries) (Note 18)

2 unchanged sentences

Other income (expense), net (Note 22)

( 189,231 ) 29,782

Interest and other related expense, net ( 40,382 ) ( 37,055 )

Income before income taxes 115,763 123,346 418,781 471,622

Income (loss) before income taxes ( 83,260 ) 175,416

Provision for income taxes (Note 15)

Net income for the period $ 74,722 $ 91,528 $ 295,024 $ 129,501

33,625 43,450

Net income (loss) for the period $ ( 116,885 ) $ 131,966

Net (income) loss attributable to non-controlling interests ( 44 ) ( 51 )

Net income attributable to OpenText $ 74,681 $ 91,490 $ 294,894 $ 129,389

Earnings per share—basic attributable to OpenText (note 23) $ 0.28 $ 0.34 $ 1.09 $ 0.47

Earnings per share—diluted attributable to OpenText (note 23) $ 0.28 $ 0.33 $ 1.08 $ 0.47

Net income (loss) attributable to OpenText $ ( 116,929 ) $ 131,915

Earnings (loss) per share—basic attributable to OpenText (Note 23)

$ ( 0.43 ) $ 0.48

Earnings (loss) per share—diluted attributable to OpenText (Note 23)

$ ( 0.43 ) $ 0.48

Weighted average number of Common Shares outstanding—basic (in '000's) 269,804 272,044

1 unchanged sentence

See accompanying Notes to Condensed Consolidated Financial Statements

Table of C ontents

OPEN TEXT CORPORATION

1 unchanged sentence

(In thousands of U.S.

Three Months Ended March 31, Nine Months Ended March 31,

2022 2021 2022 2021

Net income for the period $ 74,722 $ 91,528 $ 295,024 $ 129,501

Three Months Ended September 30,

Net income (loss) for the period $ ( 116,885 ) $ 131,966

Other comprehensive income (loss)—net of tax:

1 unchanged sentence

Unrealized gain (loss) on cash flow hedges:

Unrealized gain (loss) - net of tax expense (recovery) effect of $ 233 and $ 246 for the three months ended March 31, 2022 and 2021, respectively;

($ 158 ) and $ 1,302 for the nine months ended March 31, 2022 and 2021, respectively

648 681 ( 334 ) 3,608

(Gain) loss reclassified into net income - net of tax (expense) recovery effect of $ 79 and ($ 399 ) for the three months ended March 31, 2022 and 2021, respectively;

($ 24 ) and ($ 682 ) for the nine months ended March 31, 2022 and 2021, respectively

Unrealized gain (loss) - net of tax expense (recovery) effect of ($ 1,206 ) and $( 391 ) for the three months ended September 30, 2022 and 2021, respectively

( 3,340 ) ( 1,086 )

(Gain) loss reclassified into net income - net of tax (expense) recovery effect of $ 212 and $( 103 ) for the three months ended September 30, 2022 and 2021, respectively

Actuarial gain (loss) relating to defined benefit pension plans:

Actuarial gain (loss) - net of tax expense (recovery) effect of ($ 579 ) and $ 944 for the three months ended March 31, 2022 and 2021, respectively;

($ 811 ) and ($ 413 ) for the nine months ended March 31, 2022 and 2021, respectively

( 2,033 ) 344 ( 4,517 ) ( 2,342 )

Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $ 66 and $ 95 for the three months ended March 31, 2022 and 2021, respectively;

$ 134 and $ 275 for the nine months ended March 31, 2022 and 2021, respectively

Actuarial gain (loss) - net of tax expense (recovery) effect of $ 1,104 and $( 232 ) for the three months ended September 30, 2022 and 2021, respectively

4,164 ( 1,049 )

Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $ 26 and $ 68 for the three months ended September 30, 2022 and 2021, respectively

Total other comprehensive income (loss) net, for the period ( 34,917 ) ( 12,352 )

Total comprehensive income 60,639 79,126 246,052 165,750

Total comprehensive income (loss) ( 151,802 ) 119,614

Comprehensive (income) loss attributable to non - controlling interests

( 44 ) ( 51 )

Total comprehensive income attributable to OpenText $ 60,598 $ 79,088 $ 245,922 $ 165,638

Total comprehensive income (loss) attributable to OpenText $ ( 151,846 ) $ 119,563

See accompanying Notes to Condensed Consolidated Financial Statements

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands of U.S.

dollars and shares)

Three Months Ended March 31, 2022

Common Shares and Additional Paid in Capital Treasury Stock Retained

Earnings Accumulated Other

Comprehensive

Income Non-Controlling Interests Total

Shares Amount Shares Amount

Balance as of December 31, 2021

271,006 $ 1,990,913 ( 1,476 ) $ ( 67,966 ) $ 2,174,467 $ 31,349 $ 1,062 $ 4,129,825

Issuance of Common Shares

Under employee stock option plans 53 1,863 — — — — — 1,863

Under employee stock purchase plans 172 7,003 — — — — — 7,003

Share-based compensation — 16,748 — — — — — 16,748

Purchase of treasury stock — — ( 1,300 ) ( 56,067 ) — — — ( 56,067 )

Repurchase of Common Shares ( 1,000 ) ( 6,381 ) — — ( 38,702 ) — — ( 45,083 )

Dividends declared

($ 0.2209 per Common Share)

— — — — ( 59,077 ) — — ( 59,077 )

Other comprehensive income (loss) - net — — — — — ( 14,083 ) — ( 14,083 )

Net income for the period — — — — 74,681 — 41 74,722

Balance as of March 31, 2022

270,231 $ 2,010,146 ( 2,776 ) $ ( 124,033 ) $ 2,151,369 $ 17,266 $ 1,103 $ 4,055,851

Three Months Ended March 31, 2021

Common Shares and Additional Paid in Capital Treasury Stock Retained

Earnings Accumulated Other

Comprehensive

Income Non-Controlling Interests Total

Shares Amount Shares Amount

Balance as of December 31, 2020

272,589 $ 1,889,857 ( 1,101 ) $ ( 47,555 ) $ 2,093,076 $ 66,476 $ 1,393 $ 4,003,247

Issuance of Common Shares

Under employee stock option plans 219 8,270 — — — — — 8,270

Under employee stock purchase plans 165 6,421 — — — — — 6,421

Share-based compensation — 12,357 — — — — — 12,357

Purchase of treasury stock — — ( 490 ) ( 22,977 ) — — — ( 22,977 )

Issuance of treasury stock — ( 1,146 ) 23 1,146 — — — —

Dividends declared

($ 0.2008 per Common Share)

— — — — ( 54,519 ) — — ( 54,519 )

Other comprehensive income (loss) - net — — — — — ( 12,402 ) — ( 12,402 )

Net income for the period — — — — 91,490 — 38 91,528

Balance as of March 31, 2021

272,973 $ 1,915,759 ( 1,568 ) $ ( 69,386 ) $ 2,130,047 $ 54,074 $ 1,431 $ 4,031,925

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OPEN TEXT CORPORATION

2 unchanged sentences

dollars and shares)

Nine Months Ended March 31, 2022

Three Months Ended September 30, 2022

Common Shares and Additional Paid in Capital Treasury Stock Retained

9 unchanged sentences

Share-based compensation — 23,208 — — — — — 23,208

Purchase of treasury stock — — ( 1,700 ) ( 75,660 ) — — — ( 75,660 )

Issuance of treasury stock — ( 5,174 ) 120 5,174 — — — —

Repurchase of Common Shares ( 2,810 ) ( 17,879 ) — — ( 118,238 ) — — ( 136,117 )

Dividends declared

2 unchanged sentences

Other comprehensive income (loss) - net — — — — — ( 34,917 ) — ( 34,917 )

Distribution to non-controlling interest — 142 — — — — ( 538 ) ( 396 )

Net income for the period — — — — 294,894 — 130 295,024

Balance as of March 31, 2022

Net income (loss) for the period — — — — ( 116,929 ) — 44 ( 116,885 )

Balance as of September 30, 2022

269,881 $ 2,067,881 ( 3,586 ) $ ( 154,792 ) $ 1,978,442 $ ( 42,576 ) $ 1,186 $ 3,850,141

Nine Months Ended March 31, 2021

Three Months Ended September 30, 2021

Common Shares and Additional Paid in Capital Treasury Stock Retained

5 unchanged sentences

271,541 $ 1,947,764 ( 1,568 ) $ ( 69,386 ) $ 2,153,326 $ 66,238 $ 1,511 $ 4,099,453

Adoption of ASU 2016-13 - cumulative effect, net

— — — — ( 2,450 ) — — ( 2,450 )

Issuance of Common Shares

2 unchanged sentences

Share-based compensation — 13,934 — — — — — 13,934

Purchase of treasury stock — — ( 1,455 ) ( 64,847 ) — — — ( 64,847 )

Issuance of treasury stock — ( 5,909 ) 142 5,909 — — — —

3 unchanged sentences

Other comprehensive income (loss) - net — — — — — ( 12,352 ) — ( 12,352 )

Net income for the period — — — — 129,389 — 112 129,501

Balance as of March 31, 2021

Distribution to non-controlling interest — 142 — — — — ( 538 ) ( 396 )

Net income (loss) for the period — — — — 131,915 — 51 131,966

Balance as of September 30, 2021

272,534 $ 1,991,719 ( 1,426 ) $ ( 63,477 ) $ 2,225,363 $ 53,886 $ 1,024 $ 4,208,515

See accompanying Notes to Condensed Consolidated Financial Statements

Table of C ontents

OPEN TEXT CORPORATION

1 unchanged sentence

(In thousands of U.S.

Nine Months Ended March 31,

Three Months Ended September 30,

Cash flows from operating activities:

Net income for the period $ 295,024 $ 129,501

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss) for the period $ ( 116,885 ) $ 131,966

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization of intangible assets 120,249 126,437

2 unchanged sentences

Amortization of debt issuance costs 1,480 1,161

Loss on extinguishment of debt 27,413 —

Write-off of right of use assets 2,827 —

Loss on sale and write down of property and equipment — 27

1 unchanged sentence

Share in net (income) loss of equity investees 6,534 ( 29,315 )

Unrealized (gain) loss on financial instruments 181,461 —

Changes in operating assets and liabilities:

10 unchanged sentences

Additions of property and equipment ( 36,324 ) ( 26,712 )

Purchase of Zix Corporation, net of cash acquired ( 856,175 ) —

Purchase of Bricata Inc.

Purchase of XMedius — 444

Purchase of Dynamic Solutions Group Inc.

Other investing activities — 296

1 unchanged sentence

Cash flows from financing activities:

Proceeds from issuance of Common Shares from exercise of stock options and ESPP 56,476 45,780

Proceeds from long-term debt and Revolver 1,500,000 —

Proceeds from issuance of Common Shares

from exercise of stock options and ESPP

10,037 36,720

Repayment of long-term debt and Revolver ( 2,500 ) ( 2,500 )

Debt extinguishment costs (note 22) ( 24,969 ) —

Debt issuance costs ( 17,159 ) —

Repurchase of Common Shares ( 136,117 ) —

Purchase of treasury stock ( 75,660 ) ( 64,847 )

Distribution to non-controlling interest — ( 396 )

Payments of dividends to shareholders ( 64,698 ) ( 59,878 )

Net cash provided by (used in) financing activities 266,062 ( 782,855 )

Net cash used in financing activities ( 57,161 ) ( 26,054 )

Foreign exchange gain (loss) on cash held in foreign currencies ( 28,102 ) ( 9,277 )

Increase (decrease) in cash, cash equivalents and restricted cash during the period 26,051 ( 218,583 )

Increase in cash, cash equivalents and restricted cash during the period 10,372 127,922

Cash, cash equivalents and restricted cash at beginning of the period 1,695,911 1,609,800

Cash, cash equivalents and restricted cash at end of the period $ 1,706,283 $ 1,737,722

Table of C ontents

OPEN TEXT CORPORATION

2 unchanged sentences

Reconciliation of cash, cash equivalents and restricted cash:

March 31, 2022 March 31, 2021

September 30, 2022 September 30, 2021

Cash and cash equivalents $ 1,704,385 $ 1,735,265

1 unchanged sentence

Total cash, cash equivalents and restricted cash $ 1,706,283 $ 1,737,722

_________________________________

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

1 unchanged sentence

See accompanying Notes to Condensed Consolidated Financial Statements

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OPEN TEXT CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended March 31, 2022

For the Three Months Ended September 30, 2022

(Tabular amounts in thousands of U.S.

1 unchanged sentence

NOTE 1— BASIS OF PRESENTATION

The accompanying Condensed Consolidated Financial Statements include the accounts of Open Text Corporation and our subsidiaries, collectively referred to as “OpenText” or the “Company”.

We wholly own all of our subsidiaries with the exception of Open Text South Africa Proprietary Ltd.

(OT South Africa), which as of March 31, 2022, was 70 % owned by OpenText.

The accompanying Condensed Consolidated Financial Statements include the accounts of Open Text Corporation and our subsidiaries, collectively referred to as “OpenText” or the “Company.” We wholly own all of our subsidiaries with the exception of Open Text South Africa Proprietary Ltd.

(OT South Africa), which as of September 30, 2022, was 70 % owned by OpenText.

All intercompany balances and transactions have been eliminated.

2 unchanged sentences

During the first quarter of Fiscal 2022 (as defined below), we made a final cash distribution of $ 0.4 million to the non-controlling interest holder in GXS Singapore as part of the process to liquidate the subsidiary.

During the three months ended March 31, 2022, the liquidation of GXS Singapore was completed.

Throughout this Quarterly Report on Form 10-Q:

(i) the term “Fiscal 2022” means our fiscal year beginning on July 1, 2021 and ending June 30, 2022;

(ii) the term “Fiscal 2021” means our fiscal year beginning on July 1, 2020 and ended June 30, 2021;

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

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

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

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

(vii) the term “Fiscal 2016” means our fiscal year beginning on July 1, 2015 and ended June 30, 2016;

(viii) the term “Fiscal 2015” means our fiscal year beginning on July 1, 2014 and ended June 30, 2015;

(ix) the term “Fiscal 2014” means our fiscal year beginning on July 1, 2013 and ended June 30, 2014;

(x) the term “Fiscal 2013” means our fiscal year beginning on July 1, 2012 and ended June 30, 2013;

and (xi) the term “Fiscal 2012” means our fiscal year beginning on July 1, 2011 and ended June 30, 2012.

During Fiscal 2022, the liquidation of GXS Singapore was completed.

The following Fiscal Year terms are used throughout this Quarterly Report on Form 10-Q:

Fiscal Year Beginning Date Ending Date

July 1, 2023 June 30, 2024

July 1, 2022 June 30, 2023

July 1, 2021 June 30, 2022

July 1, 2020 June 30, 2021

July 1, 2019 June 30, 2020

July 1, 2018 June 30, 2019

July 1, 2017 June 30, 2018

July 1, 2016 June 30, 2017

July 1, 2015 June 30, 2016

July 1, 2014 June 30, 2015

July 1, 2013 June 30, 2014

July 1, 2012 June 30, 2013

July 1, 2011 June 30, 2012

These Condensed Consolidated Financial Statements are expressed in U.S.

8 unchanged sentences

In particular, key estimates, judgments and assumptions include those related to:

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

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

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

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

As of March 31, 2022, we have recorded certain estimates resulting from the pandemic, particularly with respect to the COVID-19 Restructuring Plan (as defined herein) and allowance for credit losses, based on management's estimates and assumptions utilizing the most currently available information.

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

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

Please see note 18 “Special Charges (Recoveries)” and “Risk Factors” included within Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2021.

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Proposed Acquisition of Micro Focus

On August 25, 2022, we announced an agreement on the terms of an all-cash offer (through our wholly-owned subsidiary), to acquire the entire issued and to be issued share capital of Micro Focus International PLC (Micro Focus), for a total purchase price of approximately $ 6.0 billion, inclusive of Micro Focus’ cash and debt.

The all-cash consideration for the proposed acquisition of Micro Focus (Micro Focus Acquisition) is expected to be funded by new debt, cash on hand and a draw on our Revolver (defined below).

Concurrent with the announcement of the Micro Focus Acquisition, the Company entered into the Acquisition Term Loan and Bridge Loan (each as defined below) as well as certain derivative transactions.

These derivative transactions were marked-to-market during the three months ended September 30, 2022, with the resulting unrealized gains (losses) on these derivatives recognized in Other Income (Expense) within our Condensed Consolidated Statements of Income.

The Micro Focus Acquisition is expected to close in the first quarter of calendar 2023, subject to the satisfaction (or, where applicable, waiver) of certain conditions.

On October 18, 2022 the shareholders of Micro Focus approved the all-cash offer.

The following Notes include details related to the Micro Focus Acquisition:

Note 9 “Prepaid Expenses and Other Assets,” Note 10 “Accounts Payable and Accrued Liabilities,” Note 11 “Long-Term Debt,” Note 16 “Fair Value Measurement,” Note 17 “Derivative Instruments and Hedging Activities,” Note 19 “Acquisitions” and Note 22 “Other Income (Expense), Net.”

NOTE 2— RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Adopted in Fiscal 2023

During Fiscal 2022, we have adopted the following Accounting Standards Update (ASU) that did not have a material impact to our reported financial position, results of operations or cash flows:

• ASU 2019-12 “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes”

Business Combinations

In October 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-08 “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This standard requires contract assets and contract liabilities acquired in a business combination to be recognized and measured as if the acquirer had originated the original contract in accordance with Accounting Standards Codification (ASC) Topic 606.

Previously, contract assets and contract liabilities were measured at fair value.

The standard is effective for us in our fiscal year ending June 30, 2024, with early adoption permitted.

We elected to early adopt the ASU during our second quarter of Fiscal 2022.

Early adoption required retrospective adoption to business combinations completed on or after July 1, 2021 and prospective adoption to business combinations occurring on or after the date of adoption.

There was no retrospective impact of early adoption as we did not have acquisitions during our first quarter of Fiscal 2022.

Acquisitions disclosed in note 19 “Acquisitions” are in accordance with ASU 2021-08.

The adoption will not have a material impact to our reported financial position, results of operations or cash flows.

During the three months ended September 30, 2022, there have been no new Accounting Standards Updates (ASU) or changes in accounting pronouncements that have had a material impact to our reported financial position, results of operations or cash flows .

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NOTE 3— REVENUES

3 unchanged sentences

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

Three Months Ended March 31, Nine Months Ended March 31,

2022 2021 2022 2021

Three Months Ended September 30,

Total Revenues by Geography:

19 unchanged sentences

Total revenues $ 852,036 $ 832,308

___________________________

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

9 unchanged sentences

deferred revenues) for the periods indicated below were as follows:

As of March 31, 2022

As of September 30, 2022

As of June 30, 2022

6 unchanged sentences

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

During the nine months ended March 31, 2022, we reclassified $ 26.6 million of contract assets to receivables as a result of the right to the transaction consideration becoming unconditional.

During the three and nine months ended March 31, 2022 and 2021, respectively, there was no significant impairment loss recognized related to contract assets.

During the three months ended September 30, 2022, we reclassified $ 8.9 million (three months ended September 30, 2021—$ 8.1 million) of contract assets to

Table of C ontents

receivables as a result of the right to the transaction consideration becoming unconditional.

During the three months ended September 30, 2022 and 2021, respectively, there was no significant impairment loss recognized related to contract assets.

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

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

The amount of revenue that was recognized during the nine months ended March 31, 2022 that was included in the deferred revenue balances at June 30, 2021 was $ 775 million (nine months ended March 31, 2021—$ 737 million).

The amount of revenue that was recognized during the three months ended September 30, 2022 that was included in the deferred revenue balances at June 30, 2022 was $ 373 million (three months ended September 30, 2021—$ 359 million).

Incremental Costs of Obtaining a Contract with a Customer

5 unchanged sentences

Impact of foreign exchange rate changes ( 1,885 )

Capitalized costs to obtain a contract as of March 31, 2022

During the three and nine months ended March 31, 2022 and 2021, respectively, there was no significant impairment loss recognized related to capitalized costs to obtain a contract.

Capitalized costs to obtain a contract as of September 30, 2022

During the three months ended September 30, 2022 and 2021, respectively, there was no significant impairment loss recognized related to capitalized costs to obtain a contract.

Refer to Note 9 “Prepaid Expenses and Other Assets” for additional information on incremental costs of obtaining a contract.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2022, approximately $ 1.5 billion of revenue is expected to be recognized from remaining performance obligations on existing contracts.

As of September 30, 2022, approximately $ 1.5 billion of revenue is expected to be recognized from remaining performance obligations on existing contracts.

We expect to recognize approximately 46 % of this amount over the next 12 months and the remaining balance substantially over the next three years thereafter.

5 unchanged sentences

Write-off / adjustments ( 1,910 )

Balance as of March 31, 2022

Included in accounts receivable are unbilled receivables in the amount of $ 52.4 million as of March 31, 2022 (June 30, 2021—$ 51.4 million).

As of March 31, 2022, we have an allowance for credit losses of $ 0.6 million for contract assets (June 30, 2021—$ 0.4 million).

Balance as of September 30, 2022

Included in accounts receivable are unbilled receivables in the amount of $ 51.0 million as of September 30, 2022 (June 30, 2022—$ 47.9 million).

As of September 30, 2022, we have an allowance for credit losses of $ 0.5 million for contract assets (June 30, 2022—$ 0.7 million).

For additional information on contract assets please see Note 3 “Revenues.”

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NOTE 5— PROPERTY AND EQUIPMENT

As of March 31, 2022

As of September 30, 2022

Cost Accumulated

Depreciation Net

Furniture and fixtures $ 42,009 $ ( 38,021 ) $ 3,988

Office equipment 2,755 ( 1,359 ) 1,396

Furniture, equipment and other $ 51,418 $ ( 39,485 ) $ 11,933

Computer hardware 340,407 ( 231,133 ) 109,274

7 unchanged sentences

Depreciation Net

Furniture and fixtures $ 38,541 $ ( 32,500 ) $ 6,041

Office equipment 2,533 ( 1,244 ) 1,289

Furniture, equipment and other $ 52,381 $ ( 39,643 ) $ 12,738

Computer hardware 332,462 ( 226,341 ) 106,121

11 unchanged sentences

The following illustrates the various components of operating lease costs for the period indicated:

Three Months Ended March 31, Nine Months Ended March 31,

2022 2021 2022 2021

Three Months Ended September 30,

Operating lease cost $ 14,311 $ 15,391

4 unchanged sentences

The weighted average remaining lease term and discount rate for the periods indicated below were as follows:

As of March 31, 2022 As of June 30, 2021

As of September 30, 2022 As of June 30, 2022

Weighted-average remaining lease term 5.87 years 6.13 years

Weighted-average discount rate 3.29 % 2.95 %

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Supplemental Cash Flow Information

1 unchanged sentence

Cash payments made for variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and, as such, are excluded from the amounts below:

Nine Months Ended March 31,

Three Months Ended September 30,

Cash paid for amounts included in the measurement of operating lease liabilities $ 17,740 $ 17,452

Right of use assets obtained in exchange for new operating lease liabilities $ 22,467 $ 4,231

$ 24,880 $ 59,762

(1) The nine months ended March 31, 2022 excludes the impact of $ 8.1 million of right of use (ROU) assets obtained through the acquisition of Zix Corporation.

See note 19 “Acquisitions” for further details including expected finalization of preliminary purchase price allocation.

(2) The nine months ended March 31, 2021 excludes the release of $ 22.3 million of lease liabilities relating to office space that was abandoned during the fourth quarter of Fiscal 2020 and has since been early terminated or assigned to a third party.

These recoveries were recorded in “Special charges (recoveries)” in the Condensed Consolidated Statements of Income.

Please see note 18 “Special Charges (Recoveries)”.

Maturity of Lease Liabilities

The following table presents the future minimum lease payments under our operating leases liabilities as of March 31, 2022:

The following table presents the future minimum lease payments under our operating leases liabilities as of September 30, 2022:

Fiscal years ending June 30,

2022 (three months ended)

2023 (nine months ended)

Thereafter 65,344

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Acquisition of Zix Corporation (Note 19)

Acquisition of Bricata Inc.

(note 19) 10,257

Impact of foreign exchange rate changes ( 18,479 )

Balance as of March 31, 2022

Balance as of September 30, 2022

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NOTE 8— ACQUIRED INTANGIBLE ASSETS

As of March 31, 2022

As of September 30, 2022

Cost Accumulated Amortization Net

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Total $ 2,594,251 $ ( 1,519,043 ) $ 1,075,208

Where applicable, the above balances as of March 31, 2022 have been reduced to reflect the impact of intangible assets where the gross cost has become fully amortized during the nine months ended March 31, 2022.

The impact of this resulted in a reduction of $ 91.0 million to technology assets cost and accumulated amortization.

Where applicable, the above balances as of September 30, 2022 have been reduced to reflect the impact of intangible assets where the gross cost has become fully amortized during the three months ended September 30, 2022.

The impact of this resulted in a reduction of $ 119 million to technology assets and $ 64 million to customer assets.

The weighted average amortization periods for acquired technology and customer intangible assets are approximately six years and eight years , respectively.

2 unchanged sentences

Fiscal years ending June 30,

2022 (three months ended)

Thereafter 191,714

2023 (nine months ended)

2028 and Thereafter

Total $ 974,589

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NOTE 9— PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other current assets:

As of March 31, 2022 As of June 30, 2021

As of September 30, 2022 As of June 30, 2022

Deposits and restricted cash $ 1,674 $ 6,300

3 unchanged sentences

Other assets:

As of March 31, 2022 As of June 30, 2021

As of September 30, 2022 As of June 30, 2022

Deposits and restricted cash $ 10,590 $ 6,462

Capitalized costs to obtain a contract 52,341 55,484

Deferred debt issuance costs 47,010 —

Investments 166,672 173,205

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Capitalized costs to obtain a contract relate to incremental costs of obtaining a contract, such as sales commissions, which are eligible for capitalization on contracts to the extent that such costs are expected to be recovered (see Note 3 “Revenues”).

Deferred debt issuance costs represents fees incurred related to the Acquisition Term Loan and Bridge Loan (each as defined below).

See Note 11 “Long-Term Debt.”

Investments relate to certain investment funds in which we are a limited partner.

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These investments are accounted for using the equity method.

Our share of net income or losses based on our interest in these investments, which approximates fair value and subject to volatility based on market trends and business conditions, is recorded as a component of Other income (expense), net in our Condensed Consolidated Statements of Income (see note 22 “Other Income (Expense), Net”).

During the three and nine months ended March 31, 2022, our share of income (loss) from these investments was $ 27.7 million and $ 59.1 million, respectively (three and nine months ended March 31, 2021—$ 11.8 million and $ 20.0 million, respectively).

Our share of net income or losses based on our interest in these investments, which approximates fair value and is subject to volatility based on market trends and business conditions, is recorded as a component of Other income (expense), net in our Condensed Consolidated Statements of Income (see Note 22 “Other Income (Expense), Net”).

During the three months ended September 30, 2022, our share of income (loss) from these investments was $( 6.5 ) million (three months ended September 30, 2021—$ 29.3 million).

Prepaid expenses and other assets, both short-term and long-term, include advance payments on licenses that are being amortized over the applicable terms of the licenses and other miscellaneous assets.

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NOTE 10— ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities:

As of March 31, 2022 As of June 30, 2021

As of September 30, 2022 As of June 30, 2022

Accounts payable—trade $ 101,544 $ 113,978

2 unchanged sentences

Accrued sales and other tax liabilities 14,525 20,423

Derivative liability (1)

Deferred debt issuance costs (2)

Accrued interest on Senior Notes 28,751 31,813

2 unchanged sentences

Total $ 601,074 $ 448,607

______________________________

(1) Represents the liability related to the unrealized losses on our derivatives not designated as hedges related to the proposed Micro Focus Acquisition (see Note 17 “Derivative Instruments and Hedging Activities”).

(2) Represents deferred debt issuance costs related to the Acquisition Term Loan and Bridge Loan related to the proposed Micro Focus Acquisition (see Note 11 “Long-Term Debt”).

Long-term accrued liabilities:

As of March 31, 2022 As of June 30, 2021

As of September 30, 2022 As of June 30, 2022

Amounts payable in respect of restructuring and other special charges $ 5,803 $ 5,702

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We are required to return certain of our leased facilities to their original state at the conclusion of our lease.

As of March 31, 2022, the present value of this obligation was $ 15.9 million (June 30, 2021—$ 15.7 million), with an undiscounted value of $ 16.6 million (June 30, 2021—$ 16.4 million).

As of September 30, 2022, the present value of this obligation was $ 15.5 million (June 30, 2022—$ 15.8 million), with an undiscounted value of $ 16.2 million (June 30, 2022—$ 16.4 million).

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NOTE 11— LONG-TERM DEBT

As of March 31, 2022 As of June 30, 2021

As of September 30, 2022 As of June 30, 2022

Senior Notes 2031 $ 650,000 $ 650,000

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Term Loan B 955,000 957,500

Acquisition Term Loan — —

Bridge Loan — —

Total principal payments due 4,255,000 4,257,500

Premium on Senior Notes 2026 (1)

Debt issuance costs (1)

5 unchanged sentences

Non-current portion of long-term debt $ 4,208,547 $ 4,209,567

(1) During the nine months ended March 31, 2022, we recorded $ 17.2 million of debt issuance costs relating to the issuance of Senior Notes 2031 and Senior Notes 2029 (both defined below).

Additionally, upon redemption of Senior Notes 2026 (defined below), $ 6.2 million of unamortized debt issuance costs and ($ 3.8 ) million of the unamortized premium were included in the loss on debt extinguishment.

See note 22 “Other Income (Expense), Net”.

____________________________

(1) As of September 30, 2022, there was an additional $ 47.0 million of deferred debt issuance costs related to the Acquisition Term Loan and Bridge Loan included in “Other assets” not included above.

Senior Unsecured Fixed Rate Notes

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

For the three and nine months ended March 31, 2022, we recorded interest expense of $ 6.7 million and $ 9.4 million, respectively, relating to Senior Notes 2031.

For the three months ended September 30, 2022, we recorded interest expense of $ 6.7 million relating to Senior Notes 2031 (three months ended September 30, 2021— nil ).

Senior Notes 2030

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

For the three and nine months ended March 31, 2022, we recorded interest expense of $ 9.3 million and $ 27.9 million, respectively, relating to Senior Notes 2030 (three and nine months ended March 31, 2021—$ 9.3 million and $ 27.8 million, respectively).

For the three months ended September 30, 2022, we recorded interest expense of $ 9.3 million relating to Senior Notes 2030 (three months ended September 30, 2021—$ 9.3 million).

Senior Notes 2029

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.

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certain non-U.S.

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

1 unchanged sentence

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

For the three and nine months ended March 31, 2022, we recorded interest expense of $ 8.2 million and $ 11.5 million, respectively, relating to Senior Notes 2029.

For the three months ended September 30, 2022, we recorded interest expense of $ 8.2 million relating to Senior Notes 2029 (three months ended September 30, 2021— nil ).

Senior Notes 2028

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 non-U.S.

On February 18, 2020, we issued $ 900 million in aggregate principal amount of 3.875 % Senior Notes due 2028 (Senior Notes 2028 and, together with the Senior Notes 2031, Senior Notes 2030 and Senior Notes 2029, the Senior Notes) 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.

1 unchanged sentence

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

For the three and nine months ended March 31, 2022, we recorded interest expense of $ 8.7 million and $ 26.1 million, respectively, relating to Senior Notes 2028 (three and nine months ended March 31, 2021—$ 8.7 million and $ 26.0 million, respectively).

For the three months ended September 30, 2022, we recorded interest expense of $ 8.7 million relating to Senior Notes 2028 (three months ended September 30, 2021—$ 8.7 million).

Senior Notes 2026

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 would have matured on June 1, 2026, unless earlier redeemed, in accordance with their terms, or repurchased.

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 additional notes had identical terms, were fungible with and were 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.

4 unchanged sentences

See Note 22 “Other Income (Expense), Net.”

For the three and nine months ended March 31, 2022, we recorded interest expense of nil and $ 21.9 million, respectively, relating to Senior Notes 2026 (three and nine months ended March 31, 2021—$ 12.5 million and $ 37.5 million, respectively).

For the three months ended September 30, 2022, we did not record any interest expense relating to Senior Notes 2026 (three months ended September 30, 2021—$ 12.5 million).

On May 30, 2018, we refinanced our existing term loan facility, by entering into a new $ 1 billion term loan facility (Term Loan B), whereby we borrowed $ 1 billion on that day and repaid in full the loans under our prior $ 800 million term loan facility originally entered into on January 16, 2014.

Borrowings under Term Loan B are secured by a first charge over substantially all of our assets on a pari passu basis with the Revolver (defined below).

Borrowings under Term Loan B are secured by a first charge over substantially all of our assets on a pari passu basis with the Revolver, Acquisition Term Loan and Bridge Loan (each as defined below).

Term Loan B has a seven-year term, maturing in May 2025, and repayments made under Term Loan B are equal to 0.25 % of the principal amount in equal quarterly installments for the life of Term Loan B, with the remainder due at maturity.

Borrowings under Term Loan B currently bear a floating rate of interest equal to 1.75 % plus LIBOR.

As of March 31, 2022, the outstanding balance on the Term Loan B bears an interest rate of 1.96 %.

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, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2021.

As of September 30, 2022, the outstanding balance on the Term Loan B bears an interest rate of 4.27 %.

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” in our Annual Report on Form 10-K for Fiscal 2022.

Under Term Loan B, 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.

As of March 31, 2022, our consolidated net leverage ratio was 1.9 :1.

For the three and nine months ended March 31, 2022, we recorded interest expense of $ 4.5 million and $ 13.6 million, respectively, relating to Term Loan B (three and nine months ended March 31, 2021—$ 4.6 million and $ 14.1 million, respectively).

As of September 30, 2022, our consolidated net leverage ratio was 2.1 :1.

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For the three months ended September 30, 2022, we recorded interest expense of $ 9.7 million relating to Term Loan B (three months ended September 30, 2021—$ 4.6 million).

On October 31, 2019, we amended our committed revolving credit facility (the Revolver) to increase the total commitments under the Revolver from $ 450 million to $ 750 million as well as to extend the maturity from May 5, 2022 to October 31, 2024.

Borrowings under the Revolver are secured by a first charge over substantially all of our assets, on a pari passu basis with Term Loan B.

Borrowings under the Revolver are secured by a first charge over substantially all of our assets, on a pari passu basis with Term Loan B, the Acquisition Term Loan and Bridge Loan.

The Revolver has no fixed repayment date prior to the end of the term.

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 %.

As of March 31, 2022, we had no outstanding balance under the Revolver (June 30, 2021— nil ).

For the three and nine months ended March 31, 2022 we did not record any interest expense relating to the Revolver (three and nine months ended March 31, 2021— nil and $ 3.6 million, respectively, relating to amounts previously drawn).

Debt Issuance Costs and Premium on Senior Notes

Debt issuance costs relate primarily to costs incurred for the purpose of obtaining our credit facilities and issuing our Senior Notes 2026, Senior Notes 2028, Senior Notes 2029, Senior Notes 2030 and Senior Notes 2031 (collectively referred to as the Senior Notes) and are being amortized through interest expense over the respective terms of the Senior Notes and Term Loan B and the Revolver using the effective interest method.

The premium on Senior Notes 2026 represented the excess of the proceeds received over the face value of Senior Notes 2026.

This premium was amortized as a reduction to interest expense over the term of Senior Notes 2026 using the effective interest method.

The unamortized debt issuance costs and unamortized premium on Senior Notes 2026 were included in the loss on debt extinguishment recognized during our second quarter of Fiscal 2022.

See note 22 “Other Income (Expense), Net”.

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

For the three months ended September 30, 2022, we did not record any interest expense relating to the Revolver (three months ended September 30, 2021— nil ).

Acquisition Term Loan

On August 25, 2022, we entered into a first lien term loan facility (the Acquisition Term Loan) which provides for a senior secured delayed-draw term loan facility in an aggregate principal amount of $ 2.585 billion.

The proceeds of the Acquisition Term Loan, if drawn, will be used solely by the Company to finance the Micro Focus Acquisition (see Note 19 — “Acquisitions” for more details).

The Acquisition Term Loan has a seven-year term from the date of funding, and repayments under the Acquisition Term Loan are equal to 0.25 % of the principal amount in equal quarterly installments for the life of the Acquisition Term Loan, with the remainder due at maturity.

Borrowings under the Acquisition Term Loan will bear interest at rates as specified in the Acquisition Term Loan Agreement.

The Acquisition Term Loan 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.

Consolidated senior secured net leverage ratio is defined for this purpose as the proportion of the Company’s total debt reduced by unrestricted cash, including guarantees and letters of credit, that is secured by the Company’s or any of the Company’s subsidiaries’ assets, over the Company’s trailing four financial quarter net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges.

Under the Acquisition Term Loan, we must maintain a “consolidated net leverage” ratio of no more than 4.5 :1.00 at the end of each financial quarter.

Consolidated net leverage ratio is defined for this purpose as the proportion of the Company’s total debt reduced by unrestricted cash, including guarantees and letters of credit, over the Company’s trailing four financial quarter net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges as defined in the Acquisition Term Loan Agreement.

As of September 30, 2022, our consolidated net leverage ratio was 2.1 :1.

The Acquisition Term Loan is unconditionally guaranteed by certain subsidiary guarantors, as defined in the Acquisition Term Loan Agreement, and is secured by a first charge on substantially all of the assets of the Company and the subsidiary guarantors on a pari passu basis with the Revolver, Term Loan B and the Bridge Loan.

Certain adjustments may be made to the applicable margin and other terms of the Acquisition Term Loan in limited circumstances where necessary to achieve successful syndication.

As of September 30, 2022, we had no borrowings under the Acquisition Term Loan.

For the three months ended September 30, 2022, we did not record any interest expense relating to the Acquisition Term Loan (three months ended September 30, 2021— nil ).

On August 25, 2022, we entered into a bridge loan agreement (Bridge Loan) which provides for commitments of up to $ 2.0 billion to finance a portion of the repayment of Micro Focus’ existing debt.

The Bridge Loan has a one-year term from the initial date of funding, with an extension mechanism pursuant to which such borrowings would convert into secured financing maturing five years from the initial funding date.

Borrowings under the Bridge Loan would bear interest at rates as specified in the Bridge Loan Agreement, subject to a total cap.

The Bridge Loan is unconditionally guaranteed by certain subsidiary guarantors, as defined in the Bridge Loan Agreement, and is secured by a first charge on substantially all of the assets of the Company and the subsidiary guarantors on a pari passu basis with the Revolver, Term Loan B and Acquisition Term Loan.

The Company intends to reduce commitments or

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the borrowings under the Bridge Loan by accessing the debt capital markets directly or through certain affiliates prior to or following the closing of the Micro Focus Acquisition, but no assurance can be given that the Company will be able to do so.

The Company expects that such debt to also be secured.

As of September 30, 2022, we had no borrowings under the Bridge Loan.

For the three months ended September 30, 2022, we did not record any interest expense relating to the Bridge Loan (three months ended September 30, 2021— nil ).

Debt Issuance Costs

Debt issuance costs relate primarily to costs incurred for the purpose of obtaining our credit facilities and issuing our Senior Notes and are being amortized through interest expense over the respective terms of the Senior Notes and Term Loan B, Revolver, Acquisition Term Loan and Bridge Loan using the effective interest method.

Additionally, as of September 30, 2022, we had $ 47.0 million in deferred debt issuance costs included in “Other Assets” (see Note 9 “Prepaid Expenses and Other Assets” for more details).

NOTE 12— PENSION PLANS AND OTHER POST RETIREMENT BENEFITS

The following table provides details of our defined benefit pension plans and long-term employee benefit obligations for Open Text Document Technologies GmbH (CDT), GXS GmbH (GXS GER), GXS Philippines, Inc.

(GXS PHP) and other plans as of March 31, 2022 and June 30, 2021:

As of March 31, 2022

Total benefit

obligation Current portion of

benefit obligation (1)

Non-current portion of

benefit obligation

CDT defined benefit plan $ 27,158 $ 867 $ 26,291

GXS GER defined benefit plan 19,545 968 18,577

GXS PHP defined benefit plan 12,071 86 11,985

Other plans 20,126 615 19,511

Total $ 78,900 $ 2,536 $ 76,364

As of June 30, 2021

Total benefit

obligation Current portion of

benefit obligation (1)

Non-current portion of

benefit obligation

CDT defined benefit plan $ 32,865 $ 880 $ 31,985

GXS GER defined benefit plan 23,861 1,058 22,803

GXS PHP defined benefit plan 10,973 42 10,931

Other plans 9,594 802 8,792

Total $ 77,293 $ 2,782 $ 74,511

(1) The current portion of the benefit obligation has been included within “Accrued salaries, incentives and commissions”, all within “Accounts payable and accrued liabilities” in the Condensed Consolidated Balance Sheets (see note 10 “Accounts Payable and Accrued Liabilities”).

Defined Benefit Plans

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The net periodic cost of this pension plan is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs.

Aside from an initial contribution which has a fair value of $ 0.03 million as of March 31, 2022, no additional contributions have been made since the inception of the plan.

The following are the details of the change in the benefit obligation for each of the above mentioned pension plans for the periods indicated:

As of March 31, 2022 As of June 30, 2021

CDT GXS GER GXS PHP Total CDT GXS GER GXS PHP Total

Benefit obligation—beginning of fiscal year $ 32,865 $ 23,861 $ 10,973 $ 67,699 $ 32,851 $ 24,105 $ 10,270 $ 67,226

Service cost 273 126 1,420 1,819 473 206 1,822 2,501

Interest cost 326 232 457 1,015 505 364 469 1,338

Benefits paid ( 625 ) ( 743 ) ( 183 ) ( 1,551 ) ( 800 ) ( 1,027 ) ( 19 ) ( 1,846 )

Actuarial (gain) loss ( 3,110 ) ( 2,072 ) 268 ( 4,914 ) ( 1,976 ) ( 1,118 ) ( 1,853 ) ( 4,947 )

Foreign exchange (gain) loss ( 2,571 ) ( 1,859 ) ( 864 ) ( 5,294 ) 1,812 1,331 284 3,427

Benefit obligation—end of period 27,158 19,545 12,071 58,774 32,865 23,861 10,973 67,699

Current portion ( 867 ) ( 968 ) ( 86 ) ( 1,921 ) ( 880 ) ( 1,058 ) ( 42 ) ( 1,980 )

Non-current portion of benefit obligation $ 26,291 $ 18,577 $ 11,985 $ 56,853 $ 31,985 $ 22,803 $ 10,931 $ 65,719

Aside from an initial contribution which has a fair value of $( 0.03 ) million as of September 30, 2022, no additional contributions have been made since the inception of the plan.

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The following are details of net pension expense relating to the following pension plans:

Three Months Ended March 31,

Pension expense:

CDT GXS GER GXS PHP Total CDT GXS GER GXS PHP Total

Service cost $ 88 $ 41 $ 520 $ 649 $ 117 $ 51 $ 404 $ 572

Interest cost 105 75 164 344 125 90 104 319

Amortization of actuarial (gains) losses 117 6 ( 22 ) 101 175 28 — 203

Net pension expense $ 310 $ 122 $ 662 $ 1,094 $ 417 $ 169 $ 508 $ 1,094

Nine Months Ended March 31,

Three Months Ended September 30,

Pension expense:

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Service-related net periodic pension costs are recorded within operating expense and all other non-service related net periodic pension costs are classified under “Interest and other related expense, net” on our Condensed Consolidated Statements of Income.

In determining the fair value of the pension plan benefit obligations as of March 31, 2022 and June 30, 2021, respectively, we used the following weighted-average key assumptions:

As of March 31, 2022 As of June 30, 2021

CDT GXS GER GXS PHP CDT GXS GER GXS PHP

Salary increases 1.50 % 1.50 % 6.00 % 1.50 % 1.50 % 5.00 %

Pension increases 1.50 % 1.50 % N/A 1.50 % 1.50 % N/A

Discount rate 2.10 % 2.10 % 5.50 % 1.39 % 1.39 % 5.00 %

Normal retirement age 65 - 67

Employee fluctuation rate:

to age 20 — % — % 13.98 % — % — % 13.98 %

to age 25 — % — % 7.10 % — % — % 7.10 %

to age 30 1.00 % — % 3.00 % 1.00 % — % 3.00 %

to age 35 0.50 % — % 2.44 % 0.50 % — % 2.44 %

to age 40 — % — % 2.59 % — % — % 2.59 %

to age 45 0.50 % — % 1.15 % 0.50 % — % 1.15 %

to age 50 0.50 % — % — % 0.50 % — % — %

from age 51 1.00 % — % — % 1.00 % — % — %

Anticipated pension payments under the pension plans for the fiscal years indicated below are as follows:

Fiscal years ending June 30,

CDT GXS GER GXS PHP

2022 (three months ended) $ 203 $ 244 $ —

2023 886 965 116

2024 959 966 130

2025 1,002 989 175

2026 1,036 977 287

2027 to 2031 5,997 4,743 2,894

Total $ 10,083 $ 8,884 $ 3,602

Other plans include defined benefit pension plans that are offered or statutorily required by certain of our foreign subsidiaries.

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Cash Dividends

For the three and nine months ended March 31, 2022, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $ 0.2209 and $ 0.6627 per Common Share, respectively, in the aggregate amount of $ 59.1 million and $ 178.6 million, respectively, which we paid during the same period (three and nine months ended March 31, 2021—$ 0.2008 and $ 0.5762 per Common Share, respectively, in the aggregate amount of $ 54.5 million and $ 156.3 million, respectively).

For the three months ended September 30, 2022, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $ 0.24299 per Common Share in the aggregate amount of $ 64.7 million which we paid during the same period (three months ended September 30, 2021—$ 0.2209 per Common Share in the aggregate amount of $ 59.9 million).

Share Capital

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From time to time we may provide funds to an independent agent to facilitate repurchases of our Common Shares in connection with the settlement of awards under the Long-Term Incentive Plans (LTIP) or other plans.

During the three and nine months ended March 31, 2022, we repurchased 1,300,000 and 1,700,000 Common Shares, respectively, on the open market at a cost of $ 56.1 million and $ 75.7 million, respectively, for potential settlement of awards under “Long-Term Incentive Plans” and “Restricted Share Units” or other plans as described below (three and nine months ended March 31, 2021— 489,934 and 1,455,088 Common Shares, respectively, at a cost of $ 23.0 million and $ 64.8 million, respectively).

During the three and nine months ended March 31, 2022, we reissued nil and 491,244 Common Shares, respectively, from treasury stock in connection with the settlement of awards and other plans (three and nine months ended March 31, 2021— 23,640 and 509,721 Common Shares, respectively).

During the three months ended September 30, 2022 and 2021, we did not repurchase any Common Shares on the open market for potential settlement of awards under our LTIP or other plans as described below.

During the three months ended September 30, 2022, we delivered to eligible participants 120,406 Common Shares that were purchased in the open market in connection with the settlement of awards and other plans (three months ended September 30, 2021— 141,452 Common Shares).

Share Repurchase Plan

On November 5, 2020, the Board authorized a share repurchase plan (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 November 4, 2021, the Board authorized a share repurchase plan (Renewed 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.

During the three and nine months ended March 31, 2022, we repurchased and cancelled 1,000,000 and 2,809,559 Common Shares, respectively, for $ 45.1 million and $ 136.1 million, respectively (three and nine months ended March 31, 2021— nil , respectively).

Share repurchases during the three and nine months ended March 31, 2022 were completed under our share repurchase plans authorized on both November 5, 2020 and November 4, 2021.

On November 4, 2021, the Board authorized a share repurchase plan (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.

During the three months ended September 30, 2022 and 2021, we did not repurchase and cancel any Common Shares.

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Share-Based Payments

Total share-based compensation expense for the periods indicated below is detailed as follows:

Three Months Ended March 31, Nine Months Ended March 31,

2022 2021 2022 2021

Stock options $ 3,442 $ 3,460 $ 12,457 $ 11,329

Share-based compensation expense for the periods indicated below is detailed as follows:

Three Months Ended September 30,

Stock Options (issued under Stock Option Plans) $ 3,585 $ 4,267

Performance Share Units (issued under LTIP) 4,235 3,445

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Total share-based compensation expense $ 23,208 $ 13,934

Summary of Outstanding Stock Options

As of March 31, 2022, an aggregate of 9,009,585 options to purchase Common Shares were outstanding and an additional 9,450,921 options to purchase Common Shares were available for issuance under our stock option plans.

Our stock options generally vest over four years and expire between seven and ten years from the date of the grant.

Currently we also have options outstanding that vest over five years , as well as options outstanding that vest based on meeting certain market conditions.

The exercise price of all our options is set at an amount that is not less than the closing price of our Common Shares on the NASDAQ on the trading day immediately preceding the applicable grant date.

A summary of activity under our stock option plans for the nine months ended March 31, 2022 is as follows:

A summary of unrecognized compensation cost for unvested shared-based payment awards is as follows:

As of September 30, 2022

Unrecognized Compensation Cost Weighted Average Recognition Period (years)

Stock Options (issued under Stock Option Plans) 49,204.7 2.6

Performance Share Units (issued under LTIP) 45,389.4 2.5

Restricted Share Units (issued under LTIP) 23,596.2 1.8

Restricted Share Units (other) 76,748.6 1.9

Total unrecognized share-based compensation cost $ 194,938.9

Stock Option Plans

Stock Options

A summary of activity under our stock option plans for the three months ended September 30, 2022 is as follows:

Options Weighted-

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Forfeited or expired ( 505,374 ) 44.34

Outstanding at March 31, 2022

Outstanding at September 30, 2022

10,115,608 $ 41.38 4.87 $ —

Exercisable at March 31, 2022

Exercisable at September 30, 2022

3,651,940 $ 39.07 3.30 $ —

As of September 30, 2022, 8,227,818 options to purchase Common Shares were available for issuance under our stock option plans.

We estimate the fair value of stock options using the Black-Scholes option-pricing model or, where appropriate, the Monte Carlo pricing model, consistent with the provisions of ASC Topic 718, “Compensation—Stock Compensation” (Topic 718) and SEC Staff Accounting Bulletin No.

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Estimates of fair value are not intended, however, to predict actual future events or the value ultimately realized by employees who receive equity awards.

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For the periods indicated, the weighted-average fair value of options and weighted-average assumptions estimated under the Black-Scholes option-pricing model were as follows:

Three Months Ended March 31, Nine Months Ended March 31,

2022 2021 2022 2021

Three Months Ended September 30,

Weighted–average fair value of options granted $ 8.16 $ 9.75

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Average exercise share price $ 39.09 $ 52.62

As of March 31, 2022, the total compensation cost related to the unvested stock option awards not yet recognized was $ 44.2 million, which will be recognized over a weighted-average period of 2.9 years.

No cash was used by us to settle equity instruments granted under share-based compensation arrangements in any of the periods presented.

We have no t capitalized any share-based compensation costs as part of the cost of an asset in any of the periods presented.

The aggregate intrinsic value of options exercised during the three and nine months ended March 31, 2022 was $ 0.4 million and $ 16.7 million, respectively (three and nine months ended March 31, 2021—$ 2.1 million and $ 9.8 million, respectively).

For the three and nine months ended March 31, 2022, cash in the amount of $ 1.9 million and $ 31.1 million, respectively, was received as the result of the exercise of options granted under share-based payment arrangements (three and nine months ended March 31, 2021—$ 8.3 million and $ 23.8 million, respectively).

The tax benefit realized by us during the three and nine months ended March 31, 2022 from the exercise of options eligible for a tax deduction was $ 0.1 million and $ 1.6 million, respectively (three and nine months ended March 31, 2021—$ 0.3 million and $ 1.4 million, respectively).

Performance Options

During the three months ended September 30, 2022, we granted 1,000,000 performance options (during the three months ended September 30, 2021— nil ).

For the period in which performance options were granted, the weighted-average fair value of performance options and weighted-average assumptions estimated under the Monte Carlo pricing model were as follows:

Three Months Ended September 30,

Weighted–average fair value of options granted $ 8.09

Derived service period (in years) 1.7

Weighted-average assumptions used:

Expected volatility 26.00 %

Risk–free interest rate 3.21 %

Expected dividend yield 2.00 %

Average exercise share price $ 31.89

Long-Term Incentive Plans

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Target PSUs become vested upon the achievement of certain financial and/or operational performance criteria (the Performance Conditions) that are determined at the time of the grant.

Target RSUs become vested when an eligible employee remains employed throughout the vesting period.

RSUs become vested when an eligible employee remains employed throughout the vesting period.

PSUs and RSUs granted under the LTIP have been measured at fair value as of the effective date, consistent with Topic 718, and will be charged to share-based compensation expense over the remaining life of the plan.

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Stock options granted under the LTIP have been measured using the Black-Scholes option-pricing model, consistent with Topic 718.

As of March 31, 2022, the total expected compensation cost related to the unvested LTIP awards not yet recognized was $ 41.3 million, which is expected to be recognized over a weighted average period of 1.9 years.

LTIP grants that have recently vested, or have yet to vest, are described below.

LTIP grants are referred to in this Quarterly Report on Form 10-Q based upon the year in which the grants are expected to vest.

Grants made in Fiscal 2023 under the LTIP (collectively referred to as LTIP 2025), consisting of PSUs and RSUs, took effect in Fiscal 2023 starting on August 8, 2022.

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The RSUs are employee service-based awards and vest over the life of the LTIP 2025.

We settled the LTIP 2021 awards by issuing 349,792 Common Shares from treasury stock during our second quarter in Fiscal 2022, at a cost of $ 15.1 million.

Grants made in Fiscal 2020 under the LTIP (collectively referred to as LTIP 2022), consisting of PSUs and RSUs, took effect in Fiscal 2020 starting on August 5, 2019.

The Performance Conditions for vesting of the PSUs are based solely upon market conditions.

The RSUs are employee service-based awards and vest over the life of the LTIP 2022.

We expect to settle the LTIP 2022 awards in stock.

Grants made in Fiscal 2021 under the LTIP (collectively referred to as LTIP 2023), consisting of PSUs and RSUs, took effect in Fiscal 2021 starting on August 10, 2020.

The Performance Conditions for vesting of the PSUs are based solely upon market conditions.

The RSUs are employee service-based awards and vest over the life of the LTIP 2023.

We expect to settle the LTIP 2023 awards in stock.

Grants made in Fiscal 2022 under the LTIP (collectively referred to as LTIP 2024), consisting of PSUs and RSUs, took effect in Fiscal 2022 starting on August 9, 2021.

The Performance Conditions for vesting of the PSUs are based solely upon market conditions.

The RSUs are employee service-based awards and vest over the life of the LTIP 2024.

We expect to settle the LTIP 2024 awards in stock.

Restricted Share Units

In addition to the grants made in connection with the LTIP plans discussed above, from time to time, we may grant RSUs to certain employees in accordance with employment and other non-LTIP related agreements.

During the three months ended March 31, 2022, we granted RSUs through a special one-time grant for development, engagement and long-term retention to certain of our non-executive employees.

During the three and nine months ended March 31, 2022, we granted 2,459,929 RSUs, respectively, to employees (three and nine months ended March 31, 2021— nil and 484,956 RSUs, respectively).

RSUs vest over a specified contract date, typically three years from the respective date of grants.

As of March 31, 2022, the total expected compensation cost related to the unvested RSU awards not yet recognized was $ 106.9 million, which is expected to be recognized over a weighted average period of 2.1 years.

We expect to settle RSU awards in stock.

During the three and nine months ended March 31, 2022, we issued nil and 141,452 Common Shares, respectively, from treasury stock in connection with the settlement of vested RSUs, at a cost of nil and $ 5.9 million, respectively (three and nine months ended March 31, 2021— nil ).

We expect to settle the LTIP 2025 awards in Common Shares.

The LTIP 2025 PSU and RSU awards are eligible to receive dividend equivalent units that vest under the same conditions as the underlying grants.

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Performance Share Units (Issued Under LTIP)

A summary of activity under our performance share units issued under the LTIP for the three months ended September 30, 2022 is as follows:

Units Weighted-Average

Grant Date Fair Value Weighted-

Contractual Term

(years) Aggregate Intrinsic Value

Outstanding at June 30, 2022

812,937 $ 61.29 1.89 $ 30,762

526,865 54.70

Forfeited or expired ( 58,350 ) 67.10

Outstanding at September 30, 2022

1,281,452 $ 58.37 2.12 $ 33,882

__________________________

(1) PSUs are earned based on market conditions and the actual number of PSUs earned, if any, is dependent upon performance and may range from 0 to 200 percent.

For the periods indicated, the weighted-average fair value of PSUs issued under LTIP, and weighted-average assumptions estimated under the Monte Carlo pricing model were as follows:

Three Months Ended September 30,

Weighted–average fair value of performance share units granted $ 55.06 $ 75.15

Weighted-average assumptions used:

Expected volatility 29.00 % 28.00 %

Risk–free interest rate 3.13 % 0.45 %

Expected dividend yield — % 1.70 %

Expected life (in years) 3.11 3.10

Forfeiture rate (based on historical rates) 7 % 7 %

Restricted Share Units (Issued Under LTIP)

A summary of activity under our RSUs issued under the LTIP for the three months ended September 30, 2022 is as follows:

Units Weighted-Average

Grant Date Fair Value Weighted-

Contractual Term

(years) Aggregate Intrinsic Value

Outstanding at June 30, 2022

611,743 $ 44.14 1.62 $ 23,148

Granted 394,584 38.97

Forfeited or expired ( 45,030 ) 45.85

Outstanding at September 30, 2022

961,297 $ 41.94 2.07 $ 25,417

Restricted Share Units (Other)

In addition to the grants made in connection with the LTIP discussed above, from time to time, we may grant RSUs to certain employees in accordance with employment and other non-LTIP related agreements.

RSUs (other) vest over a specified contract date, typically two or three years from the respective date of grants.

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A summary of activity under our RSUs (other) issued for the three months ended September 30, 2022 is as follows:

Units Weighted-Average

Grant Date Fair Value Weighted-

Contractual Term

(years) Aggregate Intrinsic Value

Outstanding at June 30, 2022

2,593,707 $ 44.90 2.86 $ 98,146

Vested ( 120,406 ) 37.83

Forfeited or expired ( 88,587 ) 44.84

Outstanding at September 30, 2022

2,384,714 $ 44.86 2.68 $ 63,052

Deferred Share Units (DSUs)

During the three and nine months ended March 31, 2022, we granted 5,058 and 78,705 DSUs, respectively, to certain non-employee directors (three and nine months ended March 31, 2021— 5,015 and 81,585 DSUs, respectively).

The DSUs were issued under our Deferred Share Unit Plan.

The DSUs are granted to certain non-employee directors.

DSUs are issued under our Deferred Share Unit Plan.

DSUs granted as compensation for director fees vest immediately, whereas all other DSUs granted vest at our next annual general meeting following the granting of the DSUs.

No DSUs are payable by us until the director ceases to be a member of the Board.

During the three and nine months ended March 31, 2022, respectively, we did no t issue any of our Common Shares from treasury stock in connection with the settlement of vested DSUs (three and nine months ended March 31, 2021— 23,640 Common Shares, respectively, at a cost of $ 1.1 million, respectively).

A summary of activity under our deferred share units issued for the three months ended September 30, 2022 is as follows:

Units Weighted-Average

Price Weighted-

Contractual Term

(years) Aggregate Intrinsic Value

Outstanding at June 30, 2022 (1)

885,701 $ 31.49 0.36 $ 33,515

Granted 13,747 32.41

Outstanding at September 30, 2022 (1)

899,448 $ 31.50 0.10 $ 21,934

______________________

(1) Includes 55,520 unvested DSUs.

Employee Stock Purchase Plan (ESPP)

Our ESPP offers employees the opportunity to purchase our Common Shares at a purchase price discount of 15 %.

During the three and nine months ended March 31, 2022, 246,473 and 644,986 Common Shares, respectively, were eligible for issuance to employees enrolled in the ESPP (three and nine months ended March 31, 2021— 204,812 and 572,219 Common Shares, respectively).

During the three and nine months ended March 31, 2022, cash in the amount of $ 8.9 million and $ 25.3 million, respectively, was received from employees relating to the ESPP (three and nine months ended March 31, 2021—$ 8.3 million and $ 22.0 million, respectively).

During the three months ended September 30, 2022, 354,465 Common Shares were eligible for issuance to employees enrolled in the ESPP (three months ended September 30, 2021— 225,731 Common Shares).

During the three months ended September 30, 2022, cash in the amount of $ 8.0 million was received from employees relating to the ESPP (three months ended September 30, 2021—$ 9.4 million).

NOTE 14— GUARANTEES AND CONTINGENCIES

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Payments due between

Total April 1, 2022 -

Total October 1, 2022 -

June 30, 2023 July 1, 2023 -

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$ 5,429,196 $ 170,258 $ 1,333,509 $ 276,179 $ 3,649,250

_________________________

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

Please see Note 11 “Long-Term Debt” for more details.

(2) For contractual obligations relating to leases and purchase obligations accounted for under Topic 842, please see note 6 “Leases”.

(2) For contractual obligations relating to leases and purchase obligations accounted for under ASC Topic 842, please see Note 6 “Leases.”

Guarantees and Indemnifications

We have entered into customer agreements which may include provisions to indemnify our customers against third party claims that our software products or services infringe certain third party intellectual property rights and for liabilities related to a breach of our confidentiality obligations.

We have entered into customer agreements which may include provisions to indemnify our customers against third-party claims that our software products or services infringe certain third-party intellectual property rights and for liabilities related to

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a breach of our confidentiality obligations.

We have not made any material payments in relation to such indemnification provisions and have not accrued any liabilities related to these indemnification provisions in our Condensed Consolidated Financial Statements.

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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.

Assuming the utilization of available tax attributes (further described below), we estimate our potential aggregate liability, as of March 31, 2022, in connection with the CRA's reassessments for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016, to be limited to penalties, interest and provincial taxes that may be due of approximately $ 75 million.

As of March 31, 2022, we have provisionally paid approximately $ 34 million in order to fully preserve our rights to object to the CRA's audit positions, being the minimum payment required under Canadian legislation while the matter is in dispute.

This amount is recorded within “Long-term income taxes recoverable” on the Condensed Consolidated Balance Sheets as of March 31, 2022.

Assuming the utilization of available tax attributes (further described below), we estimate our potential aggregate liability, as of September 30, 2022, in connection with the CRA's reassessments for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016, to be limited to penalties, interest and provincial taxes that may be due of approximately $ 70 million.

As of September 30, 2022, we have provisionally paid approximately $ 32 million in order to fully preserve our rights to object to the CRA's audit positions, being the minimum payment required under Canadian legislation while the matter is in dispute.

This amount is recorded within “Long-term income taxes recoverable” on the Condensed Consolidated Balance Sheets as of September 30, 2022.

The notices of reassessment for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016 would, as drafted, increase our taxable income by approximately $ 90 million to $ 100 million for each of those years, as well as impose a 10 % penalty on the proposed adjustment to income.

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 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 has also been auditing Fiscal 2017 on a basis that we strongly disagree with and will vigorously contest.

The CRA has 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.

In accordance with applicable rules, these assets were recognized for tax purposes at fair market value as of that time, which value was supported by an expert valuation prepared by an independent leading accounting and advisory firm.

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 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.

Other aspects of CRA’s position for Fiscal 2017 conflict with the expert valuation prepared by the

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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 a basis consistent with its proposal to reduce the available depreciable basis of assets in Canada.

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

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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 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.

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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.

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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.

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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 Court held a hearing to construe the claims of the asserted patents.

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.

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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.

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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 our Annual Report on Form 10-K for Fiscal 2022.

NOTE 15— INCOME TAXES

Our effective tax rate represents the net effect of the mix of income earned in various tax jurisdictions that are subject to a wide range of income tax rates.

The effective tax rate increased to a provision of 35.5 % for the three months ended March 31, 2022, compared to a provision of 25.8 % for the three months ended March 31, 2021.

Tax expense increased from $ 31.8 million during the three months ended March 31, 2021 to $ 41.0 million during the three months ended March 31, 2022.

This was primarily due to (i) an increase of $ 10.6 million related to the US Base Erosion and Anti-Abuse Tax (US BEAT) and (ii) an increase of $ 4.4 million relating to tax impacts of legal entity rationalization.

These were partially offset by (i) a net decrease of $ 2.9 million related to Foreign Accrual Property Income and (ii) a net increase of $ 2.1 million benefit related to the 50 % exclusion on gains in certain investment funds in which we are a limited partner.

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

The effective tax rate decreased to a provision of 29.6 % for the nine months ended March 31, 2022, compared to a provision of 72.5 % for the nine months ended March 31, 2021.

Tax expense decreased from $ 342.1 million during the nine months ended March 31, 2021 to $ 123.8 million during the nine months ended March 31, 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 $ 11.3 million related to differences in tax filings, (iii) a net decrease of $ 5.9 million for related Subpart F and (iv) an increase of $ 5.2 million benefit related to the 50 % exclusion on gains in certain investment funds in which we are a limited partner.

These were partially offset by (i) an increase of $ 90.6 million for changes in unrecognized tax benefits, (ii) a net increase of $ 17.0 million related to internal reorganizations and (iii) a decrease of $ 4.4 million in share-based compensation benefits.

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

We recognize interest expense and penalties related to income tax matters in income tax expense.

For the three and nine months ended March 31, 2022 and 2021, respectively, we recognized the following amounts as income tax-related interest expense and penalties:

Three Months Ended March 31, Nine Months Ended March 31,

2022 2021 2022 2021

Interest expense $ 336 $ 1,315 $ 803 $ 45,422

Penalties expense 245 506 418 889

Total $ 581 $ 1,821 $ 1,221 $ 46,311

The following amounts have been accrued on account of income tax-related interest expense and penalties:

As of March 31, 2022 As of June 30, 2021

Interest expense accrued (1)

$ 5,751 $ 5,166

Penalties accrued (1)

$ 2,553 $ 2,605

(1) These balances are primarily included within “Long-term income taxes payable” within the Condensed Consolidated Balance Sheets.

We believe that it is reasonably possible that the gross unrecognized tax benefits, as of March 31, 2022, could decrease tax expense in the next 12 months by $ 3.1 million, relating primarily to the expiration of competent authority relief and tax years becoming statute barred for purposes of future tax examinations by local taxing jurisdictions.

Our four most significant tax jurisdictions are Canada, the United States, Luxembourg and Germany.

Our tax filings remain subject to audits by applicable tax authorities for a certain length of time following the tax year to which those filings relate.

The earliest fiscal years open for examination are 2012 for Canada, 2016 for the United States and 2012 for Germany.

The Company’s effective tax rate for the three months ended September 30, 2022, was ( 40.4 )%, compared to a provision of 24.8 % for the three months ended September 30, 2021.

The Company’s effective tax rate for the three months ended September 30, 2022, differs from the Canadian statutory rate of 26.5% primarily due to the pre-tax loss created by the mark-to-market valuation on the derivatives not designated as hedges that the Company entered into in connection with the proposed Micro Focus Acquisition, and the inability to recognize a majority of the mark-to-market losses for tax purposes (see Note 17 “Derivative Instruments and Hedging Activities”).

The mark-to-market losses are considered capital losses for tax purposes and require capital income to be recognized.

Therefore we recorded a valuation allowance on the portion of the losses that are not supportable by capital gains.

Other items impacting the rate include provision to return adjustments, a net increase in uncertain tax positions, and permanent items such as disallowed stock-based compensation and foreign passive income inclusion, partially offset by research and development credits.

The Company’s effective tax rate for the three months ended September 30, 2021, differs from the Canadian statutory rate primarily due to research and development credits, partially offset by US Base Erosion and Anti-Abuse Tax (US BEAT).

As of September 30, 2022, the gross amount of unrecognized tax benefits accrued is $ 58.9 million, which is inclusive of interest and penalties accrued of $ 8.6 million (June 30, 2022 — $ 54.1 million and $ 8.4 million, respectively).

We believe that it is reasonably possible that the gross unrecognized tax benefit could decrease by $ 6.8 million in the next 12 months, relating primarily to the expiration of competent authority relief and tax years becoming statute barred for purposes of future tax examinations by local taxing jurisdictions.

We are subject to income tax audits in all major taxing jurisdictions in which we operate, and remain subject to income tax audits by applicable tax authorities for a certain length of time following the tax year to which those tax filings relate.

We currently have income tax audits open in Canada, the United States, Germany and other immaterial jurisdictions.

The earliest fiscal years open for examination for our major jurisdictions are 2012 for Canada, 2016 for the United States and 2012 for Germany.

As of December 31, 2021, the Fiscal 2015 and Fiscal 2016 tax years for Luxembourg became statute barred.

We are subject to income tax audits in all major taxing jurisdictions in which we operate and currently have income tax audits open in Canada, the United States, Germany, India and France.

On a quarterly basis we assess the status of these examinations and the potential for adverse outcomes to determine the adequacy of the provision for income and other taxes.

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For more information relating to certain income tax audits, please refer to Note 14 “Guarantees and Contingencies.”

As of March 31, 2022, we have recognized a provision of $ 29.2 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.

As of September 30, 2022, we have recognized a provision of $ 20.7 million (June 30, 2022—$ 19.9 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 not provided for additional foreign withholding taxes or deferred income tax liabilities related to undistributed earnings of all other non-Canadian subsidiaries, since such earnings are considered permanently invested in those subsidiaries or are not subject to withholding taxes.

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In addition, the fair value of liabilities should include consideration of non-performance risk, including our own credit risk.

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In addition to defining fair value and addressing disclosure requirements, Topic 820 establishes a fair value hierarchy for valuation inputs.

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Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis:

Our financial assets and liabilities measured at fair value on a recurring basis consisted of the following types of instruments as of March 31, 2022 and June 30, 2021:

March 31, 2022 June 30, 2021

Fair Market Measurements using:

March 31, 2022 Quoted prices

(liabilities) Significant

inputs Significant

inputs June 30, 2021 Quoted prices

(liabilities) Significant

inputs Significant

(Level 1) (Level 2) (Level 3) (Level 1) (Level 2) (Level 3)

Our financial assets and liabilities that are measured at fair value on a recurring basis consisted of the following types of instruments as of September 30, 2022 and June 30, 2022:

Fair Value Hierarchy September 30, 2022 June 30, 2022

Financial Assets (Liabilities):

Foreign currency forward contracts designated as cash flow hedges (note 17) $ 559 $ — $ 559 $ — $ 1,131 $ — $ 1,131 $ —

Total $ 559 $ — $ 559 $ — $ 1,131 $ — $ 1,131 $ —

Our valuation techniques used to measure the fair values of the derivative instruments, the counterparty to which has high credit ratings, were derived from pricing models including discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data, as no quoted market prices exist for these instruments.

Designated as Hedging Instruments

Cash flow hedge (Note 17)

Level 2 $ ( 4,637 ) $ ( 892 )

Not Designated as Hedging Instruments

Deal-contingent forward contracts (Note 17)

Level 3 $ ( 125,331 ) $ —

Non-contingent forward contract (Note 17)

Level 2 $ ( 26,203 ) $ —

Cross currency swap contract (Note 17)

Level 2 $ ( 29,927 ) $ —

Changes in Level 3 Fair Value Measurements

The following tables provides a reconciliation of changes in the fair value of our Level 3 deal-contingent foreign currency forward contract between June 30, 2022 and September 30, 2022.

Deal-contingent foreign currency forward contract

Balance as of June 30, 2022

Gain (loss) recognized in income ( 125,331 )

Balance as of September 30, 2022

$ ( 125,331 )

Our valuation techniques used to measure the fair value of our Level 2 and Level 3 derivative instruments, the counterparties to which have high credit ratings, were derived from pricing models including discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data, as no quoted market prices exist for these instruments.

Our discounted cash flow techniques use observable market inputs, such as, where applicable, foreign currency spot and forward rates.

The valuation technique for our Level 3 derivative instrument utilizes management estimates related to the probability and timing of our proposed Micro Focus Acquisition that are unobservable, and are not deemed to be significant inputs for the overall valuation.

Our cash and cash equivalents, along with our accounts receivable and accounts payable and accrued liabilities balances, are measured and recognized in our Condensed Consolidated Financial Statements at an amount that approximates the fair value (a Level 2 measurement) due to their short maturities.

The fair value of our Senior Notes is determined based on observable market prices and categorized as a Level 2 measurement.

As of March 31, 2022, the fair value was $ 3.1 billion (June 30, 2021—$ 2.7 billion).

As of September 30, 2022, the fair value was $ 2.6 billion (June 30, 2022—$ 2.8 billion).

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

Please see Note 11 “Long-Term Debt” for further details.

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If applicable, we will recognize transfers between levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs.

During the three and nine months ended March 31, 2022 and 2021, respectively, we did not have any transfers between Level 1, Level 2 or Level 3.

During the three months ended September 30, 2022 and 2021, respectively, we did not have any transfers between Level 1, Level 2 or Level 3.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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These assets and liabilities are recognized at fair value when they are deemed to be other-than-temporarily impaired.

During the three and nine months ended March 31, 2022 and 2021, respectively, no indications of impairments were identified and therefore no fair value measurements were required.

During the three months ended September 30, 2022 and 2021, respectively, no indications of impairments were identified and therefore no fair value measurements were required.

NOTE 17— DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Foreign Currency Forward Contracts

Cash Flow Hedge

We are engaged in hedging programs with various banks to limit the potential foreign exchange fluctuations incurred on future cash flows relating to a portion of our Canadian dollar payroll expenses.

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As the critical terms of the hedging instrument and of the entire hedged forecasted transaction are the same, in accordance with Topic 815, we have been able to conclude that changes in fair value or cash flows attributable to the risk being hedged are expected to completely offset at inception and on an ongoing basis.

Accordingly, quarterly unrealized gains or losses on the effective portion of these forward contracts have been included within “Other Comprehensive Income (Loss) - net”.

The fair value of the contracts, as of March 31, 2022, is recorded within “Prepaid expenses and other current assets” and represents the net gain before tax effect that is expected to be reclassified from accumulated other comprehensive income into earnings with the next twelve months.

As of March 31, 2022, the notional amount of forward contracts we held to sell U.S.

Accordingly, quarterly unrealized gains or losses on the effective portion of these forward contracts have been included within “Other Comprehensive Income (Loss) - net.” As of September 30, 2022, the fair value of the contracts is recorded within “Accounts payable and accrued liabilities” and represents the net loss before tax effect that is expected to be reclassified from accumulated other comprehensive income (loss) into earnings with the next twelve months.

As of September 30, 2022, the notional amount of forward contracts we held to sell U.S.

dollars in exchange for Canadian dollars was $ 79.0 million (June 30, 2022—$ 66.5 million).

Non-designated Hedges

In connection with the Micro Focus Acquisition, in August 2022, the Company entered into certain derivative transactions to meet certain foreign currency obligations under UK cash confirmation requirements related to the purchase price of the proposed Micro Focus Acquisition, mitigate the risk of foreign currency appreciation in the GBP denominated purchase price and mitigate the risk of foreign currency appreciation in the EUR denominated existing debt held by Micro Focus.

The Company entered into the following derivatives:

(i) three deal-contingent forward contracts, (ii) a non-contingent forward contract, and (iii) EUR/USD cross currency swaps.

The deal-contingent forward contracts have an aggregate notional amount of £ 1.475 billion, and settlement is contingent upon closing the Micro Focus Acquisition.

The non-contingent forward contract has a notional amount of £ 350 million.

The cross currency swaps are comprised of a 5 year EUR/USD cross currency swap with a notional amount of € 690 million and a 7 year EUR/USD cross currency swap with a notional amount of € 690 million.

These instruments were entered into as economic hedges to mitigate foreign currency risks associated with the proposed Micro Focus Acquisition.

The instruments do not qualify for hedge accounting at inception.

Derivative financial instruments that do not apply hedge accounting are recognized on the Condensed Consolidated Balance Sheets as either assets or liabilities.

As of September 30, 2022, the forward contracts and the foreign currency swaps are in a net liability position and are classified within “Accounts payable and accrued liabilities.” The forward contracts and cross currency swaps are measured at fair value with changes to fair value being recognized in the Condensed Consolidated Statements of Income within “Other income (expense), net.”

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Fair Value of Derivative Instruments and Effect of Derivative Instruments on Financial Performance

The effect of these derivative instruments on our Condensed Consolidated Financial Statements for the periods indicated below were as follows (amounts presented do not include any income tax effects).

Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets (see note 16 “Fair Value Measurement”)

As of March 31, 2022 As of June 30, 2021

Derivatives Balance Sheet Location Fair Value

Asset (Liability) Fair Value

Asset (Liability)

Foreign currency forward contracts designated as cash flow hedges Prepaid expenses and other current assets (Accounts payable and accrued liabilities) $ 559 $ 1,131

Effects of Derivative Instruments on Income and Other Comprehensive Income (OCI) (Loss)

Three and Nine Months Ended March 31, 2022

Derivatives in Cash Flow Hedging Relationship Amount of Gain or (Loss) Recognized in OCI (Loss) on Derivatives (Effective Portion) Location of Gain or (Loss)

Reclassified from Accumulated OCI into Income (Loss)

(Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Loss)

(Effective Portion)

Three Months Ended March 31, 2022 Nine Months Ended March 31, 2022 Three Months Ended March 31, 2022 Nine Months Ended March 31, 2022

Foreign currency forward contracts $ 881 $ ( 455 ) Operating expenses $ ( 298 ) $ 117

Three and Nine Months Ended March 31, 2021

Derivatives in Cash Flow Hedging Relationship Amount of Gain or (Loss) Recognized in OCI (Loss) on Derivatives (Effective Portion) Location of Gain or (Loss)

Reclassified from Accumulated OCI into Income (Loss)

(Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Loss)

The fair values of outstanding derivative instruments are as follows:

September 30, 2022 As of

June 30, 2022

Instrument Balance Sheet Location Asset Liability Asset Liability

Derivatives designated as hedges:

Cash flow hedge Accounts payable and accrued liabilities $ — $ ( 4,637 ) $ — $ ( 892 )

Total derivatives designated as hedges:

$ — $ ( 4,637 ) $ — $ ( 892 )

Derivatives not designated as hedges:

Deal-contingent forward contracts Accounts payable and accrued liabilities — ( 125,331 ) — —

Non-contingent forward contract Accounts payable and accrued liabilities — ( 26,203 ) — —

Cross currency swap contracts Accounts payable and accrued liabilities — ( 29,927 ) — —

Total derivatives not designated as hedges:

$ — $ ( 181,461 ) $ — $ —

Total derivatives $ — $ ( 186,098 ) $ — $ ( 892 )

The effects of gains (losses) from derivative instruments on our Condensed Consolidated Statements of Income is as follows:

Three Months Ended September 30,

Instrument Income Statement Location 2022 2021

Derivatives designated as hedges:

Cash flow hedges Operating expenses $ ( 800 ) $ 390

Derivatives not designated as hedges:

Deal-contingent forward contract Other income (expense), net ( 125,331 ) —

Non-contingent forward contract Other income (expense), net ( 26,203 ) —

Cross currency swap contracts Other income (expense), net ( 29,927 ) —

Total $ ( 182,261 ) $ 390

The effects of the cash flow hedges on our Condensed Consolidated Statements of Comprehensive Income:

Three Months Ended September 30,

Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income Location

Gain (loss) recognized in OCI (loss) on derivatives (effective portion) Unrealized gain (loss) on cash flow hedges $ ( 4,546 ) $ ( 1,477 )

Gain (loss) reclassified from AOCI into income

(effective portion)

Three Months Ended March 31, 2021 Nine Months Ended March 31, 2021 Three Months Ended March 31, 2021 Nine Months Ended March 31, 2021

Foreign currency forward contracts $ 927 $ 4,910 Operating expenses $ 1,507 $ 2,574

Operating expenses $ ( 800 ) $ 390

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NOTE 18— SPECIAL CHARGES (RECOVERIES)

Special charges (recoveries) include costs and recoveries that relate to certain restructuring initiatives that we have undertaken from time to time under our various restructuring plans, as well as acquisition-related costs and other charges.

Three Months Ended March 31, Nine Months Ended March 31,

2022 2021 2022 2021

Fiscal 2022 Restructuring Plan $ 464 $ — $ 464 $ —

COVID-19 Restructuring Plan ( 495 ) 153 ( 1,310 ) ( 7,581 )

Three Months Ended September 30,

Fiscal 2022 Restructuring Plan $ 6,110 $ —

Restructuring Plans prior to Fiscal 2020 Restructuring Plan 15 10 ( 64 ) 11

Other historical restructuring plans ( 468 ) ( 602 )

Acquisition-related costs 4,585 728

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On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.

During the three and nine months ended March 31, 2022, we recorded charges of $ 0.5 million, respectively, related to workforce reductions.

As of March 31, 2022, we expect total costs to be incurred in connection with the Fiscal 2022 Restructuring Plan to be approximately $ 30.0 million to $ 35.0 million, of which $ 0.5 million has been recorded within “Special charges (recoveries)” to date.

A reconciliation of the beginning and ending restructuring liability, which is included within “Accounts payable and accrued liabilities” in our Condensed Consolidated Balance Sheets, for the nine months ended March 31, 2022 is shown below.

Fiscal 2022 Restructuring Plan Workforce reduction Total

Balance payable as of June 30, 2021

Accruals and adjustments 464 464

Cash payments ( 111 ) ( 111 )

Foreign exchange and other non-cash adjustments 2 2

Balance payable as of March 31, 2022

COVID-19 Restructuring Plan

During the fourth quarter of Fiscal 2020, in response to the COVID-19 pandemic, we made a strategic decision to move towards a significant work from home model.

We began to implement restructuring activities to streamline our operations and significantly reduce our real estate footprint around the world (COVID-19 Restructuring Plan).

The COVID-19 Restructuring Plan charges relate to workforce reductions and facility costs, including the accelerated amortization associated with the abandonment of ROU assets, the write-off of fixed assets and other related variable lease and exit costs.

These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries.

Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded.

On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.

With respect to the COVID-19 Restructuring Plan, at the time of initial abandonment we assumed there would be no additional sublease income, lease assignments or early terminations from vacated facilities.

During the three and nine months ended March 31, 2022, we recorded net recoveries of $ 0.5 million and $ 1.3 million, respectively, related to abandoned facilities and workforce reductions.

During the three and nine months ended March 31, 2021, we recorded net recoveries of $ 1.5 million and $ 15.4 million, respectively, related to office space that was abandoned during the fourth quarter of Fiscal 2020 and has since been early terminated or assigned to a third party.

Included in these recoveries are $ 2.2 million and $ 12.3 million, respectively, related to the reversal of lease liabilities (see note 6 “Leases”), with the remainder related to other facility charges and recoveries.

Additionally, during the three and nine months ended March 31, 2021, we incurred $ 1.6 million and $ 7.8 million, respectively, of charges related to abandoned facilities, workforce reductions and the write-off of fixed assets.

Since the inception of the COVID-19 Restructuring Plan, $ 43.4 million has been recorded within “Special charges (recoveries)” to date.

We do not expect to incur any further significant charges relating to the COVID-19 Restructuring Plan.

A reconciliation of the beginning and ending restructuring liability, which is included within “Accounts payable and accrued liabilities” and “Long-term accrued liabilities” in our Condensed Consolidated Balance Sheets, for the nine months ended March 31, 2022 is shown below.

COVID-19 Restructuring Plan Workforce reduction Facility charges Total

Balance payable as of June 30, 2021

$ 255 $ 4,010 $ 4,265

Accruals and adjustments ( 101 ) ( 1,462 ) ( 1,563 )

Cash payments ( 144 ) 318 174

Foreign exchange and other non-cash adjustments ( 10 ) ( 302 ) ( 312 )

Balance payable as of March 31, 2022

$ — $ 2,564 $ 2,564

Fiscal 2020 Restructuring Plan

During Fiscal 2020, we began to implement restructuring activities to streamline our operations (Fiscal 2020 Restructuring Plan), including in connection with our acquisitions of Carbonite and XMedius, to take further steps to improve our operational efficiency.

The Fiscal 2020 Restructuring Plan charges relate to workforce reductions and facility costs, including the accelerated amortization associated with the abandonment of ROU assets, the write-off of fixed assets and other related variable lease and exit costs.

These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries.

Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded.

On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.

With respect to the Fiscal 2020 Restructuring Plan, at the time of the initial abandonment we assumed there would be no additional sublease income, lease assignments or early terminations from vacated facilities.

During the three and nine months ended March 31, 2022, we recorded immaterial charges and net recoveries of $ 0.1 million respectively, related to abandoned facilities and workforce reductions.

During the three and nine months ended March 31, 2021, we recorded net recoveries of $ 0.6 million and $ 13.6 million, respectively, related to office space that was abandoned during the fourth quarter of Fiscal 2020 and has since been early terminated or assigned to a third party.

Included in these recoveries are $ 1.0 million and $ 10.0 million, respectively, related to the reversal of lease liabilities (see note 6 “Leases”), with the remainder related to other facility charges and recoveries.

Additionally, during the three and nine months ended March 31, 2021, we recognized a net recovery of $ 0.1 million and charges of $ 14.1 million, respectively, related to abandoned facilities, workforce reductions and the write-off of fixed assets.

Since the inception of the Fiscal 2020 Restructuring Plan, $ 30.2 million has been recorded within “Special charges (recoveries)” to date.

We do not expect to incur any further significant charges relating to the Fiscal 2020 Restructuring Plan.

During the three months ended September 30, 2022, we recognized costs of $ 3.8 million related to abandoned office space that have been early terminated or assigned to a third party, of which $ 2.9 million was related to the write-off of right of use assets.

As of September 30, 2022, we expect total costs to be incurred in connection with the Fiscal 2022 Restructuring Plan to be approximately $ 40.0 million to $ 45.0 million, of which $ 31.9 million has been recorded within “Special charges (recoveries)” to date.

Fiscal 2022 Restructuring Plan Workforce reduction Facility charges Total

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Foreign exchange and other non-cash adjustments ( 120 ) — ( 120 )

Balance payable as of March 31, 2022

Balance payable as of September 30, 2022

$ 1,992 $ 5,931 $ 7,923

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Acquisition-related costs, recorded within “Special charges (recoveries)” include direct costs of potential and completed acquisitions.

Acquisition-related costs for the three and nine months ended March 31, 2022 were $ 1.3 million and $ 6.0 million, respectively (three and nine months ended March 31, 2021—$ 3.1 million and $ 4.6 million, respectively).

Acquisition-related costs for the three months ended September 30, 2022 were $ 4.6 million (three months ended September 30, 2021—$ 0.7 million).

Other charges (recoveries)

For the three and nine months ended March 31, 2022, “Other charges” includes $ 9.6 million and $ 11.6 million, respectively, related to pre-acquisition equity incentives, which upon acquisition were replaced by equivalent value cash settlements (see note 19 “Acquisitions”) and $ 0.1 million and $ 4.1 million, respectively, related to other miscellaneous charges.

For the three and nine months ended March 31, 2021, “Other charges” includes $ 0.3 million and $ 1.1 million, respectively, related to other miscellaneous charges.

For the three months ended September 30, 2022, “Other charges” includes $ 3.6 million, related to pre-acquisition equity incentives of Zix Corporation (Zix), which upon acquisition were replaced by equivalent value cash settlements (see Note 19 “Acquisitions”) and $ 0.5 million related to other miscellaneous charges.

For the three months ended September 30, 2021, “Other charges” includes $ 0.2 million related to other miscellaneous charges.

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NOTE 19— ACQUISITIONS

Fiscal 2023 Acquisitions

Proposed Acquisition of Micro Focus

On August 25, 2022, we announced an agreement on the terms of an all-cash offer (through our wholly-owned subsidiary), to acquire the entire issued and to be issued share capital of Micro Focus, at a price of 532 pence per share, for a total purchase price of approximately $ 6.0 billion, inclusive of Micro Focus’ cash and debt.

The all-cash consideration for the Micro Focus Acquisition is expected to be funded by new debt, cash on hand and a draw on our Revolver.

Concurrent with the announcement of the Micro Focus Acquisition, the Company entered into the Acquisition Term Loan and Bridge Loan (see Note 11 “Long-Term Debt”) as well as certain derivative transactions (see Note 17 “Derivative Instruments and Hedging Activities”).

These derivative transactions were marked-to-market during the three months ended September 30, 2022, with the resulting unrealized gains (losses) on these derivatives recognized in other income (expense) within our Condensed Consolidated Statements of Income (see Note 22 “Other Income (Expense), Net”).

On October 18, 2022 the shareholders of Micro Focus approved the all-cash offer.

The Micro Focus Acquisition is expected to close in the first quarter of calendar 2023, subject to the satisfaction (or, where applicable, waiver) of certain conditions.

See Part II, Item 1A, “Risk Factors” included within this Quarterly Report on Form 10-Q.

Acquisition-related costs for Micro Focus included in “Special Charges (Recoveries)” in the Condensed Consolidated Financial Statements for the three months ended September 30, 2022 were $ 4.4 million.

Fiscal 2022 Acquisitions

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 small and medium-sized businesses (SMB).

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

Total consideration for Zix was $ 894.5 million paid in cash, inclusive of cash acquired and $ 18.6 million relating to the cash settlement of pre-acquisition vested share-based compensation that was previously accrued but since paid as of March 31, 2022.

In accordance with ASC Topic 805 “Business Combinations” (Topic 805), this acquisition was accounted for as a business combination.

In accordance with Accounting Standards Codification (ASC) Topic 805 “Business Combinations” (Topic 805), this acquisition was accounted for as a business combination.

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

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The gross amount receivable was $ 32.7 million, of which $ 4.3 million is expected to be uncollectible.

Acquisition-related costs for Zix included in “Special charges (recoveries)” in the Condensed Consolidated Financial Statements for the three and nine months ended March 31, 2022 were $ 0.6 million and $ 2.7 million, respectively.

Acquisition-related costs for Zix included in “Special Charges (Recoveries)” in the Condensed Consolidated Financial Statements for the three months ended September 30, 2022 were $ 0.2 million.

Table of C ontents

Pre-acquisition equity incentives of $ 26.4 million were replaced upon acquisition by equivalent value cash settlements to be settled in accordance with the original vesting dates, primarily over the next two years .

Of these equity incentives, $ 9.6 million and $ 11.6 million for the three and nine months ended March 31, 2022, respectively, were included in “Special charges (recoveries).”

Of these equity incentives, $ 3.6 million for the three months ended September 30, 2022 were included in “Special Charges (Recoveries).”

The finalization of the above purchase price allocation is pending the finalization of the valuation of fair value for the assets acquired and liabilities assumed, including intangible assets and taxation-related balances as well as for potential unrecorded liabilities.

We expect to finalize this determination on or before our quarter ending December 31, 2022.

Since the date of acquisition, the acquisition had no significant impact on revenues and net earnings for the three and nine months ended March 31, 2022.

Pro forma results of operations for this acquisition have not been presented because they are not material to our consolidated results of operations.

We expect to finalize this determination during our quarter ending December 31, 2022.

Acquisition of Bricata Inc.

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

Since the date of acquisition, the acquisition had no significant impact on revenues and net earnings for the three and nine months ended March 31, 2022.

Pro forma results of operations for this acquisition have not been presented because they are not material to our consolidated results of operations.

NOTE 20— ACCUMULATED OTHER COMPREHENSIVE INCOME

Three Months Ended March 31, 2022

Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Income

Balance as of December 31, 2021

$ 43,969 $ ( 457 ) $ ( 12,163 ) $ 31,349

Other comprehensive income (loss) before reclassifications, net of tax ( 13,073 ) 648 ( 2,033 ) ( 14,458 )

Amounts reclassified into net income, net of tax — 219 156 375

Total other comprehensive income (loss) net, for the period ( 13,073 ) 867 ( 1,877 ) ( 14,083 )

Balance as of March 31, 2022

$ 30,896 $ 410 $ ( 14,040 ) $ 17,266

Nine Months Ended March 31, 2022

Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Income

NOTE 20— ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Income (Loss)

Balance as of June 30, 2022

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Total other comprehensive income (loss) net, for the period ( 36,366 ) ( 2,752 ) 4,201 ( 34,917 )

Balance as of March 31, 2022

$ 30,896 $ 410 $ ( 14,040 ) $ 17,266

Three Months Ended March 31, 2021

Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Income

Balance as of December 31, 2020

$ 81,678 $ 2,007 $ ( 17,209 ) $ 66,476

Other comprehensive income (loss) before reclassifications, net of tax ( 12,568 ) 681 344 ( 11,543 )

Amounts reclassified into net income, net of tax — ( 1,108 ) 249 ( 859 )

Total other comprehensive income (loss) net, for the period ( 12,568 ) ( 427 ) 593 ( 12,402 )

Balance as of March 31, 2021

Balance as of September 30, 2022

$ ( 39,682 ) $ ( 3,408 ) $ 514 $ ( 42,576 )

Nine Months Ended March 31, 2021

Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Income

Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Pension Plans Accumulated Other Comprehensive Income (Loss)

Balance as of June 30, 2021

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Total other comprehensive income (loss) net, for the period ( 10,092 ) ( 1,373 ) ( 887 ) ( 12,352 )

Balance as of March 31, 2021

Balance as of September 30, 2021

$ 65,316 $ ( 543 ) $ ( 10,887 ) $ 53,886

NOTE 21— SUPPLEMENTAL CASH FLOW DISCLOSURES

Nine Months Ended March 31,

Three Months Ended September 30,

Cash paid during the period for interest $ 46,423 $ 41,659

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Cash paid during the period for income taxes $ 38,459 $ 12,780

$ 88,259 $ 369,246

(1) Included for the nine months ended March 31, 2021 is cash paid of $ 290.0 million relating to settlements with the IRS.

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NOTE 22— OTHER INCOME (EXPENSE), NET

Three Months Ended March 31, Nine Months Ended March 31,

2022 2021 2022 2021

Three Months Ended September 30,

Foreign exchange gains (losses) $ ( 1,361 ) $ 351

OpenText share in net income of equity investees (1)

Unrealized losses on derivatives not designated as hedges (1)

( 181,461 ) —

Loss on debt extinguishment (2)

OpenText share in net income (losses) of equity investees (2)

( 6,534 ) 29,315

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Total other income (expense), net $ ( 189,231 ) $ 29,782

(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” 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” for more details).

NOTE 23— EARNINGS PER SHARE

Basic earnings per share are computed by dividing net income, attributable to OpenText, by the weighted average number of Common Shares outstanding during the period.

Diluted earnings per share are computed by dividing net income, attributable to OpenText, by the shares used in the calculation of basic earnings per share plus the dilutive effect of Common Share equivalents, such as stock options, using the treasury stock method.

Common Share equivalents are excluded from the computation of diluted earnings per share if their effect is anti-dilutive.

Three Months Ended March 31, Nine Months Ended March 31,

____________________________________

Basic earnings per share

Net income attributable to OpenText $ 74,681 $ 91,490 $ 294,894 $ 129,389

Basic earnings per share attributable to OpenText $ 0.28 $ 0.34 $ 1.09 $ 0.47

Diluted earnings per share

Net income attributable to OpenText $ 74,681 $ 91,490 $ 294,894 $ 129,389

Diluted earnings per share attributable to OpenText $ 0.28 $ 0.33 $ 1.08 $ 0.47

(1) Represents the unrealized losses on our derivatives not designated as hedges related to the proposed Micro Focus Acquisition (see Note 17 “Derivative Instruments and Hedging Activities” for more details).

(2) Represents our share in net income (losses) 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” for more details).

NOTE 23— EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share are computed by dividing net income (loss) attributable to OpenText, by the weighted average number of Common Shares outstanding during the period.

Diluted earnings (loss) per share are computed by dividing net income (loss) attributable to OpenText, by the shares used in the calculation of basic earnings (loss) per share plus the dilutive effect of Common Share equivalents, such as stock options, using the treasury stock method.

Common Share equivalents are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive.

For periods in which we incur a net loss, our outstanding Common Share equivalents are not included in the calculation of diluted loss per share as their effect is anti-dilutive.

Three Months Ended September 30,

Basic earnings (loss) per share

Net income (loss) attributable to OpenText $ ( 116,929 ) $ 131,915

Basic earnings (loss) per share attributable to OpenText $ ( 0.43 ) $ 0.48

Diluted earnings (loss) per share

Net income (loss) attributable to OpenText $ ( 116,929 ) $ 131,915

Diluted earnings (loss) per share attributable to OpenText $ ( 0.43 ) $ 0.48

Weighted-average number of shares outstanding (in '000's)

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(1) Represents options to purchase Common Shares excluded from the calculation of diluted earnings per share because the exercise price of the stock options was greater than or equal to the average price of the Common Shares during the period.

(1) Represents options to purchase Common Shares excluded from the calculation of diluted earnings (loss) per share because the exercise price of the stock options was greater than or equal to the average price of the Common Shares during the period or the inclusion of the potential dilutive options to purchase Common Shares results in anti-dilution due to the net loss for the period .

Table of C ontents

NOTE 24— RELATED PARTY TRANSACTIONS

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and if applicable, the availability of other sources of comparable services or products.

During the nine months ended March 31, 2022, Mr.

Stephen Sadler, a member of the Board of Directors, earned $ 0.4 million (nine months ended March 31, 2021 — $ 32 thousand) in consulting fees from OpenText for assistance with acquisition-related business activities.

During the three months ended September 30, 2022, Mr.

Stephen Sadler, a member of the Board of Directors, earned $ 7 thousand (three months ended September 30, 2021 — $ 4 thousand) in consulting fees from OpenText for assistance with acquisition-related business activities.

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

NOTE 25— SUBSEQUENT EVENT

NOTE 25— SUBSEQUENT EVENTS

Cash Dividends

As part of our quarterly, non-cumulative cash dividend program, we declared, on May 3, 2022, a dividend of $ 0.2209 per Common Share.

The record date for this dividend is June 3, 2022 and the payment date is June 24, 2022.

As part of our quarterly, non-cumulative cash dividend program, we declared, on November 2, 2022, a dividend of $ 0.24299 per Common Share.

The record date for this dividend is December 2, 2022 and the payment date is December 22, 2022.

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

Table of C ontents

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-Q

Item 1. Financial Statements