What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-05-04 · 336 added, 523 removed, 940 unchanged (48% of the section changed)

4 unchanged sentences

dollars, except share data)

March 31, 2023 June 30, 2022

September 30, 2023 June 30, 2023

ASSETS (unaudited)

Cash and cash equivalents $ 919,850 $ 1,231,625

Accounts receivable trade, net of allowance for credit losses of $ 16,550 as of March 31, 2023

and $ 16,473 as of June 30, 2022 (Note 4)

Accounts receivable trade, net of allowance for credit losses of $ 11,501 as of September 30, 2023 and $ 13,828 as of June 30, 2023 (Note 4)

676,594 682,517

54 unchanged sentences

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

270,479,181 and 269,522,639 Common Shares issued and outstanding at March 31, 2023

and June 30, 2022, respectively;

271,227,929 and 270,902,571 Common Shares issued and outstanding at September 30, 2023 and June 30, 2023, respectively;

authorized Common Shares:

3 unchanged sentences

Retained earnings 2,062,107 2,048,984

Treasury stock, at cost ( 3,216,394 and 3,706,420 shares at March 31, 2023 and

June 30, 2022, respectively)

Treasury stock, at cost ( 4,753,281 and 3,536,375 shares at September 30, 2023 and June 30, 2023, respectively)

( 196,119 ) ( 151,597 )

7 unchanged sentences

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Content s

OPEN TEXT CORPORATION

2 unchanged sentences

dollars, except share and per share data)

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

Three Months Ended September 30,

Revenues (Note 3):

24 unchanged sentences

Income from operations

212,892 146,353

Other income (expense), net (Note 22)

1 unchanged sentence

Interest and other related expense, net ( 141,764 ) ( 40,382 )

Income before income taxes 45,193 115,763 271,230 418,781

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

Income (loss) before income taxes

91,298 ( 83,260 )

Net income for the period $ 57,613 $ 74,722 $ 199,251 $ 295,024

Net (income) loss attributable to non-controlling interests ( 57 ) ( 41 ) ( 138 ) ( 130 )

Net income attributable to OpenText $ 57,556 $ 74,681 $ 199,113 $ 294,894

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

Provision for income taxes (Note 15)

10,352 33,625

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

Net income (loss) for the period

$ 80,946 $ ( 116,885 )

Net (income) attributable to non-controlling interests

( 45 ) ( 44 )

Net income (loss) attributable to OpenText

$ 80,901 $ ( 116,929 )

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

$ 0.30 $ ( 0.43 )

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

$ 0.30 $ ( 0.43 )

Weighted average number of Common Shares outstanding—basic (in '000's) 271,178 269,804

1 unchanged sentence

See accompanying Notes to Condensed Consolidated Financial Statements

Table of Content s

OPEN TEXT CORPORATION

1 unchanged sentence

(In thousands of U.S.

Three Months Ended

March 31, Nine Months Ended

Three Months Ended September 30,

Net income (loss) for the period

$ 80,946 $ ( 116,885 )

Net income for the period $ 57,613 $ 74,722 $ 199,251 $ 295,024

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 $ 15 and $ 233 for the three months ended March 31, 2023 and 2022, respectively;

$( 844 ) and $( 158 ) for the nine months ended March 31, 2023 and 2022, respectively

38 648 ( 2,343 ) ( 334 )

(Gain) loss reclassified into net income - net of tax (expense) recovery effect of $ 252 and $ 79 for the three months ended March 31, 2023 and 2022, respectively;

$ 861 and $( 24 ) for the nine months ended March 31, 2023 and 2022, respectively

Unrealized gain (loss) - net of tax (1)

( 1,841 ) ( 3,340 )

(Gain) loss reclassified into net income - net of tax (2)

Unrealized gain (loss) on available-for-sale financial assets:

Unrealized gain (loss) - net of tax expense (recovery) effect of $ 238 and $ — for the three months ended March 31, 2023 and 2022, respectively;

$ 238 and $ — for the nine months ended March 31, 2023 and 2022, respectively

( 900 ) — ( 900 ) —

Unrealized gain (loss) - net of tax (3)

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

Actuarial gain (loss) - net of tax expense (recovery) effect of $( 892 ) and $( 579 ) for the three months ended March 31, 2023 and 2022, respectively;

$ 318 and $( 811 ) for the nine months ended March 31, 2023 and 2022, respectively

( 3,318 ) ( 2,033 ) 878 ( 4,517 )

Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $ 25 and $ 66 for the three months ended March 31, 2023 and 2022, respectively;

$ 76 and $ 134 for the nine months ended March 31, 2023 and 2022, respectively

35 156 109 477

Total other comprehensive income (loss) net, for the period ( 32,086 ) ( 14,083 ) ( 25,455 ) ( 48,972 )

Total comprehensive income 25,527 60,639 173,796 246,052

Comprehensive (income) loss attributable to non - controlling interests

( 57 ) ( 41 ) ( 138 ) ( 130 )

Total comprehensive income attributable to OpenText $ 25,470 $ 60,598 $ 173,658 $ 245,922

See accompanying Notes to Condensed Consolidated Financial Statements

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OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands of U.S.

dollars and shares)

Three Months Ended March 31, 2023

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, 2022

270,235 $ 2,092,079 ( 3,295 ) $ ( 142,126 ) $ 2,171,236 $ ( 1,028 ) $ 1,223 $ 4,121,384

Issuance of Common Shares

Under employee stock option plans 16 479 — — — — — 479

Under employee stock purchase plans 228 5,776 — — — — — 5,776

Share-based compensation — 36,505 — — — — — 36,505

Issuance of treasury stock — ( 4,496 ) 79 3,426 — — — ( 1,070 )

Dividends declared

($ 0.24299 per Common Share)

Actuarial gain (loss) - net of tax (4)

Amortization of actuarial (gain) loss into net income - net of tax (5)

Total other comprehensive loss net, for the period

( 16,466 ) ( 34,917 )

Other comprehensive income (loss) - net — — — — — ( 32,086 ) — ( 32,086 )

Net income for the period — — — — 57,556 — 57 57,613

Balance as of March 31, 2023

Total comprehensive income (loss)

64,480 ( 151,802 )

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

Comprehensive income attributable to non - controlling interests

( 45 ) ( 44 )

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)

Total comprehensive income (loss) attributable to OpenText

$ 64,435 $ ( 151,846 )

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

______________________________

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(1) Net of tax expense (recovery) of ($ 664 ) and $( 1,206 ) for the three months ended September 30, 2023 and 2022, respectively.

(2) Net of tax expense (recovery) of $ 3 and $ 212 for the three months ended September 30, 2023 and 2022, respectively.

(3) Net of tax expense (recovery) of $ 59 and $ — for the three months ended September 30, 2023 and 2022, respectively.

(4) Net of tax expense (recovery) of $ 19 and $ 1,104 for the three months ended September 30, 2023 and 2022, respectively.

(5) Net of tax expense (recovery) of $ 75 and $ 26 for the three months ended September 30, 2023 and 2022, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements

OPEN TEXT CORPORATION

2 unchanged sentences

dollars and shares)

Nine Months Ended March 31, 2023

Three Months Ended September 30, 2023

Common Shares and Additional Paid in Capital Treasury Stock Retained

9 unchanged sentences

Share-based compensation — 37,004 — — — — — 37,004

Purchase of treasury stock — — ( 1,400 ) ( 53,085 ) — — — ( 53,085 )

Issuance of treasury stock — ( 8,563 ) 183 8,563 — — — —

3 unchanged sentences

Other comprehensive income (loss) - net — — — — — ( 16,466 ) — ( 16,466 )

Net income for the period — — — — 199,113 — 138 199,251

Balance as of March 31, 2023

Net income (loss) for the period — — — — 80,901 — 45 80,946

Balance as of September 30, 2023

271,228 $ 2,216,921 ( 4,753 ) $ ( 196,119 ) $ 2,062,107 $ ( 70,025 ) $ 1,374 $ 4,014,258

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

See accompanying Notes to Condensed Consolidated Financial Statements

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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 $ 199,251 $ 295,024

Net income (loss) for the period

$ 80,946 $ ( 116,885 )

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

2 unchanged sentences

Pension expense 3,171 1,387

Amortization of debt issuance costs 8,496 3,936

Amortization of debt discount and issuance costs

Write-off of right of use assets 4,715 2,827

Loss on extinguishment of debt 8,152 27,413

Loss on sale and write down of property and equipment 458 —

Deferred taxes ( 88,630 ) ( 20,667 )

Share in net (income) loss of equity investees 11,547 ( 59,103 )

Share in net loss of equity investees

Changes in financial instruments ( 17,895 ) 181,461

9 unchanged sentences

Net cash provided by operating activities

47,121 131,959

Cash flows from investing activities:

Additions of property and equipment ( 37,539 ) ( 36,324 )

Purchase of Micro Focus, net of cash acquired ( 5,655,606 ) —

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

Purchase of Bricata Inc.

Realized gain on financial instruments 131,248 —

Micro Focus acquisition

Proceeds from net investment hedge derivative contracts

Other investing activities ( 5,554 ) —

Net cash used in investing activities

( 50,399 ) ( 36,324 )

Cash flows from financing activities:

2 unchanged sentences

11,453 10,037

Proceeds from long-term debt and Revolver 4,927,450 1,500,000

Repayment of long-term debt and Revolver ( 186,463 ) ( 2,500 )

Debt extinguishment costs — ( 24,969 )

Debt issuance costs ( 1,961 ) —

Repurchase of Common Shares — ( 136,117 )

Purchase of treasury stock ( 53,085 ) —

Distribution to non-controlling interest — ( 396 )

Payments of dividends to shareholders ( 66,965 ) ( 64,698 )

Other financing activities ( 2,193 ) —

Net cash provided by financing activities 4,662,276 266,062

Foreign exchange gain (loss) on cash held in foreign currencies 2,632 ( 36,920 )

Net cash used in financing activities

( 297,021 ) ( 57,161 )

Foreign exchange loss on cash held in foreign currencies

( 11,503 ) ( 28,102 )

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

( 311,802 ) 10,372

Cash, cash equivalents and restricted cash at beginning of the period 1,233,952 1,695,911

Cash, cash equivalents and restricted cash at end of the period $ 922,150 $ 1,706,283

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OPEN TEXT CORPORATION

2 unchanged sentences

Reconciliation of cash, cash equivalents and restricted cash:

March 31, 2023 March 31, 2022

September 30, 2023 September 30, 2022

Cash and cash equivalents $ 919,850 $ 1,704,385

5 unchanged sentences

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, 2023

For the Three Months Ended September 30, 2023

(Tabular amounts in thousands of U.S.

2 unchanged sentences

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, 2023, was 70 % owned by OpenText.

(OT South Africa), which as of September 30, 2023, was 70 % owned by OpenText.

All intercompany balances and transactions have been eliminated.

Previously, our ownership in EC1 Pte.

(GXS Singapore) was 81 %.

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 Fiscal 2022, the liquidation of GXS Singapore was completed.

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

13 unchanged sentences

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, (x) the valuation of pension obligations, and (xi) the valuation of derivative instruments.

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

Acquisition of Micro Focus

On January 31, 2023, we acquired all of the issued and to be issued share capital of Micro Focus (the Micro Focus Acquisition) for a total purchase price of $ 6.2 billion, inclusive of Micro Focus’ cash and repayment of Micro Focus’ outstanding indebtedness, subject to final adjustments.

In connection with the financing of the Micro Focus Acquisition, concurrent with the announcement of the acquisition on August 25, 2022, the Company entered into the Acquisition Term Loan and Bridge Loan (each as defined below) as well as certain derivative transactions.

On December 1, 2022, the Company issued and sold $ 1.0 billion in aggregate principal amount of 6.90 % Senior Secured Notes due 2027 (Senior Secured Notes 2027), amended the Acquisition Term Loan and terminated the Bridge Loan.

On January 31, 2023, we drew down the entire aggregate principal amount of $ 3.585 billion of the Acquisition Term Loan, net of original issuance discount and other fees, and drew down $ 450 million under the Revolver (as defined below).

We used these proceeds and cash on hand to fund the purchase price consideration and repayment of Micro Focus’ outstanding indebtedness.

In conjunction with the closing of the Micro Focus Acquisition, the deal-contingent forward contracts and non-contingent forward contract, as described in Note 17 “Derivative Instruments and Hedging Activities,” were settled.

The results of operations of Micro Focus have been consolidated with those of OpenText with effect from February 1, 2023.

See Note 19 “Acquisitions” to our Condensed Consolidated Financial Statements for more details.

NOTE 2— RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Adopted in Fiscal 2024

During the three and nine months ended March 31, 2023, 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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During the three months ended September 30, 2023, we have adopted the following Accounting Standards Updates (ASU):

Supplier Financing Program Obligations

In September 2022, the Financial Accounting Standards Board (FASB) issued ASU 2022-04 “Liabilities-Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.” This standard requires companies that participate in supplier finance programs in connection with the procurement of goods or services to disclose quantitative and qualitative information about the programs.

We adopted this ASU as of July 1, 2023 which did not have a material impact on our Condensed Consolidated Financial Statements and related disclosures, as we had no material supplier finance program obligations as of September 30, 2023.

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,

2023 2022 2023 2022

Three Months Ended September 30,

Total Revenues by Geography:

21 unchanged sentences

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

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

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

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

5 unchanged sentences

Contract assets are reclassified to accounts receivable when the rights become unconditional.

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The balance for our contract assets and contract liabilities (i.e.

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

As of March 31, 2023 (1)

As of September 30, 2023

As of June 30, 2023

4 unchanged sentences

Long-term deferred revenues $ 197,112 $ 217,771

______________________

(1) As of March 31, 2023, the deferred revenue and contract assets balances related to the Micro Focus Acquisition are $ 992.8 million and $ 83.1 million, respectively.

The difference in the opening and closing balances of our contract assets and deferred revenues primarily results from the timing difference between our performance and the customer’s payments.

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, 2023, we reclassified $ 37.7 million (nine months ended March 31, 2022 — $ 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, 2023 and 2022, respectively, there was no significant impairment loss recognized related to contract assets.

We fulfill our obligations under a contract with a

customer by transferring products and services in exchange for consideration from the customer.

During the three months ended September 30, 2023, we reclassified $ 25.1 million (three months ended September 30, 2022—$ 8.9 million) of contract assets to receivables as a result of the right to the transaction consideration becoming unconditional.

During the three months ended September 30, 2023 and 2022, 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, 2023 that was included in the deferred revenue balances at June 30, 2022 was $ 813 million (nine months ended March 31, 2022—$ 775 million).

Incremental Costs of Obtaining a Contract with a Customer

The amount of revenue that was recognized during the three months ended September 30, 2023 that was included in the deferred revenue balances at June 30, 2023 was $ 739 million (three months ended September 30, 2022—$ 373 million).

Incremental Costs of Obtaining a Contract with a Custome r

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

4 unchanged sentences

Impact of foreign exchange rate changes ( 742 )

Capitalized costs to obtain a contract as of March 31, 2023

During the three and nine months ended March 31, 2023 and 2022, 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, 2023

During the three months ended September 30, 2023 and 2022, 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, 2023, approximately $ 2.5 billion of revenue is expected to be recognized from remaining performance obligations on existing contracts.

As of September 30, 2023, approximately $ 2.5 billion of revenue is expected to be recognized from remaining performance obligations on existing contracts.

We expect to recognize approximately 47 % of this amount over the next 12 months and the remaining balance substantially over the next three years thereafter.

We apply the practical expedient and do not disclose performance obligations that have original expected durations of one year or less.

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NOTE 4— ALLOWANCE FOR CREDIT LOSSES

3 unchanged sentences

Write-off / adjustments ( 4,109 )

Balance as of March 31, 2023

Included in accounts receivable are unbilled receivables in the amount of $ 72.2 million as of March 31, 2023 (June 30, 2022—$ 47.9 million).

As of March 31, 2023, we have an allowance for credit losses of $ 0.4 million for contract assets (June 30, 2022—$ 0.7 million).

Balance as of September 30, 2023

Included in accounts receivable are unbilled receivables in the amount of $ 63.9 million as of September 30, 2023 (June 30, 2023—$ 66.5 million).

As of September 30, 2023, we have an allowance for credit losses of $ 0.2 million for contract assets (June 30, 2023—$ 0.3 million).

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

NOTE 5— PROPERTY AND EQUIPMENT

As of March 31, 2023

As of September 30, 2023

Cost Accumulated

21 unchanged sentences

Additionally, the land upon which our headquarters in Waterloo, Ontario, Canada is located is leased from the University of Waterloo for a period of 49 years beginning in December 2005, with an option to renew for an additional term of 49 years.

We also have finance lease liabilities comprised of equipment lease arrangements with an average duration of 4 to 5 years all of which are currently being sublet.

Leases with an initial term of 12 months or less are not recorded on our Condensed Consolidated Balance Sheets.

As part of the Micro Focus Acquisition, we acquired $ 164.4 million of operating lease liabilities along with the respective right of use assets and $ 12.9 million of finance lease liabilities along with the respective finance lease receivable.

The finance lease liabilities are comprised of equipment lease arrangements with an average duration of 4 to 5 years of which all are currently being sublet.

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The following illustrates the Condensed Consolidated Balance Sheets information related to leases:

As of March 31, 2023 As of June 30, 2022

As of September 30, 2023 As of June 30, 2023

Operating Leases Balance Sheet Location

11 unchanged sentences

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

As of March 31, 2023 As of June 30, 2022

As of September 30, 2023 As of June 30, 2023

Weighted-average remaining lease term

4 unchanged sentences

Finance leases 5.58 % 5.60 %

Lease Costs and Other Information

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

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

2023 2022 2023 2022

Three Months Ended September 30,

Operating lease cost $ 23,740 $ 14,311

3 unchanged sentences

Total lease cost $ 22,692 $ 12,365

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Supplemental Cash Flow Information

The following table presents supplemental information relating to cash flows arising from lease transactions.

Cash payments made for variable lease costs and short-term leases are not included in the measurement of 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 lease liabilities:

4 unchanged sentences

$ 7,045 $ 22,467

______________________

(1) The nine months ended March 31, 2023 excludes the impact of $ 129.3 million of right of use assets obtained through the Micro Focus Acquisition.

See Note 19 “Acquisitions” for further details including the finalization of the purchase price allocation for the Micro Focus Acquisition.

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

See Note 19 “Acquisitions” for further details including the finalization of the purchase price allocation for the acquisition of Zix Corporation.

The following table presents the future minimum lease payments under our leases liabilities as of March 31, 2023:

Maturity of Lease Liabilities

The following table presents the future minimum lease payments under our leases liabilities as of September 30, 2023:

Fiscal years ending June 30, Operating Leases Finance Leases

2023 (three months ended)

$ 28,363 $ 1,475

2024 (nine months ended)

$ 79,726 $ 4,232

9 unchanged sentences

Balance as of June 30, 2023

Other acquisition (Note 19)

Acquisition of Micro Focus (Note 19) (1)

Acquisition of Zix Corporation (Note 19)

Impact of foreign exchange rate changes ( 11,199 )

Balance as of March 31, 2023

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Balance as of September 30, 2023

______________________

(1) Adjustments relating to open measurement period.

NOTE 8— ACQUIRED INTANGIBLE ASSETS

As of March 31, 2023

As of September 30, 2023

Cost Accumulated Amortization Net

7 unchanged sentences

Total $ 5,506,512 $ ( 1,425,633 ) $ 4,080,879

Where applicable, the above balances as of March 31, 2023 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, 2023.

The impact of this resulted in a reduction of $ 578 million to technology assets and $ 64 million to customer assets.

The balances as of March 31, 2023 include $ 1.4 billion of intangible technology assets and $ 2.1 billion of intangible customer assets acquired through the Micro Focus Acquisition.

See Note 19 “Acquisitions” for further details including the finalization of the purchase price allocation for the Micro Focus Acquisition.

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,

2023 (three months ended)

2024 (nine months ended)

2029 and Thereafter

Total $ 3,888,217

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NOTE 9— PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other current assets:

As of March 31, 2023 As of June 30, 2022

As of September 30, 2023 As of June 30, 2023

Deposits and restricted cash $ 4,400 $ 2,621

1 unchanged sentence

Short-term prepaid expenses and other current assets 158,566 175,879

Derivative asset (1)

Total $ 199,917 $ 221,732

______________________________

(1) Represents the asset related to our derivative instrument activity (see Note 17 “Derivative Instruments and Hedging Activities”).

Other assets:

As of March 31, 2023 As of June 30, 2022

As of September 30, 2023 As of June 30, 2023

Deposits and restricted cash $ 18,364 $ 20,418

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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 and nine months ended March 31, 2023, our share of income (loss) from these investments was $( 4.7 ) million and $( 11.5 ) million, respectively (three and nine months ended March 31, 2022—$ 27.7 million and $ 59.1 million, respectively).

As part of the Micro Focus Acquisition, we acquired the rights to certain available-for-sale financial assets.

A portion of the available-for-sale financial assets relate to contractual arrangements under insurance policies held by the Company with guaranteed interest rates that are utilized to meet certain pension and post retirement obligations but do not meet the definition of a plan asset.

During the three months ended September 30, 2023, our share of income (loss) from these investments was $( 9.7 ) million (three months ended September 30, 2022—$( 6.5 ) million).

Available-for-sale financial assets relate to contractual arrangements under insurance policies held by the Company with guaranteed interest rates that are utilized to meet certain pension and post-retirement obligations but do not meet the definition of a plan asset.

The remaining portion of available-for-sale financial assets are primarily comprised of various debt and equity funds, which are valued utilizing market quotes provided by our third-party custodian.

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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, 2023 As of June 30, 2022

As of September 30, 2023 As of June 30, 2023

Accounts payable—trade $ 138,460 $ 162,720

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Derivative liability (1)

127,152 161,191

Accrued interest on long-term debt 52,766 37,563

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Long-term accrued liabilities:

As of March 31, 2023 As of June 30, 2022

As of September 30, 2023 As of June 30, 2023

Amounts payable in respect of restructuring and other special charges $ 8,534 $ 8,875

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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, 2023, the present value of this obligation was $ 28.5 million (June 30, 2022—$ 15.8 million), with an undiscounted value of $ 31.7 million (June 30, 2022—$ 16.4 million).

As of March 31, 2023, the present value of this obligation and the undiscounted value related to the Micro Focus Acquisition was $ 12.4 million and $ 15.1 million, respectively.

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As of September 30, 2023, the present value of this obligation was $ 29.9 million (June 30, 2023—$ 31.3 million), with an undiscounted value of $ 33.5 million (June 30, 2023—$ 35.0 million).

NOTE 11— LONG-TERM DEBT

As of March 31, 2023 As of June 30, 2022

As of September 30, 2023 As of June 30, 2023

Senior Notes 2031 $ 650,000 $ 650,000

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Total principal payments due 8,903,113 9,089,575

Discount on Acquisition Term Loan ( 105,529 ) —

Debt issuance costs (1)

Unamortized debt discount and issuance costs (1)

( 202,694 ) ( 206,629 )

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______________________

(1) During three and nine months ended March 31, 2023, we recorded $ 8.5 million and $ 78.0 million of debt issuance costs, respectively, relating to the issuance of Senior Secured Notes 2027 and Acquisition Term Loan.

Additionally, upon closing of the Micro Focus Acquisition, all deferred debt issuance costs related to the Acquisition Term Loan previously included in “Other assets” have been reclassified to debt issuance costs.

(1) During the three months ended September 30, 2023, we recorded $ 1.6 million of debt issuance costs related to the modification of the Acquisition Term Loan (as defined below).

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, 2023, we recorded interest expense of $ 6.7 million and $ 20.1 million, respectively, relating to Senior Notes 2031 (three and nine months ended March 31, 2022 $ 6.7 million and $ 9.4 million, respectively).

For the three months ended September 30, 2023, we recorded interest expense of $ 6.7 million relating to Senior Notes 2031 (three months ended September 30, 2022— $ 6.7 million).

Senior Notes 2030

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

Senior Notes 2030 bear interest at a rate of

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4.125 % per annum, payable semi-annually in arrears on February 15 and August 15, commencing on August 15, 2020.

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

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

For the three and nine months ended March 31, 2023, 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, 2022—$ 9.3 million and $ 27.9 million, respectively).

For the three months ended September 30, 2023, we recorded interest expense of $ 9.3 million relating to Senior Notes 2030 (three months ended September 30, 2022—$ 9.3 million).

Senior Notes 2029

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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, 2023, we recorded interest expense of $ 8.2 million and $ 24.6 million, respectively, relating to Senior Notes 2029 (three and nine months ended March 31, 2022—$ 8.2 million and $ 11.5 million, respectively).

For the three months ended September 30, 2023, we recorded interest expense of $ 8.2 million relating to Senior Notes 2029 (three months ended September 30, 2022—$ 8.2 million).

Senior Notes 2028

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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, 2023, 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, 2022—$ 8.7 million and $ 26.1 million, respectively).

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 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 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.

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

A portion of the net proceeds from the offerings of Senior Notes 2029 and Senior Notes 2031 was used to redeem Senior Notes 2026.

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

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

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

For the three and nine months ended March 31, 2023, we did not record any interest expense relating to Senior Notes 2026 (three and nine months ended March 31, 2022— nil and $ 21.9 million, respectively).

For the three months ended September 30, 2023, we recorded interest expense of $ 8.7 million relating to Senior Notes 2028 (three months ended September 30, 2022—$ 8.7 million).

Senior Secured Fixed Rate Notes

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On December 1, 2022, we issued $ 1 billion in aggregate principal amount of Senior Secured Notes 2027 in connection with the financing of the Micro Focus Acquisition 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

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Securities Act.

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

Senior Secured Notes 2027 bear interest at a rate of 6.90 % per annum, payable semi-annually in arrears on June 1 and December 1, commencing on June 1, 2023.

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The Senior Secured Notes 2027 and the related guarantees are effectively senior to all of the Company’s and the guarantors’ senior unsecured debt to the extent of the value of the collateral (as defined in the indenture to the Senior Secured Notes 2027) and are structurally subordinated to all existing and future liabilities of each of the Company’s existing and future subsidiaries that do not guarantee the Senior Secured Notes 2027.

For the three and nine months ended March 31, 2023, we recorded interest expense of $ 17.3 million and $ 23.1 million, relating to Senior Secured Notes 2027 (three and nine months ended March 31, 2022— nil ).

As of September 30, 2023, the Senior Secured Notes 2027 bear an effective interest rate of 7.39 %.

The effective interest rate includes interest expense of $ 17.3 million and amortization of debt discount and issuance costs of $ 0.6 million.

For the three months ended September 30, 2023, we recorded interest expense of $ 17.3 million relating to Senior Secured Notes 2027 (three months ended September 30, 2022— nil ).

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 (as defined below), Acquisition Term Loan (as defined below) and Senior Secured Notes 2027.

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 (as defined below), Acquisition Term Loan and Senior Secured Notes 2027.

On June 6, 2023, we amended the Term Loan B to replace the LIBOR benchmark rate applicable to borrowings under Term Loan B with a Secured Overnight Financing Rate (SOFR) benchmark rate.

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 London Interbank Offered Rate (LIBOR).

As of March 31, 2023, the outstanding balance on the Term Loan B bears an interest rate of 6.38 %.

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.

Borrowings under Term Loan B currently bear a floating rate of interest equal to Adjusted Term SOFR (as defined in the Term Loan B) and applicable margin of 1.75 %.

As of September 30, 2023, the outstanding balance on the Term Loan B bears an interest rate of 7.18 %.

As of September 30, 2023, the Term Loan B bears an effective interest rate of 7.48 %.

The effective interest rate includes interest expense of $ 17.2 million and amortization of debt discount and issuance costs of $ 0.4 million.

Under Term Loan B, we must maintain a “consolidated net leverage” ratio of no more than 4.00 :1.00 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, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.3 :1.

For the three and nine months ended March 31, 2023, we recorded interest expense of $ 15.0 million and $ 37.9 million, respectively, relating to Term Loan B (three and nine months ended March 31, 2022—$ 4.5 million and $ 13.6 million, respectively).

depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges.

As of September 30, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.64 :1.00.

For the three months ended September 30, 2023, we recorded interest expense of $ 17.2 million relating to Term Loan B (three months ended September 30, 2022—$ 9.7 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, the Acquisition Term Loan and Senior Secured Notes 2027.

On June 6, 2023, we entered into an amendment to replace the LIBOR benchmark rate applicable to borrowings under the Revolver with a SOFR benchmark rate.

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 %.

During the third quarter of Fiscal 2023, the Company drew down $ 450.0 million from the Revolver to partially fund the Micro Focus Acquisition, and as of March 31, 2023, $ 450 million remains outstanding (June 30, 2022— nil ).

In April 2023, the Company paid $ 175 million drawn under the Revolver.

For the three and nine months ended March 31, 2023, we recorded interest expense of $ 5.0 million, respectively, relating to the Revolver (three and nine months ended March 31, 2022— nil ).

Borrowings under the Revolver bear interest per annum at a floating rate of interest equal to Adjusted Term SOFR (as defined in the Revolver) and a fixed margin dependent on our consolidated net leverage ratio ranging from 1.25 % to 1.75 %.

As of September 30, 2023, the outstanding balance on the Revolver bears an interest rate of 7.18 %.

As of September 30, 2023, we had a $ 100 million outstanding balance under the Revolver (June 30, 2023—$ 275 million).

For the three months ended September 30, 2023, we recorded interest expense of $ 2.0 million relating to the Revolver (three months ended September 30, 2022— nil ).

In October 2023, the Company repaid the $ 100 million outstanding balance drawn under the Revolver.

Acquisition Term Loan

On December 1, 2022, we amended our first lien term loan facility (the Acquisition Term Loan), dated as of August 25, 2022, to increase the aggregate commitments under the senior secured delayed-draw term loan facility from an aggregate principal amount of $ 2.585 billion to an aggregate principal amount of $ 3.585 billion.

During the third quarter of Fiscal 2023,

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the Company drew down $ 3.585 billion from the Acquisition Term Loan, net of original issuance discount of 3 % and other fees (see Note 19 “Acquisitions” for more details).

During the third quarter of Fiscal 2023, the Company drew down $ 3.585 billion from the Acquisition Term Loan, net of original issuance discount of 3 % and other fees (see Note 19 “Acquisitions” for more details).

On August 14, 2023, we amended the Acquisition Term Loan, to reduce the applicable interest rate margin by 0.75 % over the remaining term of the Acquisition Term Loan.

The reduction in interest rate margin on the Acquisition Term Loan resulting from the amendment was accounted for by the Company as a debt modification.

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 currently bear a floating rate of interest equal to 3.5 % plus Term Secured Overnight Financing Rate (SOFR) and the SOFR adjustment.

As of March 31, 2023, the outstanding balance on the Acquisition Term Loan bears an interest rate of 8.22 %.

Borrowings under the Acquisition Term Loan currently bear a floating rate of interest equal to 2.75 % plus Adjusted Term SOFR (as defined in the Acquisition Term Loan).

As of September 30, 2023, the outstanding balance on the Acquisition Term Loan bears an interest rate of 8.18 %.

As of September 30, 2023, the Acquisition Term Loan bears an effective interest rate of 9.27 %.

The effective interest rate includes interest expense of $ 77.2 million and amortization of debt discount and issuance costs of $ 3.3 million.

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.

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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.

As of March 31, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.3 :1.

As of September 30, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.64 :1:00.

The Acquisition Term Loan is unconditionally guaranteed by certain subsidiary guarantors, as defined in the Acquisition Term Loan, 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 Senior Secured Notes 2027.

For the three and nine months ended March 31, 2023, we recorded interest expense of $ 48.1 million, respectively, relating to the Acquisition Term Loan (three and nine months ended March 31, 2022— nil , respectively).

For the three months ended September 30, 2023, we recorded interest expense of $ 77.2 million relating to the Acquisition Term Loan (three months ended September 30, 2022— nil ).

In October 2023, the Company repaid $ 75 million drawn under the Acquisition Term Loan.

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

On December 1, 2022, we entered into an amendment to the Bridge Loan that reallocated commitments under the Bridge Loan to the Acquisition Term Loan.

In connection with the amendment to the Bridge Loan and the receipt of proceeds from the issuance of the Senior Secured Notes 2027, all remaining commitments under the Bridge Loan were reduced to zero and the Bridge Loan was terminated, which resulted in a loss on debt extinguishment of $ 8.2 million relating to unamortized debt issuance costs (see Note 22 “Other Income (Expense), Net” for more details) .

For the three and nine months ended March 31, 2023, we did not have any borrowings or record any interest expense relating to the Bridge Loan (three and nine months ended March 31, 2022— nil , respectively).

For the three months ended September 30, 2023, we did not have any borrowings or record any interest expense relating to the Bridge Loan (three months ended September 30, 2022— 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, Term Loan B, and Acquisition Term Loan using the effective interest method and straight-line method for the Revolver.

Additionally, upon drawing on the Acquisition Term Loan, all deferred debt issuance costs previously included in “Other Assets” were reclassified to debt issuance costs.

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

NOTE 12— PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS

The Company has 44 pension and other post retirement plans in multiple countries, including 31 defined benefit and other post retirement benefit plans which were assumed as part of the Micro Focus Acquisition (see Note 19 “Acquisitions” for more details).

All of our pension and other post retirement plans are located outside of Canada and the United States.

The plans are primarily located in Germany, which make up approximately 71 % of the total net benefit pension obligations.

Defined Benefit and Other Post-Retirement Benefit Plans

The Company has 52 pension and other post-retirement plans in multiple countries.

All of our pension and other post-retirement plans are located outside of Canada and the United States.

The plans are primarily located in Germany, which as of September 30, 2023, make up approximately 63 % of the total net benefit pension obligations.

Our defined benefit pension plans include a mix of final salary type plans which provide for retirement, old age, disability and survivor’s benefits.

Final salary pension plans provide benefits to members either in the form of a lump sum payment or a guaranteed level of pension payable for life in the case of retirement, disability and death.

Benefits under our final salary type plans are generally based on the participant’s age, compensation and years of service as well as the social security ceiling and

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other factors.

Benefits under our final salary type plans are generally based on the participant’s age, compensation and years of service as well as the social security ceiling and other factors.

Many of these plans are closed to new members.

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All of our defined benefit and other post-retirement plans are included in the aggregate projected benefit obligation within “Pension liability” on our Condensed Consolidated Balance Sheets.

As part of the Micro Focus Acquisition (see Note 19 “Acquisitions” for more details), we assumed a total of 31 defined benefit plans, all located outside of Canada and the United States.

As of March 31, 2023, these assumed plans carried a net liability of $ 50 million and are funded at 74 % of the defined benefit obligations.

Plan assets that partially fund these assumed defined benefit obligations are primarily classified within Level 1 and Level 2 of the fair value hierarchy and consist primarily of investments in equity and debt funds.

As of March 31, 2023, the fair value of these acquired plan assets was $ 141 million.

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

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

2023 2022 2023 2022

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.

The Company does not intend to make cash contributions to the above plans unless required by local regulatory or statutory requirements.

Additionally, the Company does not expect to make significant cash contributions to its pension and other post retirement plans in Fiscal 2023.

NOTE 13— SHARE CAPITAL, OPTION PLANS AND SHARE-BASED PAYMENTS

Cash Dividends

For the three and nine months ended March 31, 2023, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $ 0.24299 and $ 0.72897 per Common Share, respectively, in the aggregate amount of $ 64.9 million and $ 194.5 million, respectively, which we paid during the same period (three and nine months ended March 31, 2022—$ 0.2209 and $ 0.6627 per Common Share, respectively, in the aggregate amount of $ 59.1 million and $ 178.6 million, respectively).

For the three months ended September 30, 2023, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $ 0.25 per Common Share in the aggregate amount of $ 67.0 million which we paid during the same period (three months ended September 30, 2022—$ 0.24299 per Common Share in the aggregate amount of $ 64.7 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, 2023, 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 (three and nine months ended March 31, 2022— 1,300,000 and 1,700,000 Common Shares, respectively, at a cost of $ 56.1 million and $ 75.7 million, respectively).

During the three and nine months ended March 31, 2023, we delivered to eligible participants 78,650 and 490,026 Common Shares, respectively, that were purchased in the open market in connection with the settlement of awards and other plans (three and nine months ended March 31, 2022— nil and 491,244 Common Shares, respectively).

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During the three months ended September 30, 2023, 1,400,000 Common Shares were purchased on the open market at a cost of $ 53.1 million and held under trust for potential settlement of awards under our LTIP or other plans as described below (three months ended September 30, 2022— no Common Shares were purchased).

During the three months ended September 30, 2023, we delivered to eligible participants 183,313 Common Shares that were purchased in the open market in connection with the settlement of awards and other plans (three months ended September 30, 2022— 120,406 Common Shares).

Share Repurchase Plan

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 and nine months ended March 31, 2023, we did not repurchase and cancel any Common Shares (three and nine months ended March 31, 2022— 1,000,000 and 2,809,559 Common Shares, respectively, for $ 45.1 million and $ 136.1 million, respectively).

During the three months ended September 30, 2023 and 2022, we did not repurchase and cancel any Common Shares.

Share-Based Payments

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

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

Three Months Ended September 30,

Stock Options (issued under Stock Option Plans) $ 4,544 $ 3,585

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

As of March 31, 2023

As of September 30, 2023

Unrecognized Compensation Cost Weighted Average Recognition Period (years)

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Stock Options

A summary of activity under our stock option plans for the nine months ended March 31, 2023 is as follows:

A summary of activity under our stock option plans for the three months ended September 30, 2023 is as follows:

Options Weighted-

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Forfeited or expired ( 221,571 ) 42.39

Outstanding at March 31, 2023

Outstanding at September 30, 2023

12,753,593 $ 38.29 4.60 $ 23,473

Exercisable at March 31, 2023

Exercisable at September 30, 2023

4,940,080 $ 40.16 3.10 $ 2,691

As of March 31, 2023, 5,680,872 options to purchase Common Shares were available for issuance under our stock option plans.

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As of September 30, 2023, 5,331,793 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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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

2023 2022 2023 2022

Three Months Ended September 30,

Weighted–average fair value of options granted $ 9.16 $ 8.16

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Performance Options

During the three and nine months ended March 31, 2023, we granted zero and 1,000,000 performance options, respectively (during the three and nine months ended March 31, 2022— nil , respectively).

During the three months ended September 30, 2023, we did not grant performance options (during the three months ended September 30, 2022— 1,000,000 ).

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:

Nine Months Ended March 31,

Three Months Ended September 30,

Weighted–average fair value of options granted $ 8.09

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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.

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.

We estimate the fair value of PSUs using the Monte Carlo pricing model and RSUs have been valued based upon their grant date fair value.

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

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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.

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 2025.

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.

The RSUs are employee service-based awards and vest subject to an eligible employee’s continued employment throughout the applicable vesting period.

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

We estimate the fair value of PSUs using the Monte Carlo pricing model and RSUs have been valued based upon their grant date fair value.

Beginning in Fiscal 2023, certain PSU and RSU grants were eligible to receive dividend equivalent units that vest under the same conditions as the underlying grants.

Performance Share Units (Issued Under LTIP)

A summary of activity under our performance share units issued under the LTIP for the nine months ended March 31, 2023 is as follows:

A summary of activity under our performance share units issued under the LTIP for the three months ended September 30, 2023 is as follows:

Units Weighted-Average

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612,432 59.22

( 224,593 ) 41.75

Forfeited or expired ( 24,049 ) 61.69

Outstanding at March 31, 2023

Outstanding at September 30, 2023

1,601,768 $ 60.76 2.16 $ 56,222

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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:

Nine Months Ended March 31,

Three Months Ended September 30,

Weighted–average fair value of performance share units granted $ 59.48 $ 55.06

$ 69.78 - $ 75.15

Weighted-average assumptions used:

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Risk–free interest rate 4.38 % 3.13 %

0.45 % - 0.71 %

Expected dividend yield — % — %

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Restricted Share Units (Issued Under LTIP)

A summary of activity under our RSUs issued under the LTIP for the nine months ended March 31, 2023 is as follows:

A summary of activity under our RSUs issued under the LTIP for the three months ended September 30, 2023 is as follows:

Units Weighted-Average

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Granted 466,454 36.80

Vested ( 147,223 ) 36.83

Forfeited or expired ( 24,049 ) 41.83

Outstanding at March 31, 2023

Outstanding at September 30, 2023

1,216,765 $ 40.55 2.11 $ 42,708

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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 nine months ended March 31, 2023 is as follows:

A summary of activity under our RSUs (other) issued for the three months ended September 30, 2023 is as follows:

Units Weighted-Average

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Forfeited or expired ( 106,055 ) 36.87

Outstanding at March 31, 2023

Outstanding at September 30, 2023

5,031,638 $ 36.12 1.75 $ 176,610

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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, 2023, we settled 30,273 DSUs, respectively, at a cost of $ 1.1 million, respectively, (three and nine months ended March 31, 2022— nil DSUs, respectively, at a cost of nil , respectively).

A summary of activity under our deferred share units issued for the nine months ended March 31, 2023 is as follows:

A summary of activity under our DSUs issued for the three months ended September 30, 2023 is as follows:

Units Weighted-Average

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Granted 7,050 37.70

Settled ( 30,273 ) $ 40.46

Outstanding at March 31, 2023 (2)

Outstanding at September 30, 2023 (1)

1,001,618 $ 30.04 0.10 $ 35,157

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(1) Includes 90,906 unvested DSUs.

(2) Includes 90,906 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, 2023, 266,297 and 848,647 Common Shares, respectively, were eligible for issuance to employees enrolled in the ESPP (three and nine months ended March 31, 2022— 246,473 and 644,986 Common Shares, respectively).

During the three and nine months ended March 31, 2023, cash in the amount of $ 8.7 million and $ 22.5 million, respectively was received from employees relating to the ESPP (three and nine months ended March 31, 2022—$ 8.9 million and $ 25.3 million, respectively).

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During the three months ended September 30, 2023, 286,772 Common Shares were eligible for issuance to employees enrolled in the ESPP (three months ended September 30, 2022— 354,465 Common Shares).

During the three months ended September 30, 2023, cash in the amount of $ 8.6 million was received from employees relating to the ESPP (three months ended September 30, 2022—$ 8.0 million).

NOTE 14— GUARANTEES AND CONTINGENCIES

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Payments due between

Total April 1, 2023 - June 30, 2023 July 1, 2023 - June 30, 2025 July 1, 2025 - June 30, 2027 July 1, 2027 and beyond

Total October 1, 2023 - June 30, 2024 July 1, 2024 - June 30, 2026 July 1, 2026 - June 30, 2028 July 1, 2028 and beyond

Long-term debt obligations (1)

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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, 2023, 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 $ 73 million.

As of March 31, 2023, 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

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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, 2023.

Assuming the utilization of available tax attributes (further described below), we estimate our potential aggregate liability, as of September 30, 2023, 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 $ 76 million.

As of September 30, 2023, we have provisionally paid approximately $ 33 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, 2023.

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.

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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 audited Fiscal 2017 and Fiscal 2018 on a basis that we strongly disagree with and are contesting.

The CRA has audited Fiscal 2017, Fiscal 2018 and Fiscal 2019 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.

CRA’s position for Fiscal 2017 and Fiscal 2018 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 and Fiscal 2018 conflict with the expert valuation prepared by the independent leading accounting and advisory firm that was used to support our original filing position.

The CRA issued notices of reassessment in respect of Fiscal 2017 and Fiscal 2018 on a basis consistent with its proposal to reduce the available depreciable basis of assets in Canada.

CRA’s position for Fiscal 2017 through Fiscal 2019 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 through Fiscal 2019 conflict with the expert valuation prepared by the independent leading accounting and advisory firm that was used to support our original filing position.

The CRA issued notices of reassessment in respect of Fiscal 2017, Fiscal 2018 and Fiscal 2019 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 and on March 15, 2023, we filed our notice of objection regarding the reassessment in respect of Fiscal 2018.

We intend to file a notice of objection regarding Fiscal 2019.

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

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

We strongly disagree with the CRA’s position for Fiscal 2017 and Fiscal 2018 and intend to vigorously defend our original filing position.

We are not required to provisionally pay any cash amounts to the CRA as a result of the reassessment in respect of Fiscal 2017 and Fiscal 2018 due to the utilization of available tax attributes;

We strongly disagree with the CRA’s position for Fiscal 2017 through Fiscal 2019 and intend to vigorously defend our original filing position.

We are not required to provisionally pay any cash amounts to the CRA as a result of the reassessment in respect of Fiscal 2017 through Fiscal 2019 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.

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

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

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

Accordingly, as of the date of this Quarterly Report on Form 10-Q, we have not recorded any accruals in respect of

these reassessments or proposed reassessment in our Condensed Consolidated Financial Statements.

The CRA is also in preliminary stages of auditing Fiscal 2020.

Carbonite Class Action Complaint

On August 1, 2019, prior to our acquisition of Carbonite, a purported stockholder of Carbonite filed a putative class action complaint against Carbonite, its former Chief Executive Officer, Mohamad S.

On August 1, 2019, prior to our acquisition of Carbonite Inc.

(Carbonite), a purported stockholder of Carbonite filed a putative class action complaint against Carbonite, its former Chief Executive Officer, Mohamad S.

Ali, and its former Chief Financial Officer, Anthony Folger, in the United States District Court for the District of Massachusetts captioned Ruben A.

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The defendants moved to dismiss the Securities Actions on March 10, 2020.

On October 22, 2020, the district court granted with prejudice the

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defendants’ motion to dismiss the Securities Actions.

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 United States Court of Appeals for the First Circuit.

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

The parties are engaged in discovery.

The parties have completed discovery.

On July 14, 2023, the district court certified the lead plaintiff’s proposed class.

The defendants have filed a motion for class decertification and a motion for summary judgment, both of which are pending.

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

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Court of Appeals for the Federal Circuit.

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

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

We 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.

Other Matters

Please see Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2022, Part II, Item 1A “Risk Factors” included elsewhere within this Quarterly Report on Form 10-Q as well as Micro Focus’ Audited Consolidated Financial Statements for the years ended October 31, 2022 and 2021, included in our Form 8-K/A filed on April 10, 2023, related to certain historical matters arising prior to the Micro Focus Acquisition.

Based upon the order in the Delaware case, the U.S.

District Court for the District of Massachusetts granted summary judgment in Carbonite’s favor.

Realtime Data appealed the order, but stipulated to stay the appeal pending the outcome of their appeal in the District of Delaware case and agreed that if the U.S.

Court of Appeals for the Federal Circuit affirmed the District of Delaware’s judgment of invalidity, Realtime Data would subsequently dismiss their appeal against Carbonite.

On August 2, 2023, the U.S.

Court of Appeals for the Federal Circuit affirmed the invalidity of the patents asserted against Carbonite.

Pursuant to the parties’ stipulation, Realtime Data dismissed its appeal against Carbonite to fully resolve this matter.

NOTE 15— INCOME TAXES

The Company’s effective tax rate for the three months ended March 31, 2023, was ( 27.5 )%, compared to a provision of 35.5 % for the three months ended March 31, 2022.

The Company’s effective tax rate for the nine months ended March 31, 2023, was 26.5 %, compared to a provision of 29.6 % for the nine months ended March 31, 2022.

The Company’s effective tax rate for the three months ended March 31, 2023, differs from the Canadian statutory rate of 26.5 % primarily due to tax benefits related to the internal reorganization and a pre-tax gain created by the mark-to-market valuation on the derivatives not designated as hedges that the Company entered into in connection with the Micro Focus Acquisition (see Note 17 “Derivative Instruments and Hedging Activities” to our Condensed Consolidated Financial Statements).

The mark-to-market gains in the quarter are considered capital in nature for income tax purposes and 50% of realized gains are not taxable.

Other items impacting the rate include permanent items such as disallowed stock-based compensation and foreign income inclusions, offset by research and development credits, foreign tax credits and a net decrease in uncertain tax positions.

The Company’s effective tax rate for the three months ended March 31, 2022 differs from the Canadian statutory rate primarily due to US Base Erosion and Anti-Abuse Tax (BEAT), partially offset by research and development credits and tax benefits related to stock-based compensation deductions.

The Company’s effective tax rate for the nine months ended March 31, 2023, differs from the Canadian statutory rate of 26.5 % primarily due to a net increase in uncertain tax positions, US BEAT and permanent items such as disallowed stock-based compensation and foreign passive income inclusion, partially offset by research and development credits, foreign tax credits, 50% non-taxable portion of capital gains on mark-to-market derivatives not designated as a hedge and tax benefits of internal reorganizations.

The Company’s effective tax rate for the nine months ended March 31, 2022, differs from the Canadian statutory rate primarily due to US BEAT, partially offset by research and development credits.

As of March 31, 2023, the gross amount of unrecognized tax benefits accrued is $ 134.9 million, which is inclusive of interest and penalties accrued of $ 15.6 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 $ 12.9 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

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examinations by local taxing jurisdictions.

The unrecognized tax benefit balance significantly increased from the prior quarter due to the Micro Focus Acquisition and the assumption of Micro Focus’ unrecognized tax benefits through purchase accounting.

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.

The Company’s effective tax rate for the three months ended September 30, 2023, was 11.3 %, compared to a provision of ( 40.4 )% for the three months ended September 30, 2022.

The Company’s effective tax rate for the three months ended September 30, 2023, differs from the Canadian statutory rate of 26.5 % primarily due to tax benefits related to foreign tax rate differences, foreign tax credits and research and development credits, partially offset by US Base Erosion and Anti-Abuse Tax (BEAT).

The Company’s effective tax rate for the three months ended September 30, 2022 differs from the Canadian statutory rate primarily due to pre-tax losses created by the mark-to-market valuation on the derivatives not designated as hedges that the Company entered into in connection with the Micro

Focus Acquisition, and the inability to recognize the tax benefit of mark-to-market losses.

The tax benefit of 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.

As of September 30, 2023, the gross amount of unrecognized tax benefits accrued is $ 183.1 million (June 30, 2023 — $ 178.7 million), which is inclusive of interest and penalties accrued of $ 17.6 million (June 30, 2023 — $ 13.5 million).

We believe that it is reasonably possible that the gross unrecognized tax benefit could decrease by $ 14.5 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.

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

Our tax filings 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, United Kingdom, Germany and other immaterial jurisdictions.

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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, 2023, we have recognized a provision of $ 18.6 million (June 30, 2022—$ 15.1 million) in respect of 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, 2023, we have recognized a deferred income tax liability of $ 29.2 million (June 30, 2023—$ 28.3 million) on taxable 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.

It is not practicable to reasonably estimate the amount of additional deferred income tax liabilities or foreign withholding taxes that may be payable should these earnings be distributed in the future.

State Aid Matter

In April 2019, the European Commission published its final decision on its State Aid investigation into the UK’s “Financing Company Partial Exemption” legislation and concluded that part of the legislation was in breach of EU State Aid rules.

The UK government and certain UK-based international companies, supported by Micro Focus, appealed to the General Court of the Court of Justice of the European Union (General Court of the CJEU) against the decision.

In February 2021, Micro Focus received and settled GBP denominated State Aid charging notices issued by HM Revenue and Customs, following the requirement for the UK government to start collection proceedings.

As a result, Micro Focus recorded a long-term income tax receivable of $ 42.9 million.

This reflects the payment that was made following the final decision published by the European Commission on its State Aid investigation into the UK’s “Financing Company Partial Exemption” legislation.

Based on management’s assessment of the value of the underlying tax benefit under dispute, and as supported by external professional advice, Micro Focus believed they had no liability in respect of these matters and therefore no tax charge was recorded.

On June 8, 2022, the General Court of the CJEU found in favor of the European Commission’s decision that the UK’s “Financing Company Partial Exemption” legislation is in breach of EU State Aid rules.

The UK government and UK-based international companies, supported by Micro Focus, lodged an appeal against the judgement with the CJEU.

Micro Focus previously received and settled State Aid charging notices from HM Revenue and Customs (including historic interest) and given that an appeal would be expected to take more than a year, a long-term income tax recoverable continues to be recognized as part of non-current tangible assets as of September 30, 2023, in the preliminary purchase price allocation relating to the Micro Focus Acquisition, as described in Note 19 “Acquisitions.”

NOTE 16— FAIR VALUE MEASUREMENT

ASC Topic 820 “Fair Value Measurement” (Topic 820) defines fair value, establishes a framework for measuring fair value, and addresses disclosure requirements for fair value measurements.

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date

and in the principal or most advantageous market for that asset or liability.

The fair value, in this context, should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.

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The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

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

Our financial assets and liabilities that are measured at fair value on a recurring basis consisted of the following types of instruments as of March 31, 2023 and June 30, 2022:

Fair Value Hierarchy March 31, 2023 June 30, 2022

Financial Assets (Liabilities):

Designated as Hedging Instruments

Cash flow hedge (Note 17)

Financial Assets and Liabilities Measured at Fair Value:

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

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

The following table summarizes the fair value of our financial instruments as of September 30, 2023 and June 30, 2023:

Fair Value Hierarchy September 30, 2023 June 30, 2023

Available-for-sale financial assets (Note 9)

Level 2 $ 14,958 $ 15,231

Net investment hedge (Note 17)

Available-for-sale financial assets (Note 9)

Level 3 $ 24,090 $ 24,627

Not Designated as Hedging Instruments

Cross currency swap contract (Note 17)

Derivative asset (Note 17)

Level 2 $ 931 $ 3,547

Available-for-sale financial assets (Note 9)

Derivative liability (Note 17)

Level 2 $ ( 127,152 ) $ ( 161,191 )

Available-for-sale financial assets (Note 9)

Senior Notes (Note 11) (1)

Level 2 $ ( 3,763,513 ) $ ( 3,827,888 )

______________________

(1) Senior Notes are presented within the Condensed Consolidated Balance Sheets at amortized cost.

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

Changes in Level 3 Fair Value Measurements

The following table provides a reconciliation of changes in the fair value of our Level 3 deal-contingent foreign currency forward contracts and available-for-sale financial assets between June 30, 2022 and March 31, 2023.

Deal-contingent foreign currency forward contracts Available-for-sale

The following table provides a reconciliation of changes in the fair value of our Level 3 available-for-sale financial assets between June 30, 2023 and September 30, 2023.

Available-for-sale

financial assets

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Gain (loss) recognized in income ( 537 )

Purchases — 24,418

Settlements ( 9,354 ) —

Balance as of March 31, 2023

Our valuation techniques used to measure the fair value of our Level 2 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.

Balance as of September 30, 2023

Our derivative liabilities and our derivative assets are classified as Level 2 and are comprised of foreign currency forward and swap contracts.

Our valuation techniques used to measure the fair value of the 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

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

As part of the Micro Focus Acquisition, we acquired the rights to certain available-for-sale financial assets which are classified as Level 2 and Level 3.

Our available-for-sale financial assets are classified as either Level 2 or Level 3.

Our Level 2 available-for-sale financial assets are comprised primarily of various debt and equity funds, which are valued utilizing market quotes provided by our third-party custodian.

Our Level 3 available-for-sale financial assets are comprised of insurance contracts which are valued by an external insurance expert by applying a discount rate to the future cash flows and taking into account the fixed interest rate, mortality rates and term of the insurance contracts.

Please see Note 9 “Prepaid Expenses and Other Assets” for further details.

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, 2023, the fair value was $ 3.9 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.

See Note 9 “Prepaid Expenses and Other Assets” for further details.

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, 2023 and 2022, respectively, we did not have any transfers between Level 1, Level 2 or Level 3.

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During the three months ended September 30, 2023 and 2022, 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, 2023 and 2022, respectively, no indications of impairments were identified and therefore no fair value measurements were required.

During the three months ended September 30, 2023 and 2022, respectively, no indications of impairments were identified and therefore no fair value measurements were required.

NOTE 17— DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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We have designated these transactions as cash flow hedges of forecasted transactions under Topic 815.

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

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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.” As of March 31, 2023, 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 March 31, 2023, 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.” The fair value of the contracts as of September 30, 2023, 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, 2023, the notional amount of forward contracts we held to sell U.S.

dollars in exchange for Canadian dollars was $ 96.5 million (June 30, 2023—$ 96.3 million).

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The fair values of outstanding derivative instruments are as follows:

March 31, 2023 As of

September 30, 2023 As of

June 30, 2023

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Derivatives designated as hedges:

Cash flow hedge Accounts payable and accrued liabilities $ — $ ( 830 ) $ — $ ( 892 )

Net investment hedge Accounts payable and accrued liabilities — ( 66,601 ) — —

Cash flow hedge Prepaid expenses and other current assets (Accounts payable and accrued liabilities)

$ — $ ( 963 ) $ 1,530 $ —

Net investment hedge Prepaid expenses and other current assets (Accounts payable and accrued liabilities)

304 ( 70,748 ) 596 ( 87,855 )

Total derivatives designated as hedges

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Derivatives not designated as hedges:

Cross currency swap contracts Accounts payable and accrued liabilities — ( 57,061 ) — —

Cross currency swap contracts Prepaid expenses and other current assets (Accounts payable and accrued liabilities)

627 ( 55,441 ) 1,421 ( 73,336 )

Total derivatives not designated as hedges

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Total derivatives $ 931 $ ( 127,152 ) $ 3,547 $ ( 161,191 )

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

Three Months Ended

March 31, Nine Months Ended

September 30,

Instrument Income Statement Location 2023 2022

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Three Months Ended

March 31, Nine Months Ended

September 30,

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

2023 2022 2023 2022

Gain (loss) recognized in OCI (loss) on cash flow hedge (effective portion) Unrealized gain (loss) on cash flow hedge $ ( 2,505 ) $ ( 4,546 )

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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,

2023 2022 2023 2022

Three Months Ended September 30,

Micro Focus Acquisition Restructuring Plan $ 6,864 $ —

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Total $ 13,794 $ 14,281

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Micro Focus Acquisition Restructuring Plan

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The Micro Focus Acquisition Restructuring Plan charges relate to facility costs and workforce reductions.

Facility costs will include the accelerated amortization associated with the abandonment of right of use assets, the write-off of fixed assets and other related variable lease and exit costs.

Facility costs include the accelerated amortization associated with the abandonment of right of use 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.

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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, 2023, we recognized costs of $ 9.5 million related to abandoned office spaces that have been early terminated or assigned to a third party, of which $ 3.3 million were related to the write-off of right of use assets, and $ 1.7 million in charges associated with the write off of fixed assets as part of the Micro Focus Acquisition Restructuring Plan.

As of March 31, 2023, we expect total costs to be incurred in connection with the Micro Focus Acquisition Restructuring Plan to be approximately $ 135.0 million to $ 150.0 million, of which $ 11.2 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, 2023 is shown below.

During the three months ended September 30, 2023, we recognized costs of $ 5.5 million related to abandoned office spaces that have been early terminated or assigned to a third party, of which $ 4.1 million was related to the write-off of right of use assets, and $ 0.4 million in charges associated with the write off of fixed assets as part of the Micro Focus Acquisition Restructuring Plan.

As of September 30, 2023, we expect total costs to be incurred in connection with the Micro Focus Acquisition Restructuring Plan to be approximately $ 135.0 million to $ 150.0 million, of which $ 79.1 million has been recorded within “Special charges (recoveries)” to date.

Micro Focus Acquisition Restructuring Plan Workforce reduction Facility charges Total

Balance payable as of June 30, 2023

$ 25,816 $ 7,276 $ 33,092

Accruals and adjustments 1,407 1,367 2,774

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Foreign exchange and other non-cash adjustments ( 334 ) ( 31 ) ( 365 )

Balance payable as of March 31, 2023

Balance payable as of September 30, 2023

$ 17,475 $ 7,562 $ 25,037

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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, 2023, we recognized costs (recoveries) of $( 0.9 ) million and $ 3.4 million, respectively, related to abandoned office space that have been early terminated or assigned to a third party, of which nil and $ 3.9 million, respectively, were related to the write-off of right of use assets.

During the three months ended September 30, 2023, we recognized costs of $ 0.2 million related to abandoned office space that have been early terminated or assigned to a third party.

Since the inception of the Fiscal 2022 Restructuring Plan, $ 32.7 million has been recorded within “Special charges (recoveries)” to date.

We do not expect to incur any further significant charges relating to the Fiscal 2022 Restructuring Plan.

Fiscal 2022 Restructuring Plan Workforce reduction Facility charges Total

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Foreign exchange and other non-cash adjustments ( 8 ) ( 88 ) ( 96 )

Balance payable as of March 31, 2023

Balance payable as of September 30, 2023

$ 371 $ 3,073 $ 3,444

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Acquisition-related costs

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, 2023 were $ 34.8 million and $ 45.4 million, respectively (three and nine months ended March 31, 2022—$ 1.3 million and $ 6.0 million, respectively).

Acquisition-related costs for the three months ended September 30, 2023 were $ 1.1 million (three months ended September 30, 2022—$ 4.6 million).

Other charges (recoveries)

For the three months ended March 31, 2023, “Other charges (recoveries)” includes $ 21.4 million of severance charges and $ 7.5 million of other miscellaneous charges, both associated with the Micro Focus Acquisition, and $ 0.8 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”).

For the nine months ended March 31, 2023, “Other charges (recoveries)” includes $ 21.4 million of severance charges and $ 7.5 million of other miscellaneous charges, both associated with the Micro Focus Acquisition, $ 8.0 million related to pre-acquisition equity incentives of Zix, which upon acquisition were replaced by equivalent value cash settlements and $( 0.2 ) million related to other Zix miscellaneous 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 Zix 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 months ended September 30, 2023, “Other charges (recoveries)” includes $ 2.9 million of Micro Focus compensation related charges, $ 1.6 million of miscellaneous professional advisory charges, $ 1.1 million of other miscellaneous charges and $ 0.4 million related to pre-acquisition equity incentives of Zix Corporation (Zix), which upon acquisition were replaced by equivalent value cash settlements.

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

NOTE 19— ACQUISITIONS

Fiscal 2024 Acquisitions

Other Acquisition

On August 23, 2023, we acquired all of the equity interest in KineMatik Ltd.

(KineMatik), a provider of automated business process and project management solutions built on OpenText’s Content Server.

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

The results of operations of KineMatik have been consolidated with those of OpenText beginning August 24, 2023.

The results of KineMatik are not considered to be material to our business.

Fiscal 2023 Acquisitions

Acquisition of Micro Focus

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Preliminary Purchase Price Allocation

The recognized amounts of identifiable assets acquired and liabilities assumed, based on their fair values as of January 31, 2023, are set forth below:

Current assets (inclusive of cash acquired of $ 542.2 million)

As of September 30, 2023, the recognized amounts of identifiable assets acquired and liabilities assumed, based on their fair values as of January 31, 2023, are set forth below:

Cash and cash equivalents

Accounts receivable, net of allowances for credit losses (1)

Other current assets 291,221

Non-current tangible assets 447,764

Goodwill (2) (3)

Intangible customer assets 2,162,400

Intangible technology assets 1,392,300

Liabilities assumed ( 2,430,783 )

Total identifiable net assets 2,739,907

Goodwill 3,507,075

Accounts payable and accrued liabilities ( 504,587 )

Deferred revenues ( 1,107,627 )

Other liabilities (3)

Net assets acquired $ 6,246,437

______________________________

(1) The gross amount receivable was $ 418.2 million of which $ 9.3 million of this receivable was expected to be uncollectible.

(2) The goodwill of $ 3.4 billion is primarily attributable to the synergies expected to arise after the acquisition.

There is $ 67.3 million of goodwill that is deductible for tax purposes.

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The fair value of current assets acquired includes accounts receivable with a fair value of $ 398.3 million.

The gross amount receivable was $ 409.1 million of which $ 10.8 million of this receivable was expected to be uncollectible.

Acquisition-related costs for Micro Focus included in “Special Charges (Recoveries)” in the Condensed Consolidated Financial Statements for the three and nine months ended March 31, 2023 were $ 34.8 million and $ 45.1 million, respectively.

(3) Current period purchase price allocation adjustments of $ 33.9 million were primarily driven by changes in other liabilities related to adjustments of pre-acquisition short term and deferred tax liabilities.

A settlement related to Micro Focus’ securities litigation that was agreed to prior to the Micro Focus Acquisition has been accrued as part of the liabilities assumed.

This settlement, which is subject to final court approval, will be fully paid from insurance coverage, and therefore a receivable has been recognized as part of the assets acquired.

During the third quarter of Fiscal 2023, payment was made into escrow by insurers, and therefore both the associated receivable and liability are no longer included on the Condensed Consolidated Balance Sheets as of March 31, 2023.

This settlement, which received final court approval and is now resolved, was fully paid from insurance coverage, and therefore a receivable was recognized as part of the assets acquired.

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 March 31, 2024.

The amount of Micro Focus’ revenues and net loss included in our Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2023 is set forth below:

February 1, 2023 – March 31, 2023

Revenues $ 374,414

______________________

(1) Net loss for the three and nine months ended includes one-time fees of approximately $ 39.9 million, respectively, on account of special charges and $ 43.6 million, respectively, of amortization charges relating to intangible assets.

The unaudited pro forma revenues and net income of the combined entity for the three and nine months ended March 31, 2023 and 2022, respectively, had the Micro Focus Acquisition been consummated on July 1, 2021, are set forth below:

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

The unaudited pro forma revenues and net income (loss) of the combined entity for the three months ended September 30, 2022, had the Micro Focus Acquisition been consummated on July 1, 2021, are set forth below:

Three Months Ended September 30,

Supplemental Unaudited Pro Forma Information 2022

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Net income (loss)

( 853 ) ( 44,366 ) ( 450,690 ) 105,286

Net income (loss) attributable to OpenText

( 910 ) ( 44,407 ) ( 450,828 ) 105,156

______________________

(1) Included in the pro forma net loss for the nine months ended March 31, 2023, is a $ 448.2 million goodwill impairment recorded by Micro Focus in its pre-acquisition historical results as a result of the Company’s offer to acquire Micro Focus at a price of 532 pence per share.

The unaudited pro forma financial information in the table above is presented for information purposes only and is not indicative of the results of operations that would have been achieved if the Micro Focus Acquisition had taken place at the beginning of the periods presented or the results that may be realized in the future.

Fiscal 2022 Acquisitions

Acquisition of Zix Corporation

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 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.

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

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Purchase Price Allocation

The recognized amounts of identifiable assets acquired and liabilities assumed, based on their fair values as of December 23, 2021, are set forth below:

Current assets (inclusive of cash acquired of $ 38.3 million)

Non-current tangible assets 13,450

Intangible customer assets 212,400

Intangible technology assets 92,650

Liabilities assumed ( 81,476 )

Total identifiable net assets 308,551

Goodwill 585,910

Net assets acquired $ 894,461

The goodwill of $ 585.9 million is primarily attributable to the synergies expected to arise after the acquisition.

There is $ 103.7 million of goodwill that is deductible for tax purposes.

The fair value of current assets acquired includes accounts receivable with a fair value of $ 26.0 million.

The gross amount receivable was $ 32.6 million, of which $ 6.6 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, 2023 were nil and $ 0.2 million, respectively.

Pre-acquisition equity incentives of $ 25.8 million were replaced upon acquisition by equivalent value cash settlements to be settled in accordance with the original vesting dates, primarily over the two years after the date of the acquisition.

Of these equity incentives, $ 0.8 million and $ 8.0 million, respectively, for the three and nine months ended March 31, 2023 were included in “Special Charges (Recoveries).”

The finalization of the purchase price allocation during the quarter ended December 31, 2022 did not result in any significant changes to the preliminary amounts previously disclosed.

Acquisition of Bricata Inc.

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

(Bricata) for $ 17.8 million.

In accordance with Topic 805, this acquisition was accounted for as a business combination.

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

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

NOTE 20— ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 31, 2023

Foreign Currency Translation Adjustments (1)

Cash Flow Hedges Available-for-Sale Financial Assets Defined Benefit Pension Plans Accumulated Other Comprehensive Income (Loss)

Balance as of December 31, 2022

$ ( 263 ) $ ( 1,348 ) $ — $ 583 $ ( 1,028 )

Other comprehensive income (loss) before reclassifications, net of tax ( 28,640 ) 38 ( 900 ) ( 3,318 ) ( 32,820 )

Amounts reclassified into net income, net of tax — 699 — 35 734

Total other comprehensive income (loss) net, for the period ( 28,640 ) 737 ( 900 ) ( 3,283 ) ( 32,086 )

Balance as of March 31, 2023

$ ( 28,903 ) $ ( 611 ) $ ( 900 ) $ ( 2,700 ) $ ( 33,114 )

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Nine Months Ended March 31, 2023

Foreign Currency Translation Adjustments (1)

Cash Flow Hedges Available-for-Sale Investments Defined Benefit Pension Plans Accumulated Other Comprehensive Income (Loss)

Foreign Currency Translation Adjustments Cash Flow Hedges Available-for-Sale Financial Assets Defined Benefit Pension Plans Accumulated Other Comprehensive Income (Loss)

Balance as of June 30, 2023

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Total other comprehensive income (loss) net, for the period ( 14,583 ) ( 1,832 ) ( 221 ) 170 ( 16,466 )

Balance as of March 31, 2023

$ ( 28,903 ) $ ( 611 ) $ ( 900 ) $ ( 2,700 ) $ ( 33,114 )

______________________

(1) The amount of foreign currency translation recognized in other comprehensive income during the three and nine months ended March 31, 2023 included net gains (losses) relating to our net investment hedges of $( 11.1 ) million respectively, as further discussed in Note 17 “Derivative Instruments and Hedging Activities.”

Three Months Ended March 31, 2022

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

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

Balance as of September 30, 2023

$ ( 58,697 ) $ ( 708 ) $ ( 823 ) $ ( 9,797 ) $ ( 70,025 )

Nine Months Ended March 31, 2022

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

Foreign Currency Translation Adjustments Cash Flow Hedges Available-for-Sale Financial Assets 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

Balance as of September 30, 2022

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

NOTE 21— SUPPLEMENTAL CASH FLOW DISCLOSURES

Nine Months Ended March 31,

Three Months Ended September 30,

Cash paid during the period for interest $ 131,867 $ 46,423

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Cash paid during the period for income taxes $ 79,237 $ 38,459

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NOTE 22— OTHER INCOME (EXPENSE), NET

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

Three Months Ended September 30,

Foreign exchange gains (losses) $ 11,434 $ ( 1,361 )

$ 55,558 $ ( 3,443 ) $ 54,257 $ ( 2,900 )

Unrealized gains (losses) on derivatives

not designated as hedges (2)

( 102,713 ) — ( 112,567 ) —

Realized gains (losses) on derivatives

not designated as hedges (3)

Unrealized gains (losses) on derivatives not designated as hedges (1)

17,895 ( 181,461 )

1 unchanged sentence

( 9,696 ) ( 6,534 )

Loss on debt extinguishment (5) (6)

( 21 ) — ( 8,152 ) ( 27,413 )

Other miscellaneous income (expense) 537 125

1 unchanged sentence

______________________

(1) The three and nine months ended March 31, 2023 includes a foreign exchange gain of $ 36.6 million resulting from the delayed payment of a portion of the purchase consideration, settled on February 9th, 2023, related to the Micro Focus Acquisition (see Note 19 “Acquisitions” for more details).

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

(3) Represents the realized gains (losses) on our derivatives not designated as hedges related to the 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).

(5) On December 1, 2022, we amended the Acquisition Term Loan and Bridge Loan to reallocate commitments under the Bridge Loan to the Acquisition Term Loan and terminated all remaining commitments under the Bridge Loan which resulted in a loss on debt extinguishment related to unamortized debt issuance costs (see Note 11 “Long-Term Debt” for more details).

(6) 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).

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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

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

$ 80,901 $ ( 116,929 )

Basic earnings per share

Net income attributable to OpenText $ 57,556 $ 74,681 $ 199,113 $ 294,894

Basic earnings per share attributable to OpenText $ 0.21 $ 0.28 $ 0.74 $ 1.09

Diluted earnings per share

Net income attributable to OpenText $ 57,556 $ 74,681 $ 199,113 $ 294,894

Diluted earnings per share attributable to OpenText $ 0.21 $ 0.28 $ 0.74 $ 1.08

Weighted-average number of shares outstanding

Basic earnings (loss) per share attributable to OpenText

$ 0.30 $ ( 0.43 )

Diluted earnings (loss) per share

Net income (loss) attributable to OpenText

$ 80,901 $ ( 116,929 )

Diluted earnings (loss) per share attributable to OpenText

$ 0.30 $ ( 0.43 )

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

Basic 271,178 269,804

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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.

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, 2023, Mr.

Stephen Sadler, a member of the Board of Directors, earned $ 0.3 million (nine months ended March 31, 2022 — $ 0.4 million) in consulting fees from OpenText for assistance with acquisition-related business activities.

During the three months ended September 30, 2023, Mr.

Stephen Sadler, a member of the Board of Directors, earned $ 3 thousand (three months ended September 30, 2022 — $ 7 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.

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Cash Dividends

As part of our quarterly, non-cumulative cash dividend program, we declared, on May 2, 2023, a dividend of $ 0.24299 per Common Share.

The record date for this dividend is June 2, 2023 and the payment date is June 23, 2023.

As part of our quarterly, non-cumulative cash dividend program, we declared, on November 1, 2023, a dividend of $ 0.25 per Common Share.

The record date for this dividend is December 1, 2023 and the payment date is December 20, 2023.

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

Revolver Repayment

Following the end of the quarter, in April 2023 we repaid $ 175 million of the $ 450 million outstanding balance on the Revolver using cash on hand.

As of April 30, 2023, we had a balance of $ 275 million outstanding on our Revolver.

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Debt Repayment

Following the end of the quarter, on October 10, 2023 we repaid the outstanding balance on the Revolver of $ 100 million and on October 20, 2023 we repaid $ 75 million of the outstanding balance on the Acquisition Term Loan using cash on hand.

As of October 31, 2023, we had a balance of nil and $ 3.5 billion outstanding on our Revolver and Acquisition Term Loan, respectively.

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