What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-02-01 compared with 2023-11-02 · 459 added, 240 removed, 1036 unchanged (40% of the section changed)

4 unchanged sentences

dollars, except share data)

September 30, 2023 June 30, 2023

December 31, 2023 June 30, 2023

ASSETS (unaudited)

Cash and cash equivalents $ 1,003,134 $ 1,231,625

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)

Accounts receivable trade, net of allowance for credit losses of $ 10,642 as of December 31, 2023 and $ 13,828 as of June 30, 2023 (Note 4)

735,346 682,517

2 unchanged sentences

Income taxes recoverable (Note 15)

70,179 68,161

Prepaid expenses and other current assets (Note 9)

215,396 221,732

Assets held for sale (Note 19)

Total current assets 4,083,990 2,275,231

28 unchanged sentences

119,400 89,297

Liabilities held for sale (Note 19)

Total current liabilities 2,959,175 3,219,614

2 unchanged sentences

52,632 51,961

Pension liability (Note 12)

Pension liability, net (Note 12)

129,238 126,312

12 unchanged sentences

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

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

271,854,655 and 270,902,571 Common Shares issued and outstanding at December 31, 2023 and June 30, 2023, respectively;

authorized Common Shares:

3 unchanged sentences

Retained earnings 2,029,643 2,048,984

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

Treasury stock, at cost ( 4,400,034 and 3,536,375 shares at December 31, 2023 and June 30, 2023, respectively)

( 179,089 ) ( 151,597 )

11 unchanged sentences

dollars, except share and per share data)

Three Months Ended September 30,

Three Months Ended

December 31, Six Months Ended

2023 2022 2023 2022

Revenues (Note 3):

28 unchanged sentences

Interest and other related expense, net ( 139,292 ) ( 38,715 ) ( 281,056 ) ( 79,097 )

Income (loss) before income taxes

Income before income taxes

45,791 309,297 137,089 226,037

1 unchanged sentence

8,054 50,774 18,406 84,399

Net income (loss) for the period

Net income for the period

$ 37,737 $ 258,523 $ 118,683 $ 141,638

1 unchanged sentence

( 62 ) ( 37 ) ( 107 ) ( 81 )

Net income (loss) attributable to OpenText

Net income attributable to OpenText

$ 37,675 $ 258,486 $ 118,576 $ 141,557

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

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

$ 0.14 $ 0.96 $ 0.44 $ 0.52

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

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

$ 0.14 $ 0.96 $ 0.44 $ 0.52

5 unchanged sentences

(In thousands of U.S.

Three Months Ended September 30,

Net income (loss) for the period

Three Months Ended

December 31, Six Months Ended

2023 2022 2023 2022

Net income for the period

$ 37,737 $ 258,523 $ 118,683 $ 141,638

Other comprehensive income (loss)—net of tax:

4 unchanged sentences

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

328 1,101 337 1,689

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

2 unchanged sentences

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

( 91 ) 32 ( 110 ) 4,196

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

Total other comprehensive loss net, for the period

113 37 302 74

Total comprehensive income (loss)

Total other comprehensive income (loss) net, for the period

( 13,474 ) 41,548 ( 29,940 ) 6,631

Total comprehensive income

24,263 300,071 88,743 148,269

Comprehensive income attributable to non - controlling interests

( 62 ) ( 37 ) ( 107 ) ( 81 )

Total comprehensive income (loss) attributable to OpenText

Total comprehensive income attributable to OpenText

$ 24,201 $ 300,034 $ 88,636 $ 148,188

______________________

(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.

(1) Net of tax expense (recovery) of $ 549 and $ 347 for the three months ended December 31, 2023 and 2022, respectively;

$( 115 ) and $( 859 ) for the six months ended December 31, 2023 and 2022, respectively.

(2) Net of tax expense (recovery) of $ 118 and $ 397 for the three months ended December 31, 2023 and 2022, respectively;

$ 121 and $ 609 for the six months ended December 31, 2023 and 2022, respectively.

(3) Net of tax expense (recovery) of ($ 119 ) and $ — for the three months ended December 31, 2023 and 2022, respectively;

($ 60 ) and $ — for the six months ended December 31, 2023 and 2022, respectively.

(4) Net of tax expense (recovery) of $ 91 and $ 106 for the three months ended December 31, 2023 and 2022, respectively;

$ 110 and $ 1,210 for the six months ended December 31, 2023 and 2022, respectively.

(5) Net of tax expense (recovery) of $ 50 and $ 25 for the three months ended December 31, 2023 and 2022, respectively;

$ 125 and $ 51 for the six months ended December 31, 2023 and 2022, respectively .

See accompanying Notes to Condensed Consolidated Financial Statements

3 unchanged sentences

dollars and shares)

Three Months Ended September 30, 2023

Three Months Ended December 31, 2023

Common Shares and Additional Paid in Capital Treasury Stock Retained

3 unchanged sentences

Shares Amount Shares Amount

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

Issuance of Common Shares

Under employee stock option plans 340 11,111 — — — — — 11,111

Under employee stock purchase plans 287 8,370 — — — — — 8,370

Share-based compensation — 39,993 — — — — — 39,993

Issuance of treasury stock — ( 14,539 ) 353 17,030 ( 2,491 ) — — —

Dividends declared

($ 0.25 per Common Share)

— — — — ( 67,648 ) — — ( 67,648 )

Other comprehensive income (loss) - net — — — — — ( 13,474 ) — ( 13,474 )

Net income for the period — — — — 37,675 — 62 37,737

Balance as of December 31, 2023

271,855 $ 2,261,856 ( 4,400 ) $ ( 179,089 ) $ 2,029,643 $ ( 83,499 ) $ 1,436 $ 4,030,347

Three Months Ended December 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 September 30, 2022

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

Issuance of Common Shares

Under employee stock purchase plans 354 8,042 — — — — — 8,042

Share-based compensation — 28,822 — — — — — 28,822

Issuance of treasury stock — ( 12,666 ) 291 12,666 — — — —

Dividends declared

($ 0.24299 per Common Share)

— — — — ( 65,692 ) — — ( 65,692 )

Other comprehensive income (loss) - net — — — — — 41,548 — 41,548

Net income for the period — — — — 258,486 — 37 258,523

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

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands of U.S.

dollars and shares)

Six Months Ended December 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 June 30, 2023

10 unchanged sentences

Other comprehensive income (loss) - net — — — — — ( 29,940 ) — ( 29,940 )

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

Balance as of September 30, 2023

Net income for the period — — — — 118,576 — 107 118,683

Balance as of December 31, 2023

271,855 $ 2,261,856 ( 4,400 ) $ ( 179,089 ) $ 2,029,643 $ ( 83,499 ) $ 1,436 $ 4,030,347

Three Months Ended September 30, 2022

Six Months Ended December 31, 2022

Common Shares and Additional Paid in Capital Treasury Stock Retained

14 unchanged sentences

Other comprehensive income (loss) - net — — — — — 6,631 — 6,631

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

Balance as of September 30, 2022

Net income for the period — — — — 141,557 — 81 141,638

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

3 unchanged sentences

(In thousands of U.S.

Three Months Ended September 30,

Six Months Ended December 31,

Cash flows from operating activities:

Net income (loss) for the period

Net income for the period

$ 118,683 $ 141,638

5 unchanged sentences

Write-off of right of use assets 10,963 3,775

Loss on extinguishment of debt — 8,131

Loss on sale and write down of property and equipment 1,877 121

24 unchanged sentences

29,257 15,773

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

Repayment of long-term debt and Revolver ( 372,926 ) ( 5,000 )

2 unchanged sentences

Payments of dividends to shareholders ( 133,379 ) ( 129,562 )

Net cash used in financing activities

Net cash provided by (used in) financing activities

( 532,925 ) 869,561

Foreign exchange loss on cash held in foreign currencies

Foreign exchange gain (loss) on cash held in foreign currencies

3,539 ( 271 )

7 unchanged sentences

Reconciliation of cash, cash equivalents and restricted cash:

September 30, 2023 September 30, 2022

December 31, 2023 December 31, 2022

Cash and cash equivalents $ 1,003,134 $ 2,820,927

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended September 30, 2023

For the Three and Six Months Ended December 31, 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 September 30, 2023, was 70 % owned by OpenText.

(OT South Africa), which as of December 31, 2023, was 70 % owned by OpenText.

All intercompany balances and transactions have been eliminated.

17 unchanged sentences

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

The information furnished reflects all adjustments necessary for a fair presentation of the results for the periods presented and includes the consolidated financial results of Micro Focus International Limited, formerly Micro Focus International plc, and its subsidiaries (Micro Focus), with effect from February 1, 2023 (see below and Note 19 “Acquisitions”).

Use of estimates

5 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 pension assets, (xi) the valuation of available-for-sale investments and (xii) the valuation of derivative instruments.

(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, (xii) the valuation of derivative instruments and (xiii) the accounting for assets held for sale and proposed divestitures.

Acquisition of Micro Focus

1 unchanged sentence

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

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

Proposed Divestiture of AMC Business

On November 28, 2023, the Company entered into an agreement to sell its Application Modernization and Connectivity (AMC) business to Rocket Software, Inc.

(Rocket Software), for $ 2.275 billion in cash before taxes, fees and other adjustments.

The transaction remains subject to certain regulatory approvals and other customary closing conditions and is expected to close in the fourth quarter of Fiscal 2024.

The Company determined that the assets and liabilities of the AMC business met the criteria for held for sale classification and the respective assets and liabilities have been reclassified to assets held for sale and liabilities held for sale reported in our Condensed Consolidated Balance Sheets as of December 31, 2023.

The Company has determined that the AMC business does not constitute a component, as its operations and cash flows can not be clearly distinguished from the rest of the Company’s operations and cash flows due to significant shared costs, therefore, the transaction does not meet the discontinued operations criteria, and the results of operations from the AMC business are presented within income from operations in our Condensed Consolidated Statements of Income.

The Company expects that the sale proceeds less costs to sell will exceed the preliminary estimate of the carrying value of the net assets for the AMC business.

The carrying value is subject to change based on developments leading up to the closing date.

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

NOTE 2— ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Policies

Held for Sale Classification

Assessments for held for sale accounting classification are performed by the Company when events or changes in business circumstances indicate that a change in classification may be necessary.

The Company classifies assets and liabilities to be disposed of as held for sale in the period in which they are available for immediate sale in their present condition and when the sale is probable and expected to be completed within one year.

Assets and liabilities classified as held for sale are presented separately within current assets and liabilities in our Condensed Consolidated Balance Sheets and are measured at the lower of their carrying amount or fair value less costs to sell.

Further, the Company ceases to record depreciation and amortization expense on assets that are classified as held for sale.

The Company has classified assets and liabilities held for sale as of December 31, 2023 related to the proposed divestiture of our AMC business and the proposed sale of a company owned facility (which is unrelated to the divestiture of our AMC business).

Accounting Pronouncements Adopted in Fiscal 2024

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

During Fiscal 2024, we have adopted the following Accounting Standards Updates (ASU):

Supplier Financing Program Obligations

1 unchanged sentence

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.

Accounting Pronouncements Not Yet Adopted in Fiscal 2024

Segment Reporting

In November 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which provides guidance to improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses.

Public entities

must adopt the new guidance for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

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

We are currently evaluating the potential impact of the adoption of ASU 2023-07 on the Company’s financial disclosures.

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” that addresses requests for improved income tax disclosures from investors that use the financial statements to make capital allocation decisions.

Public entities must adopt the new guidance for fiscal years beginning after December 15, 2024.

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

We are currently evaluating the potential impact of the adoption of ASU 2023-09 on the Company’s financial disclosures.

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 September 30,

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

Total Revenues by Geography:

31 unchanged sentences

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

As of September 30, 2023

As of December 31, 2023

As of June 30, 2023

Short-term contract assets (1)

$ 70,656 $ 71,196

Long-term contract assets (1)

1 unchanged sentence

Short-term deferred revenues (1)

$ 1,535,322 $ 1,721,781

Long-term deferred revenues (1)

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 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.

$ 170,273 $ 217,771

______________________

(1) Excludes $ 4.9 million of short-term contract assets and $ 2.7 million of long-term contract assets that have been reclassified to Assets held for sale, as well as $ 172.8 million of short-term deferred revenues and $ 23.1 million of long-term deferred revenues that have been reclassified to Liabilities held for sale as of December 31, 2023, related to the proposed divestiture of the AMC business.

See Note 19 “Acquisitions and Divestitures.”

The difference in the opening and closing balances of our contract assets and deferred revenues, excluding the impact of assets held for sale, 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 six months ended December 31, 2023, we reclassified $ 58.5 million (six months ended December 31, 2022 — $ 20.2 million) of contract assets to receivables as a result of the right to the transaction consideration becoming unconditional.

During the three and six months ended December 31, 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 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

Our deferred revenues, excluding the impact of liabilities held for sale, 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 six months ended December 31, 2023 that was included in the deferred revenue balances at June 30, 2023 was $ 1,268 million (six months ended December 31, 2022—$ 658 million).

Incremental Costs of Obtaining a Contract with a Customer

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

4 unchanged sentences

Impact of foreign exchange rate changes 400

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.

Reclassification to Assets held for sale (1)

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

______________________

(1) Capitalized costs to obtain a contract of $ 2.6 million have been reclassified to Assets held for sale related to the proposed divestiture of our AMC business.

See Note 19 “Acquisitions and Divestitures.”

During the three and six months ended December 31, 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 September 30, 2023, approximately $ 2.5 billion of revenue is expected to be recognized from remaining performance obligations on existing contracts.

As of December 31, 2023, approximately $ 2.5 billion of revenue is expected to be recognized from remaining performance obligations on existing contracts, excluding performance obligations related to the proposed divestiture of our AMC business which are reported within Liabilities held for sale.

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

As of December 31, 2023, approximately $ 128.9 million of revenue is expected to be recognized from remaining performance obligations on existing contracts relates to the proposed divestiture of our AMC business and we expect to recognize approximately 49 % of this amount over the next 12 months.

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

4 unchanged sentences

Write-off / adjustments ( 5,980 )

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).

Reclassification to Assets held for sale (1)

Balance as of December 31, 2023

______________________

(1) Allowance for credit losses of $ 1.1 million have been reclassified to Assets held for sale related to the proposed divestiture of our AMC business.

See Note 19 “Acquisitions and Divestitures.”

Included in accounts receivable are unbilled receivables in the amount of $ 108.2 million as of December 31, 2023 (June 30, 2023—$ 66.5 million).

As of December 31, 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 September 30, 2023

Cost Accumulated

Depreciation Net

As of December 31, 2023

Depreciation (1)

Computer hardware $ 407,624 $ ( 271,429 ) $ 136,195

5 unchanged sentences

Total $ 1,064,496 $ ( 711,926 ) $ 352,570

______________________

(1) Excludes Property and equipment with cost of $ 6.3 million, accumulated depreciation of $ 1.0 million and a net book value of $ 5.3 million that have been reclassified to Assets held for sale related to the proposed divestiture of our AMC business and proposed divestiture of certain facilities owned by the Company.

See Note 19 “Acquisitions and Divestitures.”

As of June 30, 2023

8 unchanged sentences

Total $ 1,023,450 $ ( 666,546 ) $ 356,904

Proposed Sale of Company Owned Facility

During the three months ended December 31, 2023, the Company entered into a Purchase and Sale Agreement to dispose of a Company owned facility which has a carrying value of $ 4.4 million and has been classified as held for sale as of December 31, 2023.

NOTE 6— LEASES

5 unchanged sentences

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

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

As of December 31, 2023 As of June 30, 2023

Operating Leases Balance Sheet Location

Operating lease right of use assets Operating lease right of use assets $ 266,053 $ 285,723

Operating lease liabilities (current) Operating lease liabilities $ 90,418 $ 91,425

Operating lease liabilities (noncurrent) Long-term operating lease liabilities 252,629 271,579

Operating lease right of use assets (1)

Operating lease right of use assets $ 245,118 $ 285,723

Operating lease liabilities (current) (1)

Operating lease liabilities $ 86,868 $ 91,425

Operating lease liabilities (noncurrent) (1)

Long-term operating lease liabilities 236,481 271,579

Total operating lease liabilities $ 323,349 $ 363,004

6 unchanged sentences

Total finance lease liabilities $ 8,085 $ 10,781

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

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

______________________

(1) Excludes Operating lease right of use assets of $ 0.7 million that have been reclassified to Assets held for sale, as well as $ 0.3 million of Operating lease liabilities and $ 0.4 million of Long-term operating lease liabilities that have been reclassified to Liabilities held for sale related to the proposed divestiture of our AMC business.

See Note 19 “Acquisitions and Divestitures.”

The weighted average remaining lease term and discount rate, inclusive of assets held, for sale for the periods indicated below were as follows:

As of December 31, 2023 As of June 30, 2023

Weighted-average remaining lease term

6 unchanged sentences

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

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

Operating lease cost $ 22,594 $ 13,991 $ 46,334 $ 28,302

6 unchanged sentences

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:

Three Months Ended September 30,

Six Months Ended December 31,

Cash paid for amounts included in the measurement of lease liabilities:

5 unchanged sentences

Maturity of Lease Liabilities

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

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

Fiscal years ending June 30, Operating Leases Finance Leases

2024 (nine months ended)

2024 (six months ended)

$ 52,754 $ 2,757

3 unchanged sentences

Total $ 324,005 $ 8,085

Operating lease maturity amounts included in the table above do not include sublease income expected to be received under our various sublease agreements with third parties.

Operating lease maturity amounts included in the table above are inclusive of liabilities classified as held for sale and do not include sublease income expected to be received under our various sublease agreements with third parties.

Under the agreements initiated with third parties, we expect to receive sublease income of $ 6.3 million over the remainder of Fiscal 2024 and $ 34.1 million thereafter.

3 unchanged sentences

Balance as of June 30, 2023

Other acquisition (Note 19)

Acquisition of Micro Focus (Note 19) (1)

Impact of foreign exchange rate changes 2,344

Balance as of September 30, 2023

Other acquisition (Note 19)

Reclassification to Assets held for sale (2)

( 1,037,979 )

(1) Adjustments relating to open measurement period.

Balance as of December 31, 2023

______________________

(1) Adjustments relate to open measurement period.

(2) Adjustment to reclassify goodwill to Assets held for sale related to the proposed divestiture of our AMC business .

See Note 19 “Acquisitions and Divestitures.”

NOTE 8— ACQUIRED INTANGIBLE ASSETS

As of September 30, 2023

Cost Accumulated Amortization Net

As of December 31, 2023

Accumulated Amortization (1)

Technology assets

$ 1,157,195 $ ( 257,880 ) $ 899,315

Customer assets

3,085,048 ( 1,211,143 ) 1,873,905

Total $ 4,242,243 $ ( 1,469,023 ) $ 2,773,220

4 unchanged sentences

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

______________________

(1) Excludes technology and customer intangible net assets with cost of $ 432.1 million and $ 610.2 million respectively, accumulated amortization of $ 48.7 million and $ 62.9 million respectively, and net book value of $ 383.4 million and $ 547.3 million, respectively, that have been reclassified to Assets held for sale related to the proposed divestiture of our AMC business.

See Note 19 “Acquisitions and Divestitures.”

Where applicable, the above balances as of December 31, 2023 have been reduced to reflect the impact of intangible assets where the gross cost has become fully amortized during the six months ended December 31, 2023.

The impact of this resulted in a reduction of $ 228 million to technology assets and accumulated amortization.

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,

2024 (nine months ended)

2024 (six months ended)

2029 and Thereafter

2 unchanged sentences

Prepaid expenses and other current assets:

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

As of December 31, 2023 As of June 30, 2023

Deposits and restricted cash $ 4,253 $ 2,621

Capitalized costs to obtain a contract (2)

37,922 39,685

Short-term prepaid expenses and other current assets (2)

169,574 175,879

Derivative asset (1)

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______________________

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

(1) Represents the asset related to our derivative instrument activity.

See Note 17 “Derivative Instruments and Hedging Activities.”

(2) Excludes Capitalized costs to obtain a contract of $ 1.2 million and Short-term prepaid expenses and other current assets of $ 0.1 million that have been reclassified to Assets held for sale as of December 31, 2023 related to the proposed divestiture of our AMC business.

See Note 19 “Acquisitions and Divestitures.”

Other assets:

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

As of December 31, 2023 As of June 30, 2023

Deposits and restricted cash $ 19,463 $ 20,418

Capitalized costs to obtain a contract (1)

64,112 57,522

Investments 127,320 147,974

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Long-term prepaid expenses and other long-term assets

67,011 76,546

Total $ 318,783 $ 342,318

______________________

(1) Excludes Capitalized costs to obtain a contract of $ 1.4 million that has been reclassified to Assets held for sale as of December 31, 2023 related to the proposed divestiture of our AMC business.

See Note 19 “Acquisitions and Divestitures.”

Deposits and restricted cash primarily relate to security deposits provided to landlords in accordance with facility lease agreements and cash restricted per the terms of certain contractual-based agreements.

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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 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.

During the three and six months ended December 31, 2023, our share of income (loss) from these investments was $( 8.5 ) million and $( 18.2 ) million, respectively (three and six months ended December 31, 2022—$( 0.3 ) million and $( 6.8 ) 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.

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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Accounts payable and accrued liabilities:

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

As of December 31, 2023 As of June 30, 2023

Accounts payable—trade $ 144,219 $ 162,720

7 unchanged sentences

Asset retirement obligations 6,724 5,915

Total $ 836,042 $ 996,261

$ 948,921 $ 996,261

______________________

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

(2) Excludes $ 24.8 million of Accounts payable and accrued liabilities that have been reclassified to Liabilities held for sale related to the proposed divestiture of our AMC business.

See Note 19 “Acquisitions and Divestitures.”

Long-term accrued liabilities:

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

As of December 31, 2023 As of June 30, 2023

Amounts payable in respect of restructuring and other special charges $ 10,926 $ 8,875

1 unchanged sentence

Asset retirement obligations 23,687 25,337

Total $ 49,333 $ 51,961

$ 52,632 $ 51,961

______________________

(1) Excludes $ 0.1 million of Long-term accrued liabilities that have been reclassified to Liabilities held for sale related to the proposed divestiture of our AMC business.

See Note 19 “Acquisitions and Divestitures.”

Asset retirement obligations

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

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).

As of December 31, 2023, the present value of this obligation was $ 30.4 million (June 30, 2023—$ 31.3 million), with an undiscounted value of $ 33.9 million (June 30, 2023—$ 35.0 million).

NOTE 11— LONG-TERM DEBT

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

As of December 31, 2023 As of June 30, 2023

Senior Notes 2031 $ 650,000 $ 650,000

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______________________

(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).

(1) During the three and six months ended December 31, 2023, we recorded $ 0.8 million and $ 2.4 million of debt issuance costs, respectively, related to the amendment of the Revolver (as defined below) and 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 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).

For the three and six months ended December 31, 2023, we recorded interest expense of $ 6.7 million and $ 13.4 million, respectively, relating to Senior Notes 2031 (three and six months ended December 31, 2022—$ 6.7 million and $ 13.4 million, respectively).

Senior Notes 2030

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

For the three 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).

For the three and six months ended December 31, 2023, we recorded interest expense of $ 9.3 million and $ 18.6 million, respectively, relating to Senior Notes 2030 (three and six months ended December 31, 2022—$ 9.3 million and $ 18.6 million, respectively).

Senior Notes 2029

3 unchanged sentences

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

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).

For the three and six months ended December 31, 2023, we recorded interest expense of $ 8.2 million and $ 16.4 million, respectively, relating to Senior Notes 2029 (three and six months ended December 31, 2022—$ 8.2 million and $ 16.4 million, respectively).

Senior Notes 2028

3 unchanged sentences

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

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).

For the three and six months ended December 31, 2023, we recorded interest expense of $ 8.7 million and $ 17.4 million, respectively, relating to Senior Notes 2028 (three and six months ended December 31, 2022—$ 8.7 million and $ 17.4 million, respectively).

Senior Secured Fixed Rate Notes

Senior Secured Notes 2027

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.

On December 1, 2022, we issued $ 1 billion in aggregate principal amount of Senior Secured Notes due 2027 (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 Securities Act.

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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.

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

As of December 31, 2023, the Senior Secured Notes 2027 bear an effective interest rate of 7.39 %.

The effective interest rate includes interest expense of $ 34.6 million and amortization of debt discount and issuance costs of $ 0.7 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 ).

For the three and six months ended December 31, 2023, we recorded interest expense of $ 17.3 million and $ 34.6 million, respectively, relating to Senior Secured Notes 2027 (three and six months ended December 31, 2022—$ 5.8 million).

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

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

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 the applicable margin of 1.75 %.

As of December 31, 2023, the outstanding balance on the Term Loan B bears an interest rate of 7.20 %.

As of December 31, 2023, the Term Loan B bears an effective interest rate of 7.49 %.

The effective interest rate includes interest expense of $ 34.5 million and amortization of debt discount and issuance costs of $ 0.8 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 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.

As of December 31, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.70 :1.00.

For the three and six months ended December 31, 2023, we recorded interest expense of $ 17.3 million and $ 34.5 million, respectively, relating to Term Loan B (three and six months ended December 31, 2022—$ 13.2 million and $ 22.9 million, respectively).

On December 19, 2023, we amended our committed revolving credit facility (the Revolver) to, among other things, extend the maturity from October 31, 2024 to December 19, 2028, and to remove the 10 -basis point credit spread adjustment for loans bearing interest based on the SOFR rate.

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 (as defined below) and Senior Secured Notes 2027.

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 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.

Borrowings under the Revolver bear interest per annum at a floating rate of interest equal to 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 December 31, 2023, we had no outstanding balance under the Revolver (June 30, 2023—$ 275 million).

For the three and six months ended December 31, 2023, we recorded interest expense of $ 0.2 million and $ 2.2 million, respectively, relating to the Revolver (three and six months ended December 31, 2022— nil ).

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, 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.

2 unchanged sentences

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 %.

As of December 31, 2023, the outstanding balance on the Acquisition Term Loan bears an interest rate of 8.20 %.

As of December 31, 2023, the Acquisition Term Loan bears an effective interest rate of 9.31 %.

The effective interest rate includes interest expense of $ 150.3 million and amortization of debt discount and issuance costs of $ 9.9 million.

3 unchanged sentences

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

As of December 31, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.70 :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 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.

For the three and six months ended December 31, 2023, we recorded interest expense of $ 73.1 million and $ 150.3 million, respectively, relating to the Acquisition Term Loan (three and six months ended December 31, 2022— nil , respectively).

Following the end of the quarter, on January 22, 2024, the Company repaid an additional $ 175 million drawn under the Acquisition Term Loan (see Note 25 “Subsequent Events” to our Condensed Consolidated Financial Statements for more details).

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.

1 unchanged sentence

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 $ 8.1 million relating to unamortized debt issuance costs in the second quarter of Fiscal 2023 .

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 ).

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

Debt Issuance Costs

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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.

The plans are primarily located in Germany, which as of December 31, 2023, make up approximately 63 % of the Company’s 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.

7 unchanged sentences

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

Three Months Ended September 30,

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

Pension expense:

7 unchanged sentences

Cash Dividends

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).

For the three and six months ended December 31, 2023, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $ 0.25 and $ 0.50 per Common Share, respectively, in the aggregate amount of $ 66.4 million and $ 133.4 million, respectively, which we paid during the same periods (three and six months ended December 31, 2022—$ 0.24299 and $ 0.48598 per Common Share, respectively, in the aggregate amount of $ 64.9 million and $ 129.6 million, respectively).

Share Capital

3 unchanged sentences

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 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).

During the three and six months ended December 31, 2023, nil and 1,400,000 Common Shares were purchased on the open market at a cost of nil and $ 53.1 million, respectively, and held under trust for potential settlement of awards under our LTIP or other plans as described below (three and six months ended December 31, 2022— no Common Shares were purchased, respectively).

During the three and six months ended December 31, 2023, we delivered to eligible participants 353,247 and 536,560 Common Shares, respectively, that were purchased in the open market in connection with the settlement of awards and other plans (three and six months ended December 31, 2022— 290,970 and 411,376 Common Shares, respectively).

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

During the three and six months ended December 31, 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 September 30,

Three Months Ended

December 31, Six Months Ended

2023 2022 2023 2022

Stock Options (issued under Stock Option Plans) $ 5,716 $ 5,724 $ 10,260 $ 9,309

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Total share-based compensation expense $ 40,175 $ 28,822 $ 77,270 $ 52,030

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

As of September 30, 2023

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

As of December 31, 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 three months ended September 30, 2023 is as follows:

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

Options Weighted-

8 unchanged sentences

Forfeited or expired ( 252,923 ) 41.57

Outstanding at September 30, 2023

Outstanding at December 31, 2023

12,835,934 $ 38.51 4.52 $ 66,700

Exercisable at September 30, 2023

Exercisable at December 31, 2023

4,833,489 $ 40.49 3.07 $ 16,956

As of September 30, 2023, 5,331,793 options to purchase Common Shares were available for issuance under our stock option plans.

As of December 31, 2023, 4,909,525 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 September 30,

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

Weighted–average fair value of options granted $ 10.34 $ 5.77 $ 9.57 $ 6.40

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Performance Options

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 ).

During the three and six months ended December 31, 2023, we did not grant performance options (during the three and six months ended December 31, 2022— nil and 1,000,000 , respectively).

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

Three Months Ended September 30,

Six Months Ended December 31,

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.

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

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

The Performance Conditions for vesting of the outstanding PSUs are based on market conditions or performance-based revenue conditions.

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 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.

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

The fair value of PSUs with performance-based conditions 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 three months ended September 30, 2023 is as follows:

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

Units Weighted-Average

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918,831 52.90

( 240,741 ) 61.23

Forfeited or expired ( 40,083 ) 59.02

Outstanding at September 30, 2023

Outstanding at December 31, 2023

1,651,392 $ 57.15 2.21 $ 69,392

______________________

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

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

Three Months Ended September 30,

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

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

Six Months Ended December 31,

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

$ 43.10 - $ 55.06

Weighted-average assumptions used:

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Risk–free interest rate 4.38 %

3.13 % - 3.39 %

Expected dividend yield — % — %

Expected life (in years) 3.10 3.11

The weighted-average fair value of the performance-based PSUs granted was $ 40.14 for the six months ended December 31, 2023.

Restricted Share Units (Issued Under LTIP)

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

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

Units Weighted-Average

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Granted 491,738 36.12

Vested ( 224,010 ) 43.38

Forfeited or expired ( 34,035 ) 40.45

Outstanding at September 30, 2023

Outstanding at December 31, 2023

1,008,053 $ 39.94 2.30 $ 42,358

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

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

A summary of activity under our RSUs (other) issued for the six months ended December 31, 2023 is as follows:

Units Weighted-Average

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Forfeited or expired ( 186,875 ) 37.06

Outstanding at September 30, 2023

Outstanding at December 31, 2023

6,188,615 $ 37.06 2.07 $ 260,046

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

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

A summary of activity under our DSUs issued for the six months ended December 31, 2023 is as follows:

Units Weighted-Average

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Granted 69,789 39.69

Outstanding at September 30, 2023 (1)

Outstanding at December 31, 2023 (2)

1,064,357 $ 30.62 0.91 $ 44,724

1 unchanged sentence

(1) Includes 90,906 unvested DSUs.

(2) Includes 47,871 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 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).

During the three and six months ended December 31, 2023, 186,974 and 473,746 Common Shares, respectively, were eligible for issuance to employees enrolled in the ESPP (three and six months ended December 31, 2022— 227,885 and 582,350 Common Shares, respectively).

During the three and six months ended December 31, 2023, cash in the amount of $ 6.7 million and $ 15.3 million, respectively, was received from employees relating to the ESPP (three and six months ended December 31, 2022—$ 5.8 million and $ 13.8 million, respectively).

NOTE 14— GUARANTEES AND CONTINGENCIES

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Payments due between

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

Total January 1, 2024 - 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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Quarterly, we review the status of each significant legal matter and evaluate such matters to determine how they should be treated for accounting and disclosure purposes in accordance with the requirements of ASC Topic 450-20 “Loss Contingencies” (Topic 450-20).

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

that is reasonably likely to result in litigation, with relevant internal and external counsel, and assessing the progress of each matter in light of its merits and our experience with similar proceedings under similar circumstances.

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

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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 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.

Assuming the utilization of available tax attributes (further described below), we estimate our potential aggregate liability, as of December 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 $ 79 million.

As of December 31, 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 December 31, 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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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.

On December 11, 2023 we filed 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.

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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.

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.

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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 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.

On July 14, 2023, the district court certified the lead plaintiff’s proposed class, following which the defendants filed a motion for class decertification.

On January 31, 2024 the parties filed a motion for preliminary approval of a settlement to fully resolve the litigation.

The proposed settlement is subject to the court’s approvals and, if approved, will be substantially paid from insurance coverage, with any remaining amount not covered by insurance expected to be immaterial to the Company.

All defendants have denied, and continue to deny, the merit of the claims alleged in the case and the settlement does not reflect any admission of fault, wrongdoing, or liability as to any defendant.

Carbonite vs Realtime Data

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NOTE 15— INCOME TAXES

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).

The Company’s effective tax rate for the three months ended December 31, 2023, increased to a provision of 17.6 %, compared to a provision of 16.4 % for the three months ended December 31, 2022.

The Company’s effective tax rate for the six

months ended December 31, 2023, decreased to a provision of 13.4 %, compared to a provision of 37.3 % for the six months ended December 31, 2022.

The Company’s effective tax rate for the three months ended December 31, 2023, differs from the Canadian statutory rate of 26.5 % primarily due to tax benefits related to foreign tax credits, 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 December 31, 2022 differs from the Canadian statutory rate primarily due to tax benefits related to benefits of internal reorganizations partially offset by permanent items and uncertain tax positions.

The Company’s effective tax rate for the six months ended December 31, 2023, differs from the Canadian statutory rate of 26.5 % primarily due to tax benefits related to foreign tax credits and research and development credits, partially offset by US BEAT.

The Company’s effective tax rate for the six months ended December 31, 2022, differs from the Canadian statutory rate primarily due to permanent items and uncertain tax positions, partially offset by research and development credits.

As of December 31, 2023, the gross amount of unrecognized tax benefits accrued was $ 182.7 million (June 30, 2023 — $ 178.7 million), which is inclusive of interest and penalties accrued of $ 19.3 million (June 30, 2023 — $ 13.5 million).

We believe that it is reasonably possible that the gross unrecognized tax benefit could decrease by $ 31.3 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.

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

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.

As of December 31, 2023, we have recognized a deferred income tax liability of $ 29.5 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.

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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.”

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 December 31, 2023, in the preliminary purchase price allocation relating to the Micro Focus Acquisition, as described in Note 19 “Acquisitions and Divestitures.”

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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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

The following table summarizes the fair value of our financial instruments as of December 31, 2023 and June 30, 2023:

Fair Value Hierarchy December 31, 2023 June 30, 2023

Available-for-sale financial assets (Note 9)

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Changes in Level 3 Fair Value Measurements

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.

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 December 31, 2023.

Available-for-sale

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Gain (loss) recognized in income 361

Balance as of September 30, 2023

Balance as of December 31, 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.

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

During the three months ended September 30, 2023 and 2022, respectively, we did not have any transfers between Level 1, Level 2 or Level 3.

During the three and six months ended December 31, 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 months ended September 30, 2023 and 2022, respectively, no indications of impairments were identified and therefore no fair value measurements were required.

During the three and six months ended December 31, 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

Non-designated Hedges

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

foreign currency appreciation in the EUR denominated existing debt held by Micro Focus.

We entered into the following derivatives:

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

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

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 December 31, 2023, the fair value of the contracts is recorded within “Prepaid expenses and other current assets” and represents the net gain before tax effect that is expected to be reclassified from accumulated other comprehensive income (loss) into earnings with the next twelve months.

As of December 31, 2023, the notional amount of forward contracts we held to sell U.S.

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

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The fair values of outstanding derivative instruments are as follows:

September 30, 2023 As of

December 31, 2023 As of

June 30, 2023

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Derivatives designated as hedges:

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

$ — $ ( 963 ) $ 1,530 $ —

Cash flow hedge Prepaid expenses and other current assets $ 1,554 $ — $ 1,530 $ —

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

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Three Months Ended

September 30,

December 31, Six Months Ended

Instrument Income Statement Location 2023 2022 2023 2022

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Three Months Ended

September 30,

December 31, Six Months Ended

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 $ 2,071 $ 1,306 $ ( 434 ) $ ( 3,240 )

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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 September 30,

Three Months Ended December 31, Six Months Ended December 31,

2023 2022 2023 2022

Micro Focus Acquisition Restructuring Plan $ 44,760 $ — $ 51,624 $ —

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Other historical restructuring plans ( 167 ) ( 622 ) ( 457 ) ( 1,090 )

Divestiture-related costs

5,385 — 6,982 —

Acquisition-related costs 50 6,003 1,120 10,588

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

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.

Facility costs will include the accelerated amortization associated with the abandonment of right of use assets, the write-off of property and equipment 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 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.

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 three months ended September 30, 2023 is shown below.

During the three and six months ended December 31, 2023, we recognized costs of $ 12.3 million and $ 17.7 million, respectively, related to abandoned office spaces that have been early terminated or assigned to a third party, of which $ 6.1 million and $ 10.2 million, respectively, were related to the write-off of right of use assets, and $ 1.0 million and $ 1.5 million, respectively, in charges associated with the write-off of property and equipment as part of the Micro Focus Acquisition Restructuring Plan.

As of December 31, 2023, we expect total costs to be incurred in connection with the Micro Focus Acquisition Restructuring Plan to be approximately $ 160.0 million to $ 175.0 million, of which $ 123.9 million has been recorded within “Special charges (recoveries)” to date.

Micro Focus Acquisition Restructuring Plan Workforce reduction Facility charges Total

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Foreign exchange and other non-cash adjustments 529 ( 1,703 ) ( 1,174 )

Balance payable as of September 30, 2023

Balance payable as of December 31, 2023

$ 24,854 $ 11,045 $ 35,899

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During the third quarter of Fiscal 2022, as part of our return to office planning, we made a strategic decision to implement restructuring activities to streamline our operations and further reduce our real estate footprint around the world (Fiscal 2022 Restructuring Plan).

The Fiscal 2022 Restructuring Plan charges will 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.

The Fiscal 2022 Restructuring Plan charges relate to facility costs and workforce reductions.

Facility costs include the accelerated amortization associated with the abandonment of right of use assets, the write-off of property and equipment 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 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.

During the three and six months ended December 31, 2023, we recognized costs of $ 0.1 million and $ 0.2 million, respectively, related to abandoned office space that have been early terminated or assigned to a third party, of which nil related to the write-off of right of use assets.

Since the inception of the Fiscal 2022 Restructuring Plan, $ 32.6 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 ( 6 ) ( 112 ) ( 118 )

Balance payable as of September 30, 2023

Balance payable as of December 31, 2023

$ 176 $ 2,833 $ 3,009

Divestiture-related costs

Divestiture-related costs recorded within “Special charges (recoveries)” include the direct costs related to the proposed divestiture of our AMC business.

For the three and six months ended December 31, 2023, divestiture-related costs were $ 5.4 million and $ 7.0 million, respectively (three and six months ended December 31, 2022— nil ).

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 months ended September 30, 2023 were $ 1.1 million (three months ended September 30, 2022—$ 4.6 million).

Acquisition-related costs for the three and six months ended December 31, 2023 were $ 0.1 million and $ 1.1 million, respectively (three and six months ended December 31, 2022—$ 6.0 million and $ 10.6 million, respectively).

Other charges (recoveries)

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

For the three months ended December 31, 2023, “Other charges (recoveries)” includes $ 2.5 million of compensation related charges and $ 1.3 million of other miscellaneous charges, both associated with the Micro Focus Acquisition, and $ 0.5 million related to pre-acquisition equity incentives of Zix Corporation (Zix), which upon acquisition were replaced by equivalent value cash settlements (see Note 19 “Acquisitions and Divestitures”).

For the six months ended December 31, 2023, “Other charges (recoveries)” includes $ 5.4 million of compensation related charges and $ 2.4 million of other miscellaneous charges, both associated with the Micro Focus Acquisition, and $ 0.9 million related to pre-acquisition equity incentives of Zix, which upon acquisition were replaced by equivalent value cash settlements.

For the three and six months ended December 31, 2022, “Other charges” includes $ 3.6 million and $ 7.2 million, respectively, related to Zix pre-acquisition equity incentives, which upon acquisition were replaced by equivalent value cash settlements, and $( 0.7 ) million and $( 0.2 ) million, respectively, related to other miscellaneous charges (recoveries).

NOTE 19— ACQUISITIONS AND DIVESTITURES

Fiscal 2024 Acquisitions

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Preliminary Purchase Price Allocation

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:

As of December 31, 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

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

(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.

(3) Current period purchase price allocation adjustments of $ 23.8 million for the six months ended December 31, 2023, were primarily driven by changes in other current assets and other liabilities related to adjustments of pre-acquisition other current assets 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 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.

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 September 30, 2023.

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 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,

We expect to finalize this determination as of January 31, 2024.

The unaudited pro forma revenues and net income (loss) of the combined entity for the three and six months ended December 31, 2022, had the Micro Focus Acquisition been consummated on July 1, 2021, are set forth below:

Three Months Ended December 31, Six Months Ended December 31,

Supplemental Unaudited Pro Forma Information 2022 2022

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Net income (loss) (1)

( 373,733 ) ( 452,537 )

Net income (loss) attributable to OpenText (1)

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.

( 373,770 ) ( 452,618 )

______________________

(1) Included in the pro forma net loss for the three and six months ended December 31, 2022, is a $ 448.2 million goodwill impairment 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 informational 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 2024 Divestiture

Proposed Divestiture of AMC Business

On November 28, 2023, the Company entered into an agreement to sell its AMC business to Rocket Software, for $ 2.275 billion in cash before taxes, fees and other adjustments.

The transaction remains subject to certain regulatory approvals and other customary closing conditions and is expected to close in the fourth quarter of Fiscal 2024.

The Company expects that the sale proceeds less costs to sell will exceed the preliminary estimate of the carrying value of the net assets for the AMC business.

The carrying value is subject to change based on developments leading up to the closing date.

The following are classified as held for sale in the Condensed Consolidated Balance Sheets, which are related to the proposed divestiture of our AMC business.

The following balances incorporate the use of management estimates and are subject to change based on developments leading up to the closing date of the transaction.

Refer to Note 1 “Basis of Presentation”.

As of December 31, 2023

Assets held for sale

Accounts receivable trade, net of allowance for credit losses

Contract assets

Prepaid expenses and other current assets

Property and equipment

Operating lease right of use assets

Long-term contract assets

Acquired intangible assets

Total assets held for sale

Liabilities held for sale

Accounts payable and accrued liabilities

Operating lease liabilities

Deferred revenues

Long-term Accrued liabilities

Pension liability, net

Long-term operating lease liabilities

Long-term deferred revenues

Total liabilities held for sale

NOTE 20— 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)

Three Months Ended December 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 September 30, 2023

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

Other comprehensive income (loss) before reclassifications, net of tax ( 15,796 ) 1,522 450 ( 91 ) ( 13,915 )

Amounts reclassified into net income, net of tax — 328 — 113 441

Total other comprehensive income (loss) net, for the period ( 15,796 ) 1,850 450 22 ( 13,474 )

Balance as of December 31, 2023

$ ( 74,493 ) $ 1,142 $ ( 373 ) $ ( 9,775 ) $ ( 83,499 )

Six Months Ended December 31, 2023

Foreign Currency Translation Adjustments (1)

Cash Flow Hedges Available-for-Sale Investments 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 ( 30,379 ) 18 229 192 ( 29,940 )

Balance as of December 31, 2023

$ ( 74,493 ) $ 1,142 $ ( 373 ) $ ( 9,775 ) $ ( 83,499 )

______________________

(1) The amount of foreign currency translation recognized in other comprehensive income during the three and six months ended December 31, 2023 included net gains (losses) relating to our net investment hedges of $( 43.1 ) million and $( 26.0 ) million, respectively, as further discussed in Note 17 “Derivative Instruments and Hedging Activities.”

Three Months Ended December 31, 2022

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

Balance as of September 30, 2022

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

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

Other comprehensive income (loss) before reclassifications, net of tax 39,419 959 32 40,410

Amounts reclassified into net income, net of tax — 1,101 37 1,138

Total other comprehensive income (loss) net, for the period 39,419 2,060 69 41,548

Balance as of December 31, 2022

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

Six Months Ended December 31, 2022

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

Balance as of June 30, 2022

3 unchanged sentences

Total other comprehensive income (loss) net, for the period 3,053 ( 692 ) 4,270 6,631

Balance as of September 30, 2022

Balance as of December 31, 2022

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

NOTE 21— SUPPLEMENTAL CASH FLOW DISCLOSURES

Three Months Ended September 30,

Six Months Ended December 31,

Cash paid during the period for interest $ 286,471 $ 92,016

2 unchanged sentences

NOTE 22— OTHER INCOME (EXPENSE), NET

Three Months Ended September 30,

Three Months Ended

December 31, Six Months Ended

2023 2022 2023 2022

Foreign exchange gains (losses)

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

$ ( 19,624 ) $ 60 $ ( 8,190 ) $ ( 1,301 )

Unrealized gains (losses) on derivatives

not designated as hedges (1)

( 38,117 ) 171,607 ( 20,222 ) ( 9,854 )

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

( 8,482 ) ( 289 ) ( 18,178 ) ( 6,823 )

Loss on debt extinguishment (3)

— ( 8,131 ) — ( 8,131 )

Other miscellaneous income (expense) ( 2,561 ) 102 ( 2,024 ) 227

4 unchanged sentences

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).

(3) 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).

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 (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

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

Diluted earnings per share is 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

December 31, Six Months Ended

2023 2022 2023 2022

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

Basic earnings per share

Net income attributable to OpenText $ 37,675 $ 258,486 $ 118,576 $ 141,557

Basic earnings per share attributable to OpenText $ 0.14 $ 0.96 $ 0.44 $ 0.52

Diluted earnings per share

Net income attributable to OpenText $ 37,675 $ 258,486 $ 118,576 $ 141,557

Diluted earnings per share attributable to OpenText $ 0.14 $ 0.96 $ 0.44 $ 0.52

Weighted-average number of shares outstanding

Basic 271,568 270,189 271,373 269,997

3 unchanged sentences

8,353 11,462 8,151 10,331

(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.

______________________

(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.

NOTE 24— RELATED PARTY TRANSACTIONS

6 unchanged sentences

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

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.

During the six months ended December 31, 2023, Mr.

Stephen Sadler, a member of the Board of Directors, earned $ 4 thousand (six months ended December 31, 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.

1 unchanged sentence

Cash Dividends

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.

As part of our quarterly, non-cumulative cash dividend program, we declared, on January 31, 2024, a dividend of $ 0.25 per Common Share.

The record date for this dividend is March 1, 2024 and the payment date is March 20, 2024.

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

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.

Following the end of the quarter, on January 22, 2024 we repaid an additional $ 175 million on the Acquisition Term Loan using cash on hand.

As of January 31, 2024, we had a balance of $ 3.3 billion outstanding on our Acquisition Term Loan.

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