ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
CANADA | 98-0154400 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Page No | |
Part I Financial Information: | |
Item 1. Financial Statements | |
Condensed Consolidated Balance Sheet as of September 30, 2016 (unaudited) and June 30, 2016 | |
Condensed Consolidated Statements of Income - Three Months Ended September 30, 2016 and 2015 (unaudited) | |
Condensed Consolidated Statements of Comprehensive Income - Three Months Ended September 30, 2016 and 2015 (unaudited) | |
Condensed Consolidated Statements of Cash Flows - Three Months Ended September 30, 2016 and 2015 (unaudited) | |
Notes to Condensed Consolidated Financial Statements (unaudited) | |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation | |
Item 3. Quantitative and Qualitative Disclosures about Market Risk | |
Item 4. Controls and Procedures | |
Part II Other Information: | |
Item 1A. Risk Factors | |
Item 6. Exhibits | |
Signatures |
September 30, 2016 | June 30, 2016 | ||||||
ASSETS | (unaudited) | ||||||
Cash and cash equivalents | $ | 834,944 | $ | 1,283,757 | |||
Short-term investments | 2,726 | 11,839 | |||||
Accounts receivable trade, net of allowance for doubtful accounts of $7,270 as of September 30, 2016 and $6,740 as of June 30, 2016 (note 3) | 297,537 | 285,904 | |||||
Income taxes recoverable (note 14) | 19,954 | 31,752 | |||||
Prepaid expenses and other current assets | 70,643 | 59,021 | |||||
Total current assets | 1,225,804 | 1,672,273 | |||||
Property and equipment (note 4) | 181,728 | 183,660 | |||||
Goodwill (note 5) | 2,595,614 | 2,325,586 | |||||
Acquired intangible assets (note 6) | 831,197 | 646,240 | |||||
Deferred tax assets (note 14) | 1,100,897 | 241,161 | |||||
Other assets (note 7) | 65,533 | 53,697 | |||||
Deferred charges (note 8) | 62,512 | 22,776 | |||||
Long-term income taxes recoverable (note 14) | 9,025 | 8,751 | |||||
Total assets | $ | 6,072,310 | $ | 5,154,144 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities (note 9) | $ | 233,536 | $ | 257,450 | |||
Current portion of long-term debt (note 10) | 8,000 | 8,000 | |||||
Deferred revenues | 389,890 | 373,549 | |||||
Income taxes payable (note 14) | 39,203 | 32,030 | |||||
Total current liabilities | 670,629 | 671,029 | |||||
Long-term liabilities: | |||||||
Accrued liabilities (note 9) | 31,481 | 29,848 | |||||
Deferred credits (note 8) | 7,589 | 8,357 | |||||
Pension liability (note 11) | 63,691 | 61,993 | |||||
Long-term debt (note 10) | 2,137,276 | 2,137,987 | |||||
Deferred revenues | 46,247 | 37,461 | |||||
Long-term income taxes payable (note 14) | 145,787 | 149,041 | |||||
Deferred tax liabilities (note 14) | 90,381 | 79,231 | |||||
Total long-term liabilities | 2,522,452 | 2,503,918 | |||||
Shareholders’ equity: | |||||||
Share capital (note 12) | |||||||
121,492,067 and 121,404,677 Common Shares issued and outstanding at September 30, 2016 and June 30, 2016, respectively; Authorized Common Shares: unlimited | 822,135 | 817,788 | |||||
Additional paid-in capital | 155,323 | 147,280 | |||||
Accumulated other comprehensive income | 48,730 | 46,310 | |||||
Retained earnings | 1,877,639 | 992,546 | |||||
Treasury stock, at cost (629,480 shares at September 30, 2016 and 633,647 at June 30, 2016, respectively) | (25,166 | ) | (25,268 | ) | |||
Total OpenText shareholders' equity | 2,878,661 | 1,978,656 | |||||
Non-controlling interests | 568 | 541 | |||||
Total shareholders’ equity | 2,879,229 | 1,979,197 | |||||
Total liabilities and shareholders’ equity | $ | 6,072,310 | $ | 5,154,144 |
Three Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
Revenues: | ||||||||
License | $ | 60,656 | $ | 51,331 | ||||
Cloud services and subscriptions | 169,687 | 147,790 | ||||||
Customer support | 210,206 | 185,667 | ||||||
Professional service and other | 51,115 | 49,747 | ||||||
Total revenues | 491,664 | 434,535 | ||||||
Cost of revenues: | ||||||||
License | 3,845 | 2,681 | ||||||
Cloud services and subscriptions | 70,292 | 58,916 | ||||||
Customer support | 25,738 | 20,508 | ||||||
Professional service and other | 41,343 | 38,064 | ||||||
Amortization of acquired technology-based intangible assets (note 6) | 23,135 | 19,883 | ||||||
Total cost of revenues | 164,353 | 140,052 | ||||||
Gross profit | 327,311 | 294,483 | ||||||
Operating expenses: | ||||||||
Research and development | 58,572 | 46,440 | ||||||
Sales and marketing | 95,148 | 77,945 | ||||||
General and administrative | 38,197 | 35,569 | ||||||
Depreciation | 15,270 | 12,914 | ||||||
Amortization of acquired customer-based intangible assets (note 6) | 33,608 | 27,805 | ||||||
Special charges (note 17) | 12,454 | 17,337 | ||||||
Total operating expenses | 253,249 | 218,010 | ||||||
Income from operations | 74,062 | 76,473 | ||||||
Other income (expense), net | 6,699 | (4,913 | ) | |||||
Interest and other related expense, net | (27,275 | ) | (19,046 | ) | ||||
Income before income taxes | 53,486 | 52,514 | ||||||
Provision for (recovery of) income taxes (note 14) | (859,425 | ) | 11,202 | |||||
Net income for the period | $ | 912,911 | $ | 41,312 | ||||
Net (income) attributable to non-controlling interests | (27 | ) | (26 | ) | ||||
Net income attributable to OpenText | $ | 912,884 | $ | 41,286 | ||||
Earnings per share—basic attributable to OpenText (note 20) | $ | 7.52 | $ | 0.34 | ||||
Earnings per share—diluted attributable to OpenText (note 20) | $ | 7.46 | $ | 0.34 | ||||
Weighted average number of Common Shares outstanding—basic | 121,455 | 122,160 | ||||||
Weighted average number of Common Shares outstanding—diluted | 122,371 | 122,640 | ||||||
Dividends declared per Common Share | $ | 0.2300 | $ | 0.2000 |
Three Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
Net income for the period | $ | 912,911 | $ | 41,312 | ||||
Other comprehensive income—net of tax: | ||||||||
Net foreign currency translation adjustments | 1,219 | 1,723 | ||||||
Unrealized gain (loss) on cash flow hedges: | ||||||||
Unrealized (loss) - net of tax expense (recovery) effect of ($128) and ($1,222), respectively | (355 | ) | (3,390 | ) | ||||
(Gain) loss reclassified into net income - net of tax (expense) recovery effect of ($5) and $184, respectively | (17 | ) | 512 | |||||
Actuarial gain (loss) relating to defined benefit pension plans: | ||||||||
Actuarial gain - net of tax expense (recovery) effect of ($593) and $302, respectively | 1,538 | 1,113 | ||||||
Amortization of actuarial loss into net income - net of tax (expense) recovery effect of $62 and $32, respectively | 147 | 83 | ||||||
Unrealized net gain (loss) on short-term investments - net of tax effect of nil, respectively | (112 | ) | 15 | |||||
Total other comprehensive income, net, for the period | 2,420 | 56 | ||||||
Total comprehensive income | 915,331 | 41,368 | ||||||
Comprehensive (income) attributable to non-controlling interests | (27 | ) | (26 | ) | ||||
Total comprehensive income attributable to OpenText | $ | 915,304 | $ | 41,342 |
Three Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income for the period | $ | 912,911 | $ | 41,312 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization of intangible assets | 72,013 | 60,602 | |||||
Share-based compensation expense | 8,140 | 6,533 | |||||
Excess tax (benefits) expense on share-based compensation expense | (5 | ) | 216 | ||||
Pension expense | 1,190 | 1,167 | |||||
Amortization of debt issuance costs | 1,323 | 1,156 | |||||
Amortization of deferred charges and credits | 2,146 | 2,617 | |||||
Deferred taxes | (875,824 | ) | (4,184 | ) | |||
Share in net (income) loss of equity investees | (5,529 | ) | — | ||||
Other non-cash charges | 1,033 | — | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 16,169 | 52,106 | |||||
Prepaid expenses and other current assets | (1,189 | ) | 5,834 | ||||
Income taxes and deferred charges and credits | 3,221 | 3,797 | |||||
Accounts payable and accrued liabilities | (30,599 | ) | (48,322 | ) | |||
Deferred revenue | (26,109 | ) | (32,393 | ) | |||
Other assets | (5,440 | ) | 2,281 | ||||
Net cash provided by operating activities | 73,451 | 92,722 | |||||
Cash flows from investing activities: | |||||||
Additions of property and equipment | (20,665 | ) | (17,197 | ) | |||
Proceeds from maturity of short-term investments | 9,212 | 2,255 | |||||
Purchase of HP Inc. CCM Business | (312,198 | ) | — | ||||
Purchase of Recommind, Inc. | (170,107 | ) | — | ||||
Purchase of HP Inc. CEM Business | (7,289 | ) | — | ||||
Purchase of Actuate Corporation, net of cash acquired | — | (7,701 | ) | ||||
Purchase of Informative Graphics Corporation, net of cash acquired | — | (88 | ) | ||||
Purchase of ICCM Professional Services Limited, net of cash acquired | — | (2,027 | ) | ||||
Other investing activities | (123 | ) | (926 | ) | |||
Net cash used in investing activities | (501,170 | ) | (25,684 | ) | |||
Cash flows from financing activities: | |||||||
Excess tax benefits (expense) on share-based compensation expense | 5 | (216 | ) | ||||
Proceeds from issuance of Common Shares | 5,310 | 5,252 | |||||
Repayment of long-term debt and revolver | (2,000 | ) | (2,000 | ) | |||
Debt issuance costs | (1,330 | ) | — | ||||
Common Shares repurchased | — | (50,026 | ) | ||||
Payments of dividends to shareholders | (27,791 | ) | (23,312 | ) | |||
Net cash used in financing activities | (25,806 | ) | (70,302 | ) | |||
Foreign exchange gain (loss) on cash held in foreign currencies | 4,712 | (5,950 | ) | ||||
Decrease in cash and cash equivalents during the period | (448,813 | ) | (9,214 | ) | |||
Cash and cash equivalents at beginning of the period | 1,283,757 | 699,999 | |||||
Cash and cash equivalents at end of the period | $ | 834,944 | $ | 690,785 |
Balance as of June 30, 2016 | $ | 6,740 | |
Bad debt expense | 1,639 | ||
Write-off /adjustments | (1,109 | ) | |
Balance as of September 30, 2016 | $ | 7,270 |
As of September 30, 2016 | |||||||||||
Cost | Accumulated Depreciation | Net | |||||||||
Furniture and fixtures | $ | 20,820 | $ | (13,181 | ) | $ | 7,639 | ||||
Office equipment | 1,094 | (532 | ) | 562 | |||||||
Computer hardware | 136,713 | (90,850 | ) | 45,863 | |||||||
Computer software | 53,571 | (27,407 | ) | 26,164 | |||||||
Capitalized software development costs | 56,403 | (19,590 | ) | 36,813 | |||||||
Leasehold improvements | 58,107 | (32,968 | ) | 25,139 | |||||||
Land and buildings | 48,545 | (8,997 | ) | 39,548 | |||||||
Total | $ | 375,253 | $ | (193,525 | ) | $ | 181,728 |
As of June 30, 2016 | |||||||||||
Cost | Accumulated Depreciation | Net | |||||||||
Furniture and fixtures | $ | 20,462 | $ | (12,505 | ) | $ | 7,957 | ||||
Office equipment | 823 | (226 | ) | 597 | |||||||
Computer hardware | 134,688 | (89,351 | ) | 45,337 | |||||||
Computer software | 51,991 | (25,134 | ) | 26,857 | |||||||
Capitalized software development costs | 53,540 | (16,830 | ) | 36,710 | |||||||
Leasehold improvements | 57,061 | (30,743 | ) | 26,318 | |||||||
Land and buildings | 48,529 | (8,645 | ) | 39,884 | |||||||
Total | $ | 367,094 | $ | (183,434 | ) | $ | 183,660 |
Balance as of June 30, 2016 | $ | 2,325,586 | |
Acquisition of Recommind, Inc. (note 18) | 93,424 | ||
Acquisition of CCM Business (note 18) | 176,877 | ||
Adjustment relating to acquisition of CEM Business (note 18) | (273 | ) | |
Balance as of September 30, 2016 | $ | 2,595,614 |
As of September 30, 2016 | |||||||||||
Cost | Accumulated Amortization | Net | |||||||||
Technology Assets | $ | 485,373 | $ | (178,983 | ) | $ | 306,390 | ||||
Customer Assets | 906,406 | (381,599 | ) | 524,807 | |||||||
Total | $ | 1,391,779 | $ | (560,582 | ) | $ | 831,197 | ||||
As of June 30, 2016 | |||||||||||
Cost | Accumulated Amortization | Net | |||||||||
Technology Assets | $ | 359,573 | $ | (155,848 | ) | $ | 203,725 | ||||
Customer Assets | 790,506 | (347,991 | ) | 442,515 | |||||||
Total | $ | 1,150,079 | $ | (503,839 | ) | $ | 646,240 |
Fiscal years ending June 30, | |||
2017 (nine months ended June 30) | $ | 172,041 | |
2018 | 218,992 | ||
2019 | 191,593 | ||
2020 | 120,079 | ||
2021 | 45,872 | ||
2022 and beyond | 82,620 | ||
Total | $ | 831,197 |
As of September 30, 2016 | As of June 30, 2016 | ||||||
Deposits and restricted cash | $ | 13,075 | $ | 10,715 | |||
Deferred implementation costs | 21,130 | 18,116 | |||||
Investments | 23,504 | 18,062 | |||||
Long-term prepaid expenses and other long-term assets | 7,824 | 6,804 | |||||
Total | $ | 65,533 | $ | 53,697 |
As of September 30, 2016 | As of June 30, 2016 | ||||||
Accounts payable—trade | $ | 35,020 | $ | 35,804 | |||
Accrued salaries and commissions | 60,528 | 77,813 | |||||
Accrued liabilities | 110,792 | 113,272 | |||||
Accrued interest on Senior Notes | 21,125 | 23,562 | |||||
Amounts payable in respect of restructuring and other Special charges | 5,293 | 5,109 | |||||
Asset retirement obligations | 778 | 1,890 | |||||
Total | $ | 233,536 | $ | 257,450 |
As of September 30, 2016 | As of June 30, 2016 | ||||||
Amounts payable in respect of restructuring and other Special charges | $ | 3,752 | $ | 3,986 | |||
Other accrued liabilities* | 19,338 | 19,138 | |||||
Asset retirement obligations | 8,391 | 6,724 | |||||
Total | $ | 31,481 | $ | 29,848 |
As of September 30, 2016 | As of June 30, 2016 | ||||||
Total debt | |||||||
Senior Notes 2026 | $ | 600,000 | $ | 600,000 | |||
Senior Notes 2023 | 800,000 | 800,000 | |||||
Term Loan B | 778,000 | 780,000 | |||||
Total principal payments due | 2,178,000 | 2,180,000 | |||||
Less: | |||||||
Debt issuance costs | (32,724 | ) | (34,013 | ) | |||
Total amount outstanding | 2,145,276 | 2,145,987 | |||||
Less: | |||||||
Current portion of long-term debt | |||||||
Term Loan B | 8,000 | 8,000 | |||||
Non-current portion of long-term debt | $ | 2,137,276 | $ | 2,137,987 |
As of September 30, 2016 | |||||||||||
Total benefit obligation | Current portion of benefit obligation* | Non-current portion of benefit obligation | |||||||||
CDT defined benefit plan | $ | 31,336 | $ | 610 | $ | 30,726 | |||||
GXS Germany defined benefit plan | 26,453 | 811 | 25,642 | ||||||||
GXS Philippines defined benefit plan | 4,169 | 72 | 4,097 | ||||||||
Other plans | 3,387 | 161 | 3,226 | ||||||||
Total | $ | 65,345 | $ | 1,654 | $ | 63,691 |
As of June 30, 2016 | |||||||||||
Total benefit obligation | Current portion of benefit obligation* | Non-current portion of benefit obligation | |||||||||
CDT defined benefit plan | $ | 29,450 | $ | 589 | $ | 28,861 | |||||
GXS Germany defined benefit plan | 24,729 | 772 | 23,957 | ||||||||
GXS Philippines defined benefit plan | 7,341 | 30 | 7,311 | ||||||||
Other plans | 3,330 | 1,466 | 1,864 | ||||||||
Total | $ | 64,850 | $ | 2,857 | $ | 61,993 |
As of September 30, 2016 | As of June 30, 2016 | ||||||||||||||||||||||||||||||
CDT | GXS GER | GXS PHP | Total | CDT | GXS GER | GXS PHP | Total | ||||||||||||||||||||||||
Benefit obligation—beginning of period | $ | 29,450 | $ | 24,729 | $ | 7,341 | $ | 61,520 | $ | 26,091 | $ | 22,420 | $ | 7,025 | $ | 55,536 | |||||||||||||||
Service cost | 120 | 101 | 439 | 660 | 422 | 359 | 1,628 | 2,409 | |||||||||||||||||||||||
Interest cost | 117 | 96 | 76 | 289 | 610 | 543 | 314 | 1,467 | |||||||||||||||||||||||
Benefits paid | (118 | ) | (205 | ) | (10 | ) | (333 | ) | (534 | ) | (770 | ) | (190 | ) | (1,494 | ) | |||||||||||||||
Actuarial (gain) loss | 1,266 | 1,294 | (3,505 | ) | (945 | ) | 3,299 | 2,564 | (1,145 | ) | 4,718 | ||||||||||||||||||||
Foreign exchange (gain) loss | 501 | 438 | (172 | ) | 767 | (438 | ) | (387 | ) | (291 | ) | (1,116 | ) | ||||||||||||||||||
Benefit obligation—end of period | 31,336 | 26,453 | 4,169 | 61,958 | 29,450 | 24,729 | 7,341 | 61,520 | |||||||||||||||||||||||
Less: Current portion | (610 | ) | (811 | ) | (72 | ) | (1,493 | ) | (589 | ) | (772 | ) | (30 | ) | (1,391 | ) | |||||||||||||||
Non-current portion of benefit obligation | $ | 30,726 | $ | 25,642 | $ | 4,097 | $ | 60,465 | $ | 28,861 | $ | 23,957 | $ | 7,311 | $ | 60,129 |
Three Months Ended September 30, | ||||||||||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||||||||||
Pension expense: | CDT | GXS GER | GXS PHP | Total | CDT | GXS GER | GXS PHP | Total | ||||||||||||||||||||||||
Service cost | $ | 120 | $ | 101 | $ | 439 | $ | 660 | $ | 107 | $ | 103 | $ | 427 | $ | 637 | ||||||||||||||||
Interest cost | 117 | 96 | 76 | 289 | 154 | 128 | 81 | 363 | ||||||||||||||||||||||||
Amortization of actuarial (gains) and losses | 160 | 43 | (12 | ) | 191 | 107 | — | — | 107 | |||||||||||||||||||||||
Net pension expense | $ | 397 | $ | 240 | $ | 503 | $ | 1,140 | $ | 368 | $ | 231 | $ | 508 | $ | 1,107 |
As of September 30, 2016 | As of June 30, 2016 | ||||||||||
CDT | GXS GER | GXS PHP | CDT | GXS GER | GXS PHP | ||||||
Assumptions: | |||||||||||
Salary increases | 2.00% | 2.00% | 6.20% | 2.00% | 2.00% | 6.20% | |||||
Pension increases | 1.75% | 2.00% | 4.50% | 1.75% | 2.00% | 4.75% | |||||
Discount rate | 1.33% | 1.33% | 4.50% | 1.56% | 1.56% | 4.25% | |||||
Normal retirement age | 65 | 65-67 | 60 | 65 | 65-67 | 60 | |||||
Employee fluctuation rate: | |||||||||||
to age 20 | —% | N/A | 7.90% | —% | N/A | 7.90% | |||||
to age 25 | —% | N/A | 5.70% | —% | N/A | 5.70% | |||||
to age 30 | 1.00% | N/A | 4.10% | 1.00% | N/A | 4.10% | |||||
to age 35 | 0.50% | N/A | 2.90% | 0.50% | N/A | 2.90% | |||||
to age 40 | —% | N/A | 1.90% | —% | N/A | 1.90% | |||||
to age 45 | 0.50% | N/A | 1.40% | 0.50% | N/A | 1.40% | |||||
to age 50 | 0.50% | N/A | —% | 0.50% | N/A | —% | |||||
from age 51 | 1.00% | N/A | —% | 1.00% | N/A | —% |
Fiscal years ending June 30, | |||||||||||
CDT | GXS GER | GXS PHP | |||||||||
2017 (nine months ended June 30) | $ | 450 | $ | 592 | $ | 54 | |||||
2018 | 641 | 878 | 88 | ||||||||
2019 | 717 | 937 | 138 | ||||||||
2020 | 784 | 989 | 128 | ||||||||
2021 | 868 | 1,004 | 159 | ||||||||
2022 to 2026 | 5,127 | 5,550 | 1,701 | ||||||||
Total | $ | 8,587 | $ | 9,950 | $ | 2,268 |
Three Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
Stock options | $ | 3,888 | $ | 3,664 | ||||
Performance Share Units (issued under LTIP) | 881 | 620 | ||||||
Restricted Share Units (issued under LTIP) | 1,602 | 1,234 | ||||||
Restricted Share Units (other) | 752 | 381 | ||||||
Deferred Share Units (directors) | 511 | 634 | ||||||
Employee Share Purchase Plan | 506 | — | ||||||
Total share-based compensation expense | $ | 8,140 | $ | 6,533 |
Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (years) | Aggregate Intrinsic Value ($’000s) | |||||||||
Outstanding at June 30, 2016 | 4,177,408 | $ | 43.87 | |||||||||
Granted | 397,487 | 59.49 | ||||||||||
Exercised | (48,625 | ) | 49.49 | |||||||||
Forfeited or expired | (4,500 | ) | 52.98 | |||||||||
Outstanding at September 30, 2016 | 4,521,770 | $ | 45.18 | 4.52 | $ | 89,006 | ||||||
Exercisable at September 30, 2016 | 1,777,620 | $ | 36.90 | 3.33 | $ | 49,706 |
Three Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
Weighted–average fair value of options granted | $ | 13.06 | $ | 11.23 | ||||
Weighted-average assumptions used: | ||||||||
Expected volatility | 29.42 | % | 32.65 | % | ||||
Risk–free interest rate | 1.03 | % | 1.48 | % | ||||
Expected dividend yield | 1.45 | % | 1.63 | % | ||||
Expected life (in years) | 4.33 | 4.33 | ||||||
Forfeiture rate (based on historical rates) | 5 | % | 5 | % | ||||
Average exercise share price | $ | 59.49 | $ | 45.73 |
Payments due between | |||||||||||||||||||
Total | October 1, 2016— June 30, 2017 | July 1, 2017— June 30, 2019 | July 1, 2019— June 30, 2021 | July 1, 2021 and beyond | |||||||||||||||
Long-term debt obligations | $ | 2,930,839 | $ | 82,876 | $ | 226,916 | $ | 954,797 | $ | 1,666,250 | |||||||||
Operating lease obligations (1) | 204,087 | 37,963 | 79,231 | 48,066 | 38,827 | ||||||||||||||
Purchase obligations (2) | 15,784 | 13,360 | 2,170 | 254 | — | ||||||||||||||
$ | 3,150,710 | $ | 134,199 | $ | 308,317 | $ | 1,003,117 | $ | 1,705,077 |
Three Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
Interest expense | $ | 1,282 | $ | 1,777 | ||||
Penalties expense (recoveries) | (106 | ) | (130 | ) | ||||
Total | $ | 1,176 | $ | 1,647 |
As of September 30, 2016 | As of June 30, 2016 | ||||||
Interest expense accrued * | $ | 35,574 | $ | 34,476 | |||
Penalties accrued * | $ | 1,540 | $ | 1,615 |
* | These balances have been included within "Long-term income taxes payable" within the Condensed Consolidated Balance Sheets. |
• | Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. |
• | Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
• | Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. |
September 30, 2016 | June 30, 2016 | ||||||||||||||||||||||
Fair Market Measurements using: | Fair Market Measurements using: | ||||||||||||||||||||||
September 30, 2016 | Quoted prices in active markets for identical assets/ (liabilities) | Significant other observable inputs | Significant unobservable inputs | June 30, 2016 | Quoted prices in active markets for identical assets/ (liabilities) | Significant other observable inputs | Significant unobservable inputs | ||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||
Financial Assets: | |||||||||||||||||||||||
Short-term investments* | $ | 2,726 | n/a | $ | 2,726 | n/a | $ | 11,839 | n/a | $ | 11,839 | n/a | |||||||||||
Derivative financial instrument asset (note 16) | 287 | n/a | 287 | n/a | 792 | n/a | 792 | n/a | |||||||||||||||
$ | 3,013 | n/a | $ | 3,013 | n/a | $ | 12,631 | n/a | $ | 12,631 | n/a |
As of September 30, 2016 | As of June 30, 2016 | ||||||||||||||||||||||||||||||
Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | ||||||||||||||||||||||||
Short-term investments | $ | 2,405 | $ | 321 | $ | — | $ | 2,726 | $ | 11,406 | $ | 436 | $ | (3 | ) | $ | 11,839 |
As of September 30, 2016 | As of June 30, 2016 | |||||||
Derivatives | Balance Sheet Location | Fair Value Asset (Liability) | Fair Value Asset (Liability) | |||||
Foreign currency forward contracts designated as cash flow hedges | Prepaid expenses and other current assets | $ | 287 | $ | 792 |
Three Months Ended September 30, 2016 | |||||||||||||||
Derivatives in Cash Flow Hedging Relationship | Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion) | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Location of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | Amount of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | ||||||||||
Foreign currency forward contracts | $ | (483 | ) | Operating expenses | $ | 22 | N/A | $ | — | ||||||
Three Months Ended September 30, 2015 | |||||||||||||||
Derivatives in Cash Flow Hedging Relationship | Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion) | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Location of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | Amount of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | ||||||||||
Foreign currency forward contracts | $ | (4,612 | ) | Operating expenses | $ | (696 | ) | N/A | $ | — |
Three Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
Fiscal 2017 Restructuring Plan | $ | 1,095 | $ | — | ||||
Fiscal 2015 Restructuring Plan | (15 | ) | 15,474 | |||||
OpenText/GXS Restructuring Plan | 854 | (152 | ) | |||||
Restructuring Plans prior to OpenText/GXS Restructuring Plan | (16 | ) | — | |||||
Acquisition-related costs | 6,774 | 177 | ||||||
Other charges | 3,762 | 1,838 | ||||||
Total | $ | 12,454 | $ | 17,337 |
Fiscal 2017 Restructuring Plan | Workforce reduction | Facility costs | Total | ||||||||
Balance payable as at June 30, 2016 | $ | — | $ | — | $ | — | |||||
Accruals and adjustments | 572 | 523 | 1,095 | ||||||||
Cash payments | (522 | ) | (25 | ) | (547 | ) | |||||
Foreign exchange | 7 | 2 | 9 | ||||||||
Balance payable as at September 30, 2016 | $ | 57 | $ | 500 | $ | 557 |
Fiscal 2015 Restructuring Plan | Workforce reduction | Facility costs | Total | ||||||||
Balance payable as at June 30, 2016 | $ | 3,145 | $ | 5,046 | $ | 8,191 | |||||
Accruals and adjustments | 10 | (25 | ) | (15 | ) | ||||||
Cash payments | (663 | ) | (283 | ) | (946 | ) | |||||
Foreign exchange | (185 | ) | (33 | ) | (218 | ) | |||||
Balance payable as at September 30, 2016 | $ | 2,307 | $ | 4,705 | $ | 7,012 |
OpenText/GXS Restructuring Plan | Workforce reduction | Facility costs | Total | ||||||||
Balance payable as at June 30, 2016 | $ | 115 | $ | 606 | $ | 721 | |||||
Accruals and adjustments | 169 | 685 | 854 | ||||||||
Cash payments | — | (162 | ) | (162 | ) | ||||||
Foreign exchange | (133 | ) | 45 | (88 | ) | ||||||
Balance payable as at September 30, 2016 | $ | 151 | $ | 1,174 | $ | 1,325 |
Current assets | $ | 262 | |
Non-current deferred tax asset | 6,916 | ||
Non-current tangible assets | 2,348 | ||
Intangible customer assets | 64,000 | ||
Intangible technology assets | 101,000 | ||
Liabilities assumed | (36,403 | ) | |
Total identifiable net assets | 138,123 | ||
Goodwill | 176,877 | ||
Net assets acquired | $ | 315,000 |
Current assets | $ | 30,034 | |
Non-current tangible assets | 1,245 | ||
Intangible customer assets | 51,900 | ||
Intangible technology assets | 24,800 | ||
Deferred tax liabilities | (4,049 | ) | |
Other liabilities assumed | (27,247 | ) | |
Total identifiable net assets | 76,683 | ||
Goodwill | 93,424 | ||
Net assets acquired | $ | 170,107 |
Current assets | $ | 9,712 | |
Non-current tangible assets | 511 | ||
Intangible customer assets | 49,700 | ||
Intangible technology assets | 5,600 | ||
Liabilities assumed | (26,190 | ) | |
Total identifiable net assets | 39,333 | ||
Goodwill | 65,237 | ||
Net assets acquired | $ | 104,570 |
Current assets | $ | 3,078 | |
Non-current tangible assets | 12,589 | ||
Intangible customer assets | 33,000 | ||
Intangible technology assets | 47,000 | ||
Liabilities assumed | (26,106 | ) | |
Total identifiable net assets | 69,561 | ||
Goodwill | 90,439 | ||
Net assets acquired | $ | 160,000 |
Three Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Cash paid during the period for interest | $ | 29,191 | $ | 29,294 | |||
Cash received during the period for interest | $ | 770 | $ | 283 | |||
Cash paid during the period for income taxes | $ | 6,820 | $ | 7,405 |
Three Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Basic earnings per share | |||||||
Net income attributable to OpenText (1) | $ | 912,884 | $ | 41,286 | |||
Basic earnings per share attributable to OpenText | $ | 7.52 | $ | 0.34 | |||
Diluted earnings per share | |||||||
Net income attributable to OpenText (1) | $ | 912,884 | $ | 41,286 | |||
Diluted earnings per share attributable to OpenText | $ | 7.46 | $ | 0.34 | |||
Weighted-average number of shares outstanding | |||||||
Basic | 121,455 | 122,160 | |||||
Effect of dilutive securities | 916 | 480 | |||||
Diluted | 122,371 | 122,640 | |||||
Excluded as anti-dilutive(2) | 914 | 2,547 |
• | Total revenue was $491.7 million, up 13.1% compared to the same period in the prior fiscal year; up 14.3% after factoring the impact of $4.9 million of foreign exchange rate changes. |
• | Total recurring revenue was $431.0 million, up 12.5% compared to the same period in the prior fiscal year; up 13.6% after factoring the impact of $4.4 million of foreign exchange rate changes. |
• | Cloud services and subscriptions revenue was $169.7 million, up 14.8% compared to the same period in the prior fiscal year; up 15.5% after factoring the impact of $1.0 million of foreign exchange rate changes. |
• | License revenue was $60.7 million, up 18.2% compared to the same period in the prior fiscal year; up 19.2% after factoring the impact of $0.5 million of foreign exchange rate changes. |
• | GAAP-based EPS, diluted, was $7.46 compared to $0.34 in the same period in the prior fiscal year, affected in part by a significant tax benefit of $876.1 million. |
• | Non-GAAP-based EPS, diluted, was $0.86 compared to $0.84 in the same period in the prior fiscal year. |
• | GAAP-based gross margin was 66.6% compared to 67.8% in the same period in the prior fiscal year. |
• | GAAP-based operating margin was 15.1% compared to 17.6% in the same period in the prior fiscal year. |
• | Non-GAAP-based operating margin was 30.8% compared to 34.1% in the same period in the prior fiscal year. |
• | Operating cash flow was $73.5 million, down 20.8% from the same period in the prior fiscal year. |
• | Cash and cash equivalents was $834.9 million as of September 30, 2016, compared to $1,283.8 million as of June 30, 2016. |
(i) | Revenue recognition, |
(ii) | Capitalized software, |
(iii) | Business combinations, |
(iv) | Goodwill, |
(v) | Acquired intangibles, |
(vi) | Restructuring charges, |
(vii) | Foreign currency, and |
(viii) | Income taxes. |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
Total Revenues by Product Type: | ||||||||||||
License | $ | 60,656 | $ | 9,325 | $ | 51,331 | ||||||
Cloud services and subscriptions | 169,687 | 21,897 | 147,790 | |||||||||
Customer support | 210,206 | 24,539 | 185,667 | |||||||||
Professional service and other | 51,115 | 1,368 | 49,747 | |||||||||
Total revenues | 491,664 | 57,129 | 434,535 | |||||||||
Total Cost of Revenues | 164,353 | 24,301 | 140,052 | |||||||||
Total GAAP-based Gross Profit | 327,311 | 32,828 | 294,483 | |||||||||
Total GAAP-based Gross Margin % | 66.6 | % | 67.8 | % | ||||||||
Total GAAP-based Operating Expenses | 253,249 | 35,239 | 218,010 | |||||||||
Total GAAP-based Income from Operations | $ | 74,062 | $ | (2,411 | ) | $ | 76,473 | |||||
% Revenues by Product Type: | ||||||||||||
License | 12.3 | % | 11.8 | % | ||||||||
Cloud services and subscriptions | 34.5 | % | 34.0 | % | ||||||||
Customer support | 42.8 | % | 42.7 | % | ||||||||
Professional service and other | 10.4 | % | 11.5 | % | ||||||||
Total Cost of Revenues by Product Type: | ||||||||||||
License | $ | 3,845 | $ | 1,164 | $ | 2,681 | ||||||
Cloud services and subscriptions | 70,292 | 11,376 | 58,916 | |||||||||
Customer support | 25,738 | 5,230 | 20,508 | |||||||||
Professional service and other | 41,343 | 3,279 | 38,064 | |||||||||
Amortization of acquired technology-based intangible assets | 23,135 | 3,252 | 19,883 | |||||||||
Total cost of revenues | $ | 164,353 | $ | 24,301 | $ | 140,052 | ||||||
% GAAP-based Gross Margin by Product Type: | ||||||||||||
License | 93.7 | % | 94.8 | % | ||||||||
Cloud services and subscriptions | 58.6 | % | 60.1 | % | ||||||||
Customer support | 87.8 | % | 89.0 | % | ||||||||
Professional service and other | 19.1 | % | 23.5 | % | ||||||||
Total Revenues by Geography: | ||||||||||||
Americas (1) | $ | 296,136 | $ | 44,710 | $ | 251,426 | ||||||
EMEA (2) | 147,631 | 1,842 | 145,789 | |||||||||
Asia Pacific (3) | 47,897 | 10,577 | 37,320 | |||||||||
Total revenues | $ | 491,664 | $ | 57,129 | $ | 434,535 | ||||||
% Revenues by Geography: | ||||||||||||
Americas (1) | 60.2 | % | 57.9 | % | ||||||||
EMEA (2) | 30.0 | % | 33.6 | % | ||||||||
Asia Pacific (3) | 9.8 | % | 8.5 | % |
Three Months Ended September 30, | ||||||||||
(In thousands) | 2016 | 2015 | ||||||||
GAAP-based gross margin | 66.6 | % | 67.8 | % | ||||||
GAAP-based operating margin | 15.1 | % | 17.6 | % | ||||||
GAAP-based EPS, diluted | $ | 7.46 | $ | 0.34 | ||||||
Non-GAAP-based gross margin (4) | 71.5 | % | 72.6 | % | ||||||
Non-GAAP-based operating margin (4) | 30.8 | % | 34.1 | % | ||||||
Non-GAAP-based EPS, diluted (4) | $ | 0.86 | $ | 0.84 |
(1) | Americas consists of countries in North, Central and South America. |
(2) | EMEA primarily consists of countries in Europe, the Middle East and Africa. |
(3) | Asia Pacific primarily consists of the countries Japan, Australia, China, Korea, Philippines, Singapore and New Zealand. |
(4) | See "Use of Non-GAAP Financial Measures" (discussed later in the MD&A) for a reconciliation of GAAP-based measures to Non-GAAP-based measures. |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
License Revenues: | ||||||||||||
Americas | $ | 30,989 | $ | 5,734 | $ | 25,255 | ||||||
EMEA | 21,202 | (1,476 | ) | 22,678 | ||||||||
Asia Pacific | 8,465 | 5,067 | 3,398 | |||||||||
Total License Revenues | 60,656 | 9,325 | 51,331 | |||||||||
Cost of License Revenues | 3,845 | 1,164 | 2,681 | |||||||||
GAAP-based License Gross Profit | $ | 56,811 | $ | 8,161 | $ | 48,650 | ||||||
GAAP-based License Gross Margin % | 93.7 | % | 94.8 | % | ||||||||
% License Revenues by Geography: | ||||||||||||
Americas | 51.1 | % | 49.2 | % | ||||||||
EMEA | 35.0 | % | 44.2 | % | ||||||||
Asia Pacific | 13.9 | % | 6.6 | % |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
Cloud Services and Subscriptions: | ||||||||||||
Americas | $ | 116,114 | $ | 18,462 | $ | 97,652 | ||||||
EMEA | 36,836 | 2,377 | 34,459 | |||||||||
Asia Pacific | 16,737 | 1,058 | 15,679 | |||||||||
Total Cloud Services and Subscriptions Revenues | 169,687 | 21,897 | 147,790 | |||||||||
Cost of Cloud Services and Subscriptions Revenues | 70,292 | 11,376 | 58,916 | |||||||||
GAAP-based Cloud Services and Subscriptions Gross Profit | $ | 99,395 | $ | 10,521 | $ | 88,874 | ||||||
GAAP-based Cloud Services and Subscriptions Gross Margin % | 58.6 | % | 60.1 | % | ||||||||
% Cloud Services and Subscriptions Revenues by Geography: | ||||||||||||
Americas | 68.4 | % | 66.1 | % | ||||||||
EMEA | 21.7 | % | 23.3 | % | ||||||||
Asia Pacific | 9.9 | % | 10.6 | % |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
Customer Support Revenues: | ||||||||||||
Americas | $ | 124,191 | $ | 18,597 | $ | 105,594 | ||||||
EMEA | 68,902 | 2,694 | 66,208 | |||||||||
Asia Pacific | 17,113 | 3,248 | 13,865 | |||||||||
Total Customer Support Revenues | 210,206 | 24,539 | 185,667 | |||||||||
Cost of Customer Support Revenues | 25,738 | 5,230 | 20,508 | |||||||||
GAAP-based Customer Support Gross Profit | $ | 184,468 | $ | 19,309 | $ | 165,159 | ||||||
GAAP-based Customer Support Gross Margin % | 87.8 | % | 89.0 | % | ||||||||
% Customer Support Revenues by Geography: | ||||||||||||
Americas | 59.1 | % | 56.9 | % | ||||||||
EMEA | 32.8 | % | 35.7 | % | ||||||||
Asia Pacific | 8.1 | % | 7.4 | % |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
Professional Service and Other Revenues: | ||||||||||||
Americas | $ | 24,842 | $ | 1,917 | $ | 22,925 | ||||||
EMEA | 20,691 | (1,753 | ) | 22,444 | ||||||||
Asia Pacific | 5,582 | 1,204 | 4,378 | |||||||||
Total Professional Service and Other Revenues | 51,115 | 1,368 | 49,747 | |||||||||
Cost of Professional Service and Other Revenues | 41,343 | 3,279 | 38,064 | |||||||||
GAAP-based Professional Service and Other Gross Profit | $ | 9,772 | $ | (1,911 | ) | $ | 11,683 | |||||
GAAP-based Professional Service and Other Gross Margin % | 19.1 | % | 23.5 | % | ||||||||
% Professional Service and Other Revenues by Geography: | ||||||||||||
Americas | 48.6 | % | 46.1 | % | ||||||||
EMEA | 40.5 | % | 45.1 | % | ||||||||
Asia Pacific | 10.9 | % | 8.8 | % |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
Amortization of acquired technology-based intangible assets | $ | 23,135 | $ | 3,252 | $ | 19,883 |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
Research and development | $ | 58,572 | $ | 12,132 | $ | 46,440 | ||||||
Sales and marketing | 95,148 | 17,203 | 77,945 | |||||||||
General and administrative | 38,197 | 2,628 | 35,569 | |||||||||
Depreciation | 15,270 | 2,356 | 12,914 | |||||||||
Amortization of acquired customer-based intangible assets | 33,608 | 5,803 | 27,805 | |||||||||
Special charges | 12,454 | (4,883 | ) | 17,337 | ||||||||
Total operating expenses | $ | 253,249 | $ | 35,239 | $ | 218,010 | ||||||
% of Total Revenues: | ||||||||||||
Research and development | 11.9 | % | 10.7 | % | ||||||||
Sales and marketing | 19.4 | % | 17.9 | % | ||||||||
General and administrative | 7.8 | % | 8.2 | % | ||||||||
Depreciation | 3.1 | % | 3.0 | % | ||||||||
Amortization of acquired customer-based intangible assets | 6.8 | % | 6.4 | % | ||||||||
Special charges | 2.5 | % | 4.0 | % |
Quarter-over-Quarter Change between Fiscal | ||||
(In thousands) | 2017 and 2016 | |||
Payroll and payroll-related benefits | $ | 8,599 | ||
Contract labour and consulting | 1,302 | |||
Share-based compensation | 992 | |||
Travel and communication | 87 | |||
Facilities | 629 | |||
Other miscellaneous | 523 | |||
Total year-over-year change in research and development expenses | $ | 12,132 |
Quarter-over-Quarter Change between Fiscal | ||||
(In thousands) | 2017 and 2016 | |||
Payroll and payroll-related benefits | $ | 8,875 | ||
Commissions | 424 | |||
Contract labour and consulting | 482 | |||
Share-based compensation | (272 | ) | ||
Travel and communication | 203 | |||
Marketing expenses | 6,035 | |||
Facilities | 492 | |||
Other miscellaneous | 964 | |||
Total year-over-year change in sales and marketing expenses | $ | 17,203 |
Quarter-over-Quarter Change between Fiscal | ||||
(In thousands) | 2017 and 2016 | |||
Payroll and payroll-related benefits | $ | 850 | ||
Contract labour and consulting | 1,060 | |||
Share-based compensation | 739 | |||
Travel and communication | (443 | ) | ||
Facilities | 602 | |||
Other miscellaneous | (180 | ) | ||
Total year-over-year change in general and administrative expenses | $ | 2,628 |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
Depreciation | $ | 15,270 | $ | 2,356 | $ | 12,914 |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
Amortization of acquired customer-based intangible assets | $ | 33,608 | $ | 5,803 | $ | 27,805 |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
Special charges (recoveries) | $ | 12,454 | $ | (4,883 | ) | $ | 17,337 |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
Other income (expense), net | $ | 6,699 | $ | 11,612 | $ | (4,913 | ) |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change (increase) decrease | 2015 | |||||||||
Interest and other related expense, net | $ | 27,275 | $ | 8,229 | $ | 19,046 |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change increase (decrease) | 2015 | |||||||||
Provision for (Recovery of) income taxes | $ | (859,425 | ) | $ | (870,627 | ) | $ | 11,202 |
Three Months Ended September 30, 2016 | ||||||||||||
GAAP-based Measures | GAAP-based Measures % of Total Revenue | Adjustments | Note | Non-GAAP-based Measures | Non-GAAP-based Measures % of Total Revenue | |||||||
Cost of revenues | ||||||||||||
Cloud services and subscriptions | $ | 70,292 | $ | (360 | ) | (1) | $ | 69,932 | ||||
Customer support | 25,738 | (235 | ) | (1) | 25,503 | |||||||
Professional service and other | 41,343 | (445 | ) | (1) | 40,898 | |||||||
Amortization of acquired technology-based intangible assets | 23,135 | (23,135 | ) | (2) | — | |||||||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 327,311 | 66.6% | 24,175 | (3) | 351,486 | 71.5% | ||||||
Operating expenses | ||||||||||||
Research and development | 58,572 | (1,743 | ) | (1) | 56,829 | |||||||
Sales and marketing | 95,148 | (2,820 | ) | (1) | 92,328 | |||||||
General and administrative | 38,197 | (2,537 | ) | (1) | 35,660 | |||||||
Amortization of acquired customer-based intangible assets | 33,608 | (33,608 | ) | (2) | — | |||||||
Special charges (recoveries) | 12,454 | (12,454 | ) | (4) | — | |||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) | 74,062 | 15.1% | 77,337 | (5) | 151,399 | 30.8% | ||||||
Other income (expense), net | 6,699 | (6,699 | ) | (6) | — | |||||||
Provision for (recovery of) income taxes | (859,425 | ) | 878,017 | (7) | 18,592 | |||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 912,884 | (807,379 | ) | (8) | 105,505 | |||||||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText | $ | 7.46 | $ | (6.60 | ) | (8) | $ | 0.86 |
(1) | Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. |
(2) | Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. |
(3) | GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. |
(4) | Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods following the relevant acquisitions and include one-time, non-recurring charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results. See note 17 "Special Charges (Recoveries)" to our Consolidated Financial Statements for more details. |
(5) | GAAP-based and Non-GAAP-based income from operations stated in dollars and operating margin stated as a percentage of total revenue. |
(6) | Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in non-marketable securities investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results. |
(7) | Adjustment relates to differences between the GAAP-based tax recovery rate of approximately 1,607% and a Non-GAAP-based tax rate of approximately 15%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and “book to return” adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization (see note 14) assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 15%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense. |
(8) | Reconciliation of GAAP-based net income to Non-GAAP-based net income: |
Three Months Ended September 30, 2016 | ||||||
Per share diluted | ||||||
GAAP-based net income, attributable to OpenText | $ | 912,884 | $ | 7.46 | ||
Add: | ||||||
Amortization | 56,743 | 0.46 | ||||
Share-based compensation | 8,140 | 0.07 | ||||
Special charges (recoveries) | 12,454 | 0.10 | ||||
Other (income) expense, net | (6,699 | ) | (0.05 | ) | ||
GAAP-based provision for (recovery of ) income taxes | (859,425 | ) | (7.02 | ) | ||
Non-GAAP-based provision for income taxes | (18,592 | ) | (0.16 | ) | ||
Non-GAAP-based net income, attributable to OpenText | $ | 105,505 | $ | 0.86 |
Three Months Ended September 30, 2015 | ||||||||||||
GAAP-based Measures | GAAP-based Measures % of Total Revenue | Adjustments | Note | Non-GAAP-based Measures | Non-GAAP-based Measures % of Total Revenue | |||||||
Cost of revenues | ||||||||||||
Cloud services and subscriptions | $ | 58,916 | $ | (281 | ) | (1) | $ | 58,635 | ||||
Customer support | 20,508 | (158 | ) | (1) | 20,350 | |||||||
Professional service and other | 38,064 | (453 | ) | (1) | 37,611 | |||||||
Amortization of acquired technology-based intangible assets | 19,883 | (19,883 | ) | (2) | — | |||||||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 294,483 | 67.8% | 20,775 | (3) | 315,258 | 72.6% | ||||||
Operating expenses | ||||||||||||
Research and development | 46,440 | (752 | ) | (1) | 45,688 | |||||||
Sales and marketing | 77,945 | (3,115 | ) | (1) | 74,830 | |||||||
General and administrative | 35,569 | (1,774 | ) | (1) | 33,795 | |||||||
Amortization of acquired customer-based intangible assets | 27,805 | (27,805 | ) | (2) | — | |||||||
Special charges (recoveries) | 17,337 | (17,337 | ) | (4) | — | |||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) | 76,473 | 17.6% | 71,558 | (5) | 148,031 | 34.1% | ||||||
Other income (expense), net | (4,913 | ) | 4,913 | (6) | — | |||||||
Provision for (recovery of) income taxes | 11,202 | 14,569 | (7) | 25,771 | ||||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 41,286 | 61,902 | (8) | 103,188 | ||||||||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText | $ | 0.34 | $ | 0.50 | (8) | $ | 0.84 |
(1) | Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. |
(2) | Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. |
(3) | GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. |
(4) | Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods following the relevant acquisitions and include one-time, non-recurring charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results. See note 17 "Special Charges (Recoveries)" to our Consolidated Financial Statements for more details. |
(5) | GAAP-based and Non-GAAP-based income from operations stated in dollars and operating margin stated as a percentage of total revenue. |
(6) | Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. |
(7) | Adjustment relates to differences between the GAAP-based tax rate of approximately 21% and a Non-GAAP-based tax rate of approximately 20%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and “book to return” adjustments for tax return filings and tax assessments. In arriving at our Non-GAAP-based tax rate of approximately 20%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense. |
(8) | Reconciliation of GAAP-based net income to Non-GAAP-based net income: |
Three Months Ended September 30, 2015 | ||||||
Per share diluted | ||||||
GAAP-based net income, attributable to OpenText | $ | 41,286 | $ | 0.34 | ||
Add: | ||||||
Amortization | 47,688 | 0.39 | ||||
Share-based compensation | 6,533 | 0.05 | ||||
Special charges (recoveries) | 17,337 | 0.14 | ||||
Other (income) expense, net | 4,913 | 0.04 | ||||
GAAP-based provision for (recovery of ) income taxes | 11,202 | 0.09 | ||||
Non-GAAP-based provision for income taxes | (25,771 | ) | (0.21 | ) | ||
Non-GAAP-based net income, attributable to OpenText | $ | 103,188 | $ | 0.84 |
(In thousands) | As of September 30, 2016 | Change increase (decrease) | As of June 30, 2016 | |||||||||
Cash and cash equivalents | $ | 834,944 | $ | (448,813 | ) | $ | 1,283,757 | |||||
Short-term investments | $ | 2,726 | $ | (9,113 | ) | $ | 11,839 |
Three Months Ended September 30, | ||||||||||||
(In thousands) | 2016 | Change | 2015 | |||||||||
Cash provided by operating activities | $ | 73,451 | $ | (19,271 | ) | $ | 92,722 | |||||
Cash used in investing activities | $ | (501,170 | ) | $ | (475,486 | ) | $ | (25,684 | ) | |||
Cash used in financing activities | $ | (25,806 | ) | $ | 44,496 | $ | (70,302 | ) |
Fiscal years ending June 30, | |||||||||||
CDT | GXS GER | GXS PHP | |||||||||
2017 (nine months ended June 30) | $ | 450 | $ | 592 | $ | 54 | |||||
2018 | 641 | 878 | 88 | ||||||||
2019 | 717 | 937 | 138 | ||||||||
2020 | 784 | 989 | 128 | ||||||||
2021 | 868 | 1,004 | 159 | ||||||||
2022 to 2026 | 5,127 | 5,550 | 1,701 | ||||||||
Total | $ | 8,587 | $ | 9,950 | $ | 2,268 |
Payments due between | |||||||||||||||||||
Total | October 1, 2016— June 30, 2017 | July 1, 2017— June 30, 2019 | July 1, 2019— June 30, 2021 | July 1, 2021 and beyond | |||||||||||||||
Long-term debt obligations | $ | 2,930,839 | $ | 82,876 | $ | 226,916 | $ | 954,797 | $ | 1,666,250 | |||||||||
Operating lease obligations (1) | 204,087 | 37,963 | 79,231 | 48,066 | 38,827 | ||||||||||||||
Purchase obligations (2) | 15,784 | 13,360 | 2,170 | 254 | — | ||||||||||||||
$ | 3,150,710 | $ | 134,199 | $ | 308,317 | $ | 1,003,117 | $ | 1,705,077 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
(In thousands) | U.S. Dollar Equivalent at September 30, 2016 | U.S. Dollar Equivalent at June 30, 2016 | ||||||
Euro | $ | 174,199 | $ | 182,524 | ||||
British Pound | 35,719 | 29,572 | ||||||
Canadian Dollar | 27,651 | 22,103 | ||||||
Swiss Franc | 24,901 | 30,298 | ||||||
Other foreign currencies | 80,738 | 72,107 | ||||||
Total cash and cash equivalents denominated in foreign currencies | 343,208 | 336,604 | ||||||
U.S. dollar | 491,736 | 947,153 | ||||||
Total cash and cash equivalents | $ | 834,944 | $ | 1,283,757 |
• | difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the acquisition; |
• | conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures; |
Exhibit Number | Description of Exhibit | |
2.1 | Agreement and Plan of Merger, dated as of September 12, 2016, by and among Open Text Corporation, EMC Corporation, EMC International Company, and EMC (Benelux) B.V. (1) | |
4.1 | Amended and Restated Shareholder Rights Plan Agreement between open Text Corporation and Computershare Investor Services, Inc. dated September 23, 2016. (2) | |
10.1 | Commitment Letter, dated as of September 12, 2016, by and between Barclays Bank PLC and Open Text Corporation. (1) | |
10.2 | Amended and Restated Commitment Letter, dated as of September 26, 2016, by and among Open Text Corporation and Barclays Bank PLC, Citigroup Global Markets Inc. and Royal Bank of Canada. | |
10.3 | Open Text Corporation 2004 Stock Option Plan, as amended and restated on September 23, 2016. (3) | |
31.1 | Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL instance document. | |
101.SCH | XBRL taxonomy extension schema. | |
101.CAL | XBRL taxonomy extension calculation linkbase. | |
101.DEF | XBRL taxonomy extension definition linkbase. | |
101.LAB | XBRL taxonomy extension label linkbase. | |
101.PRE | XBRL taxonomy extension presentation. |
By: | /s/ MARK J. BARRENECHEA |
Mark J. Barrenechea Chief Executive Officer and Chief Technology Officer (Principal Executive Officer) | |
/s/ JOHN M. DOOLITTLE | |
John M. Doolittle Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |
/s/ ADITYA MAHESHWARI | |
Aditya Maheshwari Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) |
BARCLAYS 745 Seventh Avenue New York, New York 10019 | CITIGROUP GLOBAL MARKETS INC. 390 Greenwich Street New York, New York 10013 | Royal Bank of Canada Three World Financial Center 200 Vesey Street New York, New York 10281 |
1 | RBC Capital Markets is a marketing name for the capital markets businesses of Royal Bank of Canada and its affiliates. |
By: | /s/ Robert Chen |
Name: Robert Chen | |
Title: Managing Director |
By: | /s/ Monique Renta |
Name: Monique Renta | |
Title: Director |
By: | /s/ David J. Wirdnam |
Name: David J. Wirdnam | |
Title: Authorized Signatory |
By: | /s/ John Doolittle |
Name: John Doolittle | |
Title: CFO |
Borrower : | Open Text Corporation (the “Borrower ”). |
Lead Arrangers and Joint Bookrunners: | Barclays Bank PLC (“Barclays’), Citigroup Global Markets Inc. and RBC Capital Markets (in such capacity, each a “Lead Arranger” and collectively, the “Lead Arrangers”). |
Administrative Agent and Collateral Agent: | Barclays will act as the sole administrative agent and sole collateral agent (in such capacities, the “Administrative Agent”) for the Lenders. |
Transactions: | As described in the Commitment Letter. |
Lenders: | The Commitment Parties (or one of their respective affiliates) and a syndicate of financial institutions and other lenders (the “Lenders”) arranged by the Lead Arrangers reasonably acceptable to the Borrower . |
Closing Date: | The date that the initial loans are made under the Term Facility (the “Closing Date”). |
Type and Amount: | First priority term loan facility in an aggregate principal amount of up to $1,000.0 million (the “Term Facility”), which shall be secured on a pari passu basis with the loans made under the Existing Term Loan Agreement (as defined below). |
Loans under the Term Facility (the “Term Loans”) will be available to the Borrower in U.S. dollars. | |
Incremental Facility: | Same as provided under the Existing Term Loan Agreement. |
Purpose: | The proceeds of loans under the Term Facility (together with the proceeds of cash on hand of the Borrower, proceeds from the incurrence of indebtedness under the Existing Revolving Credit Agreement and/or proceeds from the issuance by the Borrower of equity securities and/or equity-linked securities) will be used to pay the consideration in connection with the Transactions and to pay for fees and expenses related to the Transactions (the “Transaction Costs”). |
Availability: | The full amount of the Term Facility must be drawn in a single drawing substantially concurrently with the consummation of the Acquisition. Amounts repaid or prepaid under the Term Facility may not be reborrowed. |
Interest Rates and Fees: | As set forth in Annex I to the Amended and Restated Fee Letter. |
Maturity and Amortization: | The Term Facility will mature on the date that is seven years after the Closing Date and will be payable in equal quarterly installments in each year in aggregate annual amounts equal to 1.0% of the original principal amount of the Term Loans, with the balance payable at maturity. The Term Facility Documentation (as defined below) shall provide the right of individual Lenders to agree to extend the maturity of their Term Loans upon the request of the Borrower without the consent of any other Term Lender. |
Guarantees: | Same as provided under the Existing Term Loan Agreement (as defined below). |
Security: | Same as provided under the Existing Term Loan Agreement (the “Collateral”) on a pari passu basis with the Existing Term Loan Agreement pursuant to the Intercreditor Agreement referred to below. For the avoidance of doubt, the assets of the Acquired Business shall become part of the Collateral unless they fall into an excluded category of assets under the terms of the Existing Term Loan Agreement referred to below. |
Documentation: | The definitive financing documentation for the Term Loan Facility shall contain the terms and conditions set forth in this Commitment Letter, it being understood and agreed that there shall not be any conditions to the funding of the Term Loan Facility other than as set forth in paragraph 5 of the Commitment Letter, under “Conditions to Borrowing” in this Exhibit A and in Exhibit B. The documentation with respect to the Term Facility (the “Term Facility Documentation”) shall be substantially identical to that certain Credit Agreement initially dated as of January 16, 2014, by and among GXS, Inc. (a wholly-owned subsidiary of the Borrower), the guarantors party thereto (including the Borrower), Barclays Bank PLC, as administrative agent, and the lenders party thereto from time to time (as amended, amended and restated or otherwise modified from time to time prior to the date of the Original Commitment Letter, the “Existing Term Loan Agreement” and the term loans made thereunder, the “Existing Term Loans”). The other documentation relating to the Term Facility (including, without limitation, any guaranty or collateral documents) (together with the Term Facility Documentation, the “Loan Documents”) shall be substantially consistent with the corresponding documentation for the Existing Term Loan Agreement. The Administrative Agent shall also become a party to that certain Intercreditor Agreement (the “Intercreditor Agreement”) dated as of January 16, 2014 (as amended from time to time) among the authorized representatives party thereto and Barclays Bank PLC, as Intercreditor Agent. |
Prepayments: | Same as applicable to the Existing Term Loans pursuant to the Existing Term Loan Agreement, except (i) any prepayment of the Term Loans in connection with a Repricing Transaction (as defined in the Existing Term Loan Agreement) prior to the six-month anniversary of the Closing Date shall be subject to a 1.00% prepayment premium and (ii) any mandatory prepayments shall not be required until all outstanding Existing Term Loans have been paid in full. |
Conditions Precedent to Borrowing: | The conditions set forth in Section 5 of the Commitment Letter and in Exhibit B to the Commitment Letter. |
Representations and Warranties; Affirmative and Negative Covenants and Events of Default: | As set forth in the Existing Term Loan Agreement; with (i) the modification of the Patriot Act representation and warranty to be a materiality qualified representation and warranty stating that the Loan Parties and the subsidiaries are in compliance with the Patriot Act and (ii) the addition of a representation and warranty relating to compliance with anti-corruption legislation in applicable jurisdictions. |
Financial Covenant: | Same as the Existing Term Loan Agreement. |
Voting: | As set forth in the Existing Term Loans under the Existing Term Loan Agreement. |
Yield Protection and Increased Costs: | As set forth in the Existing Term Loan Agreement. |
Assignments and Participations: | After the Closing Date, the Lenders will be permitted to assign loans and commitments on the same terms as applicable to the Existing Term Loans under the Existing Term Loan Agreement. |
Expenses and Indemnification: | The Borrower shall pay on the Closing Date to the extent invoiced in reasonable detail prior thereto, all reasonable and documented out-of-pocket expenses of the Administrative Agent and the Lead Arrangers relating to the preparation, execution, delivery and administration of the Term Facility Documentation and the other Loan Documents and any other amendment or waiver with respect thereto, subject to the provisions of the Amended and Restated Fee Letter. |
The indemnification provisions shall be the same as the provisions of the Existing Term Loan Agreement. | |
Governing Law and Forum: | Ontario, Canada. |
Notwithstanding Provision: | Notwithstanding any other provision of this Commitment Letter, any subsidiaries of the Acquired Business (if any) (other than subsidiaries organized in the U.S. and Canada) shall not be required to provide guarantees or security under the Term Facility until 60 days after the Closing Date. |
Counsel to Administrative Agent and Lead Arrangers: | Davis Polk & Wardwell LLP and Stikeman Elliott LLP. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Open Text Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Securities Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ MARK J. BARRENECHEA | |
Mark J. Barrenechea Chief Executive Officer and Chief Technology Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Open Text Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Securities Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ JOHN M. DOOLITTLE | |
John M. Doolittle Executive Vice President and Chief Financial Officer |
/s/ MARK J. BARRENECHEA | |
Mark J. Barrenechea Chief Executive Officer and Chief Technology Officer |
By: | /s/ JOHN M. DOOLITTLE | |
John M. Doolittle Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 31, 2016 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | OPEN TEXT CORP | |
Entity Central Index Key | 0001002638 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | otex | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 121,542,227 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable trade, allowance for doubtful accounts | $ 7,270 | $ 6,740 |
Common shares issued (in shares) | 121,492,067 | 121,404,677 |
Common shares outstanding (in shares) | 121,492,067 | 121,404,677 |
Treasury stock (in shares) | 629,480 | 633,647 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parentheticals) - USD ($) |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||
Unrealized loss on cash flow hedges, tax effect | $ (128,000) | $ (1,222,000) |
Gain (loss) reclassified into net income, tax effect | (5,000) | 184,000 |
Actuarial gain, tax effect | (593,000) | 302,000 |
Amortization of actuarial loss into net income, tax effect | 62,000 | 32,000 |
Unrealized net gain (loss) on short-term investments, tax effect | $ 0 | $ 0 |
Basis of Presentation |
3 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying Condensed Consolidated Financial Statements include the accounts of Open Text Corporation and our subsidiaries, collectively referred to as "OpenText" or the "Company". We wholly own all of our subsidiaries with the exception of Open Text South Africa Proprietary Ltd. (OT South Africa), GXS, Inc. (GXS Korea) and EC1 Pte. Ltd. (GXS Singapore), which as of September 30, 2016, were 90%, 85% and 81% owned, respectively, by OpenText. All inter-company balances and transactions have been eliminated. Throughout this Quarterly Report on Form 10-Q: (i) the term “Fiscal 2017” means our fiscal year beginning on July 1, 2016 and ending June 30, 2017; (ii) the term “Fiscal 2016” means our fiscal year beginning on July 1, 2015 and ended June 30, 2016; (iii) the term “Fiscal 2015” means our fiscal year beginning on July 1, 2014 and ended June 30, 2015; and (iv) the term "Fiscal 2014" means our fiscal year beginning on July 1, 2013 and ended June 30, 2014. These Condensed Consolidated Financial Statements are expressed in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). The information furnished reflects all adjustments necessary for a fair presentation of the results for the periods presented and includes the financial results of Recommind, Inc. (Recommind), with effect from July 20, 2016, and certain customer communication management software and services assets and liabilities acquired from HP Inc. (CCM Business), with effect from July 31, 2016 (see note 18). Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements. These estimates, judgments and assumptions are evaluated on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. In particular, significant estimates, judgments and assumptions include those related to: (i) revenue recognition, (ii) allowance for doubtful accounts, (iii) testing of goodwill for impairment, (iv) the valuation of acquired intangible assets, (v) the valuation of long-lived assets, (vi) the recognition of contingencies, (vii) restructuring accruals, (viii) acquisition accruals and pre-acquisition contingencies, (ix) the realization of investment tax credits, (x) the valuation of stock options granted and obligations related to share-based payments, including the valuation of our long-term incentive plan, (xi) the valuation of pension assets and obligations, and (xii) accounting for income taxes. |
Recent Accounting Pronouncements |
3 Months Ended |
---|---|
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Statement of Cash Flows In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" (ASU 2016-15). ASU 2016-15 clarifies how companies should present and classify certain cash receipts and cash payments in the statement of cash flows. This standard is effective for us during the first quarter of our fiscal year ending June 30, 2019, with early adoption permitted. We are currently evaluating the impact of the pending adoption of ASU 2016-15 on our Condensed Consolidated Financial Statements. Financial Instruments In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for us in our first quarter for our fiscal year ending June 30, 2021, with earlier adoption permitted beginning in the first quarter of our fiscal year ending June 30, 2020. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our Condensed Consolidated Financial Statements. In January 2016, the FASB issued ASU 2016-01 “Financial Instruments - Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01). This update requires that all equity investments be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). This update also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. Additionally, this update eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. ASU 2016-01 is effective for our fiscal year ending June 30, 2019. We are currently evaluating the impact of the pending adoption of ASU 2016-01 on our Condensed Consolidated Financial Statements. Share-based Compensation In March 2016, the FASB issued ASU No. 2016-09, "Compensation-Stock Compensation (Topic 718)." This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for us during the first quarter of our fiscal year ending June 30, 2018, with early adoption permitted. We are currently assessing how the adoption of this standard will impact our Condensed Consolidated Financial Statements. Investments-Equity Method and Joint Ventures In March 2016, the FASB issued ASU No. 2016-07, "Investments - Equity Method and Join Ventures (Topic 323): Simplifying the Transition to Equity Method of Accounting" (ASU 2016-07). The amendments in this update require that the equity method investor add the cost of acquiring any additional interest in an investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Upon qualifying for equity method accounting, no retroactive adjustment of the investment is required. We adopted ASU 2016-07 in the first quarter of our Fiscal 2017. The adoption did not have a material impact on our reported financial position or results of operations and cash flows. Leases In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)” (ASU 2016-02), which supersedes the guidance in former ASC Topic 840 “Leases”. The most significant change will result in the recognition of lease assets for the right to use the underlying asset and lease liabilities for the obligation to make lease payments by lessees, for those leases classified as operating leases under current guidance. The new guidance will also require significant additional disclosures about the amount, timing and uncertainty of cash flows related to leases. This standard is effective for us for our fiscal year ending June 30, 2020, with early adoption permitted. Upon adoption of ASU 2016-02, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the effect that the pending adoption of ASU 2016-02 will have on our Condensed Consolidated Balance Sheets. Although we have not completed our assessment, we do not expect the adoption to change the recognition, measurement or presentation of lease expenses within the Condensed Consolidated Statements of Operations and Cash Flows. Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016 and May 2016 within ASU 2015-04, ASU 2016-08, ASU 2016-10 and ASU 2016-12, respectively. These updates supersede the revenue recognition requirements in ASC Topic 605, "Revenue Recognition" and nearly all other existing revenue recognition guidance under U.S. GAAP. The core principal of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 identifies five steps to be followed to achieve this core principal, which include (i) identifying contract(s) with customers, (ii) identifying performance obligations in the contract(s), (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations in the contract(s) and (v) recognizing revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB voted to defer the effective date of ASU 2014-09 for one year. The new guidance will now be effective for us in the first quarter of our fiscal year ending June 30, 2019. Early adoption, prior to the original effective date, is not permitted. When applying ASU 2014-09 we can either apply the amendments: (i) retrospectively to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09 or (ii) retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined within ASU 2014-09. We are currently evaluating the effect that the pending adoption of the above mentioned ASUs will have on our Condensed Consolidated Financial Statements and related disclosures. Although it is expected to have a significant impact on our revenue recognition policies and disclosures, we have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting. There have been no other significant changes in our reported financial position or results of operations and cash flows as a result of our adoption of new accounting pronouncements or changes to our significant accounting policies that were disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2016. |
Allowance For Doubtful Accounts |
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Receivables [Abstract] | |||||||||||||||||||||||||
ALLOWANCE FOR DOUBTFUL ACCOUNTS | ALLOWANCE FOR DOUBTFUL ACCOUNTS
Included in accounts receivable are unbilled receivables in the amount of $36.9 million as of September 30, 2016 (June 30, 2016—$35.6 million). |
Property and Equipment |
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PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT
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Goodwill |
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GOODWILL | GOODWILL Goodwill is recorded when the consideration paid for an acquisition of a business exceeds the fair value of identifiable net tangible and intangible assets. The following table summarizes the changes in goodwill since June 30, 2016:
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Acquired Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUIRED INTANGIBLE ASSETS | ACQUIRED INTANGIBLE ASSETS
The weighted average amortization periods for acquired technology and customer intangible assets are approximately five years and seven years, respectively. The following table shows the estimated future amortization expense for the fiscal years indicated. This calculation assumes no future adjustments to acquired intangible assets:
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Other Assets |
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OTHER ASSETS | OTHER ASSETS
Deposits and restricted cash relate to security deposits provided to landlords in accordance with facility lease agreements and cash restricted per the terms of certain contractual-based agreements. Deferred implementation costs relate to deferred direct and relevant costs on implementation of long-term contracts, to the extent such costs can be recovered through guaranteed contract revenues. Investments relate to certain non-marketable equity securities in which we are a limited partner. Our interest, individually, in each of these investees range from 4% to below 20%. These investments are accounted for using the equity method. Our share of net income or losses based on our interest in these investments are recorded as a component of other income (expense), net in our Condensed Consolidated Statements of Income. During the three months ended September 30, 2016, our share of income from these investments was $5.5 million (three months ended September 30, 2015—nil). Long-term prepaid expenses and other long-term assets primarily relate to advance payments on long-term licenses that are being amortized over the applicable terms of the licenses. |
Deferred Charges and Credits |
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Deferred Costs [Abstract] | |
DEFERRED CHARGES AND CREDITS | DEFERRED CHARGES AND CREDITS Deferred charges and credits relate to cash taxes payable and the elimination of deferred tax balances relating to legal entity consolidations completed as part of internal reorganizations of our international subsidiaries. Deferred charges and credits are amortized to income tax expense over a period of 6 to 15 years. |
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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Current liabilities Accounts payable and accrued liabilities are comprised of the following:
Long-term accrued liabilities
* Other accrued liabilities consist primarily of tenant allowances, deferred rent and lease fair value adjustments relating to certain facilities acquired through business acquisitions. 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, 2016, the present value of this obligation was $9.2 million (June 30, 2016—$8.6 million), with an undiscounted value of $9.9 million (June 30, 2016—$9.2 million). |
Long-Term Debt |
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LONG-TERM DEBT | LONG-TERM DEBT Long-term debt Long-term debt is comprised of the following:
Senior Unsecured Fixed Rate Notes Senior Notes 2026 On May 31, 2016, we issued $600 million in aggregate principal amount of 5.875% Senior Notes due 2026 (Senior Notes 2026) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (Securities Act), and to certain persons in offshore transactions pursuant to Regulation S under the Securities Act. Senior Notes 2026 bear interest at a rate of 5.875% per annum, payable semi-annually in arrears on June 1 and December 1, commencing on December 1, 2016. Senior Notes 2026 will mature on June 1, 2026, unless earlier redeemed, in accordance with their terms, or repurchased. For the three months ended September 30, 2016, we recorded interest expense of $8.8 million, relating to Senior Notes 2026. Senior Notes 2023 On January 15, 2015, we issued $800 million in aggregate principal amount of 5.625% Senior Notes due 2023 (Senior Notes 2023) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to certain persons in offshore transactions pursuant to Regulation S under the Securities Act. Senior Notes 2023 bear interest at a rate of 5.625% per annum, payable semi-annually in arrears on January 15 and July 15, commencing on July 15, 2015. Senior Notes 2023 will mature on January 15, 2023, unless earlier redeemed, in accordance with their terms, or repurchased. For the three months ended September 30, 2016, we recorded interest expense of $11.3 million, relating to Senior Notes 2023 (three months ended September 30, 2015—$11.3 million). Term Loan B In connection with the acquisition of GXS Group, Inc. (GXS), on January 16, 2014, we entered into a credit facility, which provides for a $800 million term loan facility (Term Loan B). Borrowings under Term Loan B are secured by a first charge over substantially all of our assets on a pari passu basis with the Revolver (defined below). We entered into Term Loan B and borrowed the full amount on January 16, 2014. Term Loan B has a seven year term and repayments made under Term Loan B are equal to 0.25% of the original 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 at a rate per annum equal to 2.5% plus the higher of LIBOR or 0.75%. For the three months ended September 30, 2016, we recorded interest expense of $6.5 million, relating to Term Loan B (three months ended September 30, 2015—$6.5 million). Revolver We currently have a $300 million committed revolving credit facility (the Revolver). Borrowings under the Revolver are secured by a first charge over substantially all of our assets, and on a pari passu basis with Term Loan B. The Revolver will mature on December 22, 2019 with no fixed repayment date prior to the end of the term. As of September 30, 2016, we have not drawn any amounts on the Revolver. |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION PLANS AND OTHER POST RETIREMENT BENEFITS | PENSION PLANS AND OTHER POST RETIREMENT BENEFITS The following table provides details of our defined benefit pension plans and long-term employee benefit obligations for Open Text Document Technologies GmbH (CDT), GXS GmbH (GXS GER) and GXS Philippines, Inc. (GXS PHP) as of September 30, 2016 and June 30, 2016:
*The current portion of the benefit obligation has been included within "Accrued salaries and commissions", all within "Accounts payable and accrued liabilities" in the Condensed Consolidated Balance Sheets (see Note 9). Defined Benefit Plans CDT Plan CDT sponsors an unfunded defined benefit pension plan covering substantially all CDT employees (CDT pension plan) which provides for old age, disability and survivors’ benefits. Benefits under the CDT pension plan are generally based on age at retirement, years of service and the employee’s annual earnings. The net periodic cost of this pension plan is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs. No contributions have been made since the inception of the plan. Actuarial gains or losses in excess of 10% of the projected benefit obligation are being amortized and recognized as a component of net periodic benefit costs over the average remaining service period of the plan's active employees. As of September 30, 2016, there is approximately $0.5 million in accumulated other comprehensive income related to the CDT pension plan that is expected to be recognized as a component of net periodic benefit costs over the remainder of Fiscal 2017. GXS Germany Plan As part of our acquisition of GXS, we acquired an unfunded defined benefit pension plan covering certain German employees which provides for old age, disability and survivors' benefits. The GXS GER plan has been closed to new participants since 2006. Benefits under the GXS GER plan are generally based on a participant’s remuneration, date of hire, years of eligible service and age at retirement. The net periodic cost of this pension plan is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs. No contributions have been made since the inception of the plan. Actuarial gains or losses in excess of 10% of the projected benefit obligation are being amortized and recognized as a component of net periodic benefit costs over the average remaining service period of the plan’s active employees. As of September 30, 2016, there is approximately $129.2 thousand in accumulated other comprehensive income related to the GXS GER plan that is expected to be recognized as a component of net periodic benefit costs over the remainder of Fiscal 2017. GXS Philippines Plan As part of our acquisition of GXS, we acquired a primarily unfunded defined benefit pension plan covering substantially all of the GXS Philippines employees which provides for retirement, disability and survivors' benefits. Benefits under the GXS PHP plan are generally based on a participant’s remuneration, years of eligible service and age at retirement. The net periodic cost of this pension plan is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs. Aside from an initial contribution which has a fair value of approximately $34.5 thousand as of September 30, 2016, no additional contributions have been made since the inception of the plan. Actuarial gains or losses in excess of 10% of the projected benefit obligation are being amortized and recognized as a component of net periodic benefit costs over the average remaining service period of the plan’s active employees. As of September 30, 2016, there is approximately $36.4 thousand in accumulated other comprehensive income related to the GXS PHP plan that is expected to be recognized as a component of net periodic benefit costs over the remainder of Fiscal 2017. The following are the details of the change in the benefit obligation for each of the above mentioned pension plans for the periods indicated:
The following are details of net pension expense relating to the following pension plans:
In determining the fair value of the pension plan benefit obligations as of September 30, 2016 and June 30, 2016, respectively, we used the following weighted-average key assumptions:
Anticipated pension payments under the pension plans for the fiscal years indicated below are as follows:
Other Plans Other plans include defined benefit pension plans that are offered by certain of our foreign subsidiaries. Many of these plans were assumed through our acquisitions or are required by local regulatory requirements. These other plans are primarily unfunded, with the aggregate projected benefit obligation included in our pension liability. The net periodic cost of these plans are determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs. |
Share Capital, Option Plans and Share-Based Payments |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE CAPITAL, OPTION PLANS AND SHARE-BASED PAYMENTS | SHARE CAPITAL, OPTION PLANS AND SHARE-BASED PAYMENTS Cash Dividends For the three months ended September 30, 2016, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $0.23 per Common Share, in the aggregate amount of $27.8 million, which we paid during the same period. For the three months ended September 30, 2015, pursuant to the Company’s dividend policy, we paid total non-cumulative dividends of $0.20 per Common Share, in the aggregate amount of $23.3 million. Share Capital Our authorized share capital includes an unlimited number of Common Shares and an unlimited number of Preference Shares. No Preference Shares have been issued. Treasury Stock Repurchase During the three months ended September 30, 2016 and 2015, we did not repurchase any of our Common Shares for potential reissuance under our Long Term Incentive Plans (LTIP) or other plans. Reissuance During the three months ended September 30, 2016, we reissued 4,167 Common Shares from treasury stock (three months ended September 30, 2015—nil), in connection with the settlement of our LTIP and other awards. Share Repurchase Plan On July 26, 2016, our board of directors (the Board) authorized the repurchase of up to $200 million of Common Shares (Share Repurchase Plan), pursuant to a normal course issuer bid. Shares may be repurchased from time to time in the open market, private purchases through forward, derivative, accelerated repurchase or automatic repurchase transactions or otherwise. During the three months ended September 30, 2016, we did not repurchase any of our Common Shares under the Share Repurchase Plan. During the three months ended September 30, 2015, we repurchased and cancelled 1,131,812 Common Shares for approximately $50.0 million under our previous share repurchase plan. Share-Based Payments Total share-based compensation expense for the periods indicated below is detailed as follows:
Summary of Outstanding Stock Options On September 23, 2016, at our annual general meeting, our shareholders approved the amendment and restatement of our 2004 stock option plan to reserve an additional 4,000,000 Common Shares for issuance under our 2004 Stock Option Plan. As of September 30, 2016, an aggregate of 4,521,770 options to purchase Common Shares were outstanding and an additional 6,356,843 options to purchase Common Shares were available for issuance under our stock option plans. Our stock options generally vest over four years and expire between seven and ten years from the date of the grant. Currently we also have options outstanding that vest over five years, as well as options outstanding that vest based on meeting certain market conditions. The exercise price of all our options is set at an amount that is not less than the closing price of our Common Shares on the NASDAQ on the trading day immediately preceding the applicable grant date. A summary of activity under our stock option plans for the three months ended September 30, 2016 is as follows:
We estimate the fair value of stock options using the Black-Scholes option-pricing model or, where appropriate, the Monte Carlo Valuation Method, consistent with the provisions of ASC Topic 718, "Compensation—Stock Compensation" (Topic 718) and SEC Staff Accounting Bulletin No. 107. The option-pricing models require input of subjective assumptions, including the estimated life of the option and the expected volatility of the underlying stock over the estimated life of the option. We use historical volatility as a basis for projecting the expected volatility of the underlying stock and estimate the expected life of our stock options based upon historical data. We believe that the valuation techniques and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair value of our stock option grants. Estimates of fair value are not intended, however, to predict actual future events or the value ultimately realized by employees who receive equity awards. For the periods indicated, the weighted-average fair value of options and weighted-average assumptions were as follows:
As of September 30, 2016, the total compensation cost related to the unvested stock option awards not yet recognized was approximately $25.0 million, which will be recognized over a weighted-average period of approximately 2.4 years. No cash was used by us to settle equity instruments granted under share-based compensation arrangements. We have not capitalized any share-based compensation costs as part of the cost of an asset in any of the periods presented. For the three months ended September 30, 2016, cash in the amount of $2.4 million was received as the result of the exercise of options granted under share-based payment arrangements. The tax benefit realized by us during the three months ended September 30, 2016 from the exercise of options eligible for a tax deduction was $0.1 million. For the three months ended September 30, 2015, cash in the amount of $4.3 million was received as the result of the exercise of options granted under share-based payment arrangements. The tax benefit realized by us during the three months ended September 30, 2015 from the exercise of options eligible for a tax deduction was $0.2 million. Long-Term Incentive Plans We incentivize our executive officers, in part, with long term compensation pursuant to our LTIP. The LTIP is a rolling three year program that grants eligible employees a certain number of target Performance Share Units (PSUs) and/or Restricted Share Units (RSUs). Target PSUs become vested upon the achievement of certain financial and/or operational performance criteria (the Performance Conditions) that are determined at the time of the grant. Target RSUs become vested when an eligible employee remains employed throughout the vesting period. LTIP grants that have recently vested, or have yet to vest, are described below. LTIP grants will be referred to in this Quarterly Report on Form 10-Q based upon the year in which the grants are expected to vest. Fiscal 2016 LTIP Grants made in Fiscal 2014 under the LTIP (collectively referred to as Fiscal 2016 LTIP) consisting of PSUs and RSUs, took effect in Fiscal 2014 starting on November 1, 2013. The Performance Conditions for vesting of the PSUs are based solely upon market conditions. RSUs granted are employee service-based awards and vest over the life of the Fiscal 2016 LTIP. We expect to settle the Fiscal 2016 LTIP awards in stock during the second quarter of Fiscal 2017. Fiscal 2017 LTIP Grants made in Fiscal 2015 under the LTIP (collectively referred to as Fiscal 2017 LTIP), consisting of PSUs and RSUs, took effect in Fiscal 2015 starting on September 4, 2014. The Performance Conditions for vesting of the PSUs are based solely upon market conditions. The RSUs are employee service-based awards and vest over the life of the Fiscal 2017 LTIP. We expect to settle the Fiscal 2017 LTIP awards in stock. Fiscal 2018 LTIP Grants made in Fiscal 2016 under the LTIP (collectively referred to as Fiscal 2018 LTIP), consisting of PSUs and RSUs, took effect in Fiscal 2016 starting on August 23, 2015. The Performance Conditions for vesting of the PSUs are based solely upon market conditions. The RSUs are employee service-based awards and vest over the life of the Fiscal 2018 LTIP. We expect to settle the Fiscal 2018 LTIP awards in stock. Fiscal 2019 LTIP Grants made in Fiscal 2017 under the LTIP (collectively referred to as Fiscal 2019 LTIP), consisting of PSUs and RSUs, took effect in Fiscal 2017 starting on August 14, 2016. The Performance Conditions for vesting of the PSUs are based solely upon market conditions. The RSUs are employee service-based awards and vest over the life of the Fiscal 2019 LTIP. We expect to settle the Fiscal 2019 LTIP awards in stock. PSUs and RSUs granted under the LTIPs have been measured at fair value as of the effective date, consistent with Topic 718, and will be charged to share-based compensation expense over the remaining life of the plan. Stock options granted under the LTIPs have been measured using the Black-Scholes option-pricing model, consistent with Topic 718. 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. As of September 30, 2016, the total expected compensation cost related to the unvested LTIP awards not yet recognized was $21.6 million, which is expected to be recognized over a weighted average period of 2.3 years. Restricted Share Units (RSUs) During the three months ended September 30, 2016, we granted 3,900 RSUs to employees in accordance with employment and other agreements (three months ended September 30, 2015—nil). The RSUs vest over a specified contract date, typically three years from the respective date of grants. We expect to settle the awards in stock. During the three months ended September 30, 2016, we issued 4,167 Common Shares from our treasury stock, with a cost of $0.1 million, in connection with the settlement of vested RSUs (three months ended September 30, 2015—nil). Deferred Stock Units (DSUs) During the three months ended September 30, 2016, we granted 1,221 DSUs to certain non-employee directors (three months ended September 30, 2015—556). The DSUs were issued under our Deferred Share Unit Plan. DSUs granted as compensation for directors fees vest immediately, whereas all other DSUs granted vest at our next annual general meeting following the granting of the DSUs. No DSUs are payable by us until the director ceases to be a member of the Board. Employee Share Purchase Plan (ESPP) Beginning January 1, 2016, our ESPP offers employees a purchase price discount of 15%. Any Common Shares that were issued under the ESPP prior to January 1, 2016 were issued at a purchase price discount of 5%. During the three months ended September 30, 2016, 51,816 Common Shares were eligible for issuance to employees enrolled in the ESPP. During the three months ended September 30, 2016, cash in the amount of approximately $2.9 million was received from employees relating to the ESPP (three months ended September 30, 2015—$1.0 million). |
Guarantees and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GUARANTEES AND CONTINGENCIES | GUARANTEES AND CONTINGENCIES We have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:
(1) Net of $6.2 million of sublease income to be received from properties which we have subleased to third parties. (2) On September 12, 2016, we entered into a commitment letter with Barclays Bank PLC in connection with the Dell-EMC Acquisition (as defined in note 18). On September 26, 2016, we amended and restated the commitment letter (as amended and restated, the Commitment Letter) to add Citigroup Global Markets Inc. and Royal Bank of Canada as lenders (together with Barclays Bank PLC, the Lenders). Under the Commitment Letter, we obtained a financing commitment from the Lenders, severally and not jointly, to provide a first lien term loan facility in an aggregate principal amount of up to $1.0 billion to finance a portion of the purchase price for the Dell-EMC acquisition. Under the terms of the Commitment Letter, we are subject to fees of $5.0 million with a maximum fee payable up to $10.0 million. We have included our maximum fee exposure under “Purchase Obligations” in the table above, although the final fees that we pay could ultimately be less. The Commitment Letter terminates on March 14, 2017, subject to extension. Guarantees and Indemnifications We have entered into customer agreements which may include provisions to indemnify our customers against third party claims that our software products or services infringe certain third party intellectual property rights and for liabilities related to a breach of our confidentiality obligations. We have not made any material payments in relation to such indemnification provisions and have not accrued any liabilities related to these indemnification provisions in our Condensed Consolidated Financial Statements. Occasionally, we enter into financial guarantees with third parties in the ordinary course of our business, including, among others, guarantees relating to taxes and letters of credit on behalf of parties with whom we conduct business. Such agreements have not had a material effect on our results of operations, financial position or cash flows. Litigation We are currently involved in various claims and legal proceedings. Quarterly, we review the status of each significant legal matter and evaluate such matters to determine how they should be treated for accounting and disclosure purposes in accordance with the requirements of ASC Topic 450-20 "Loss Contingencies" (Topic 450-20). Specifically, this evaluation process includes the centralized tracking and itemization of the status of all our disputes and litigation items, discussing the nature of any litigation and claim, including any dispute or claim that is reasonably likely to result in litigation, with relevant internal and external counsel, and assessing the progress of each matter in light of its merits and our experience with similar proceedings under similar circumstances. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss in accordance with Topic 450-20. As of the date of this Quarterly Report on Form 10-Q, the aggregate of such estimated losses was not material to our consolidated financial position or result of operations and we do not believe as of the date of this filing that it is reasonably possible that a loss exceeding the amounts already recognized will be incurred that would be material to our consolidated financial position or results of operations. Contingencies As we have previously disclosed, the United States Internal Revenue Service (IRS) is examining certain of our tax returns for our fiscal year ended June 30, 2010 (Fiscal 2010) through our fiscal year ended June 30, 2012 (Fiscal 2012), and in connection with those examinations is reviewing our internal reorganization in Fiscal 2010 to consolidate certain intellectual property ownership in Luxembourg and Canada and our integration of certain acquisitions into the resulting structure. We also previously disclosed that the examinations may lead to proposed adjustments to our taxes that may be material, individually or in the aggregate, and that we have not recorded any material accruals for any such potential adjustments in our Condensed Consolidated Financial Statements. As part of these examinations, (which are ongoing), on July 17, 2015 we received from the IRS a Notice of Proposed Adjustment (NOPA) in draft form proposing a one-time approximately $280 million increase to our U.S. federal taxes arising from the reorganization in Fiscal 2010 and proposing penalties equal to 20% of the additional taxes, plus interest at the applicable statutory rate (which will continue to accrue until the matter is resolved and may be substantial). A NOPA is an IRS position and does not impose an obligation to pay tax. The draft NOPA may be changed before the final NOPA is issued, including because the IRS reserved the right in the draft NOPA to increase the adjustment. Based on discussions with the IRS, we expect we will receive an additional NOPA proposing an approximately $80 million increase to our U.S. federal taxes for Fiscal 2012 arising from the integration of Global 360 Holding Corp. into the structure that resulted from the reorganization, accompanied by proposed penalties and interest (although there can be no assurance that this will be the amount reflected in the NOPA when received, including because the IRS may assign a higher value to our intellectual property). Depending upon the outcome of these matters, additional state income taxes plus penalties and interest may be due. We currently estimate that, as of September 30, 2016, adjustments under the draft NOPA in its present form and the anticipated additional NOPA could result in an aggregate liability of approximately $550 million, inclusive of U.S. federal and state taxes, penalties and interest. We strongly disagree with the IRS’ position and intend to vigorously contest the proposed adjustments to our taxable income. We are examining various alternatives available to taxpayers to contest the proposed adjustments. Any such alternatives could involve a lengthy process and result in the incurrence of significant expenses. As of the date of this Quarterly Report on Form 10-Q, we have not recorded any material accruals in respect of these examinations in our Condensed Consolidated Financial Statements. An adverse outcome of these tax examinations could have a material adverse effect on our financial position and results of operations. As part of our acquisition of GXS, we have inherited a tax dispute in Brazil between the Company’s subsidiary, GXS Tecnologia da Informação (Brasil) Ltda. (GXS Brazil), and the municipality of São Paulo, in connection with GXS Brazil’s judicial appeal of a tax claim in the amount of $2.7 million as of September 30, 2016. We currently have in place a bank guarantee in the amount of $4.0 million in recognition of this dispute. However, we believe that the position of the São Paulo tax authorities is not consistent with the relevant facts and based on information available on the case and other similar matters provided by local counsel, we believe that we can defend our position and that no tax is owed. Although we believe that the facts support our position, the ultimate outcome of this matter could result in a loss of up to the claim amount discussed above, plus future interest or penalties that may accrue. Historically, prior to our acquisition of GXS, GXS would charge certain costs to its subsidiaries, including GXS Brazil, primarily based on historical transfer pricing studies that were intended to reflect the costs incurred by subsidiaries in relation to services provided by the parent company to the subject subsidiary. GXS recorded taxes on amounts billed, that were considered to be due based on the intercompany charges. GXS subsequently re-evaluated its intercompany charges to GXS Brazil and related taxes and, upon taking into consideration the current environment and judicial proceedings in Brazil, concluded that it was probable that certain indirect taxes would be assessable and payable based upon the accrual of such intercompany charges and has approximately $5.3 million accrued for the probable amount of a settlement related to the indirect taxes, interest and penalties. Our Indian subsidiary, GXS India Technology Centre Private Limited (GXS India), is subject to potential assessments by Indian tax authorities in the city of Bangalore. GXS India has received assessment orders from the Indian tax authorities alleging that the transfer price applied to intercompany transactions was not appropriate. Based on advice from our tax advisors, we believe that the facts that the Indian tax authorities are using to support their assessment are incorrect. We have filed appeals and anticipate an eventual settlement with the Indian tax authorities. We have accrued $1.5 million to cover our anticipated financial exposure in this matter. Please also see "Risk Factors" included in our Annual Report on Form 10-K for Fiscal 2016. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES Our effective tax rate represents the net effect of the mix of income earned in various tax jurisdictions that are subject to a wide range of income tax rates. We recognize interest expense and penalties related to income tax matters in income tax expense. For the three months ended September 30, 2016 and 2015, we recognized the following amounts as income tax-related interest expense and penalties:
As of September 30, 2016 and June 30, 2016, the following amounts have been accrued on account of income tax-related interest expense and penalties:
We believe that it is reasonably possible that the gross unrecognized tax benefits, as of September 30, 2016, could decrease tax expense in the next 12 months by $3.1 million, relating primarily to the expiration of competent authority relief and tax years becoming statute barred for purposes of future tax examinations by local taxing jurisdictions. Our four most significant tax jurisdictions are Canada, the United States, Luxembourg and Germany. Our tax filings remain subject to audits by applicable tax authorities for a certain length of time following the tax year to which those filings relate. The earliest fiscal years open for examination are 2008 for Germany, 2010 for the United States, 2011 for Luxembourg, and 2012 for Canada. We are subject to tax audits in all major taxing jurisdictions in which we operate and currently have tax audits open in Canada, the United States, France, Germany, India, the Netherlands, Japan and Malaysia. On a quarterly basis we assess the status of these examinations and the potential for adverse outcomes to determine the adequacy of the provision for income and other taxes. Statements regarding the United States audits are included in note 13. The timing of the resolution of income tax audits is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next 12 months we will receive additional assessments by various tax authorities or possibly reach resolution of income tax audits in one or more jurisdictions. These assessments or settlements may or may not result in changes to our contingencies related to positions on tax filings. The actual amount of any change could vary significantly depending on the ultimate timing and nature of any settlements. We cannot currently provide an estimate of the range of possible outcomes. For more information relating to certain tax audits, please refer to note 13. As at September 30, 2016, we have provided $16.7 million (June 30, 2016—$15.9 million) in respect of both additional foreign withholding taxes or deferred income tax liabilities for temporary differences related to the undistributed earnings of certain non-United States subsidiaries, and planned periodic repatriations from certain United States and German subsidiaries, that will be subject to withholding taxes upon distribution. We have not provided for additional foreign withholding taxes or deferred income tax liabilities related to undistributed earnings of all other non-Canadian subsidiaries, since such earnings are considered permanently invested in those subsidiaries, or are not subject to withholding taxes. It is not practicable to reasonably estimate the amount of additional deferred income tax liabilities or foreign withholding taxes that may be payable should these earnings be distributed in the future. The effective tax rate decreased to a recovery of 1,606.8% for the three months ended September 30, 2016, compared to a provision of 21.3% for the three months ended September 30, 2015. The decrease to tax expense of $870.6 million was primarily due to a significant tax benefit of $876.1 million resulting from an internal reorganization that is further described below. Additionally, we saw an increase of $10.9 million resulting from the impact of foreign rates, and a decrease in changes in unrecognized tax benefits in the amount of $2.2 million. The remainder of the differences were due to normal course movements and non-material items. In July 2016, we implemented a reorganization of our subsidiaries worldwide with the view to continuing to enhance operational and administrative efficiencies through further consolidated ownership, management, and development of our intellectual property (IP) in Canada, continuing to reduce the number of entities in our group and working towards our objective of having a single operating legal entity in each jurisdiction. We believe our reorganization also reduces our exposure to global political and tax uncertainties, particularly in Europe. We believe that further consolidating our IP in Canada will continue to ensure appropriate legal protections for our consolidated IP, simplify legal, accounting and tax compliance, and improve our global cash management. A significant tax benefit of $876.1 million, associated primarily with the recognition of a net deferred tax asset arising from the entry of the IP into Canada, was realized in the first quarter of Fiscal 2017. We believe it is more likely than not that the deferred tax asset will be realized and therefore no valuation allowance is required. We continue to evaluate our taxable position quarterly and consider factors by taxing jurisdiction, including but not limited to factors such as estimated taxable income, any historical experience of losses for tax purposes and the future growth of OpenText. |
Fair Value Measurement |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENT | 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. 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. In addition, the fair value of liabilities should include consideration of non-performance risk, including our own credit risk. In addition to defining fair value and addressing disclosure requirements, Topic 820 establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis: Our financial assets and liabilities measured at fair value on a recurring basis consisted of the following types of instruments as of September 30, 2016 and June 30, 2016:
*These assets in the table above are classified as Level 2 as certain specific assets included within may not have quoted prices that are readily accessible in an active market or we may have relied on alternative pricing methods that do not rely exclusively on quoted prices to determine the fair value of the investments. Our valuation techniques used to measure the fair values of the derivative instruments, the counterparty to which has high credit ratings, were derived from pricing models including discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data, as no quoted market prices exist for these instruments. Our discounted cash flow techniques use observable market inputs, such as, where applicable, foreign currency spot and forward rates. Our cash and cash equivalents, along with our accounts receivable and accounts payable and accrued liabilities balances, are measured and recognized in our Condensed Consolidated Financial Statements at an amount that approximates their fair value (a Level 2 measurement) due to their short maturities. 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, 2016 and 2015, 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 We measure certain assets and liabilities at fair value on a nonrecurring basis. 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, 2016 and 2015, no indications of impairment were identified and therefore no fair value measurements were required. Short-term Investments Short-term investments are classified as available for sale securities and are recorded on our Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a separate component of Accumulated Other Comprehensive Income. A summary of our short-term investments outstanding as of September 30, 2016 and June 30, 2016 is as follows:
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Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Foreign Currency Forward Contracts We are engaged in hedging programs with relationship banks to limit the potential foreign exchange fluctuations incurred on future cash flows relating to a portion of our Canadian dollar payroll expenses. We operate internationally and are therefore exposed to foreign currency exchange rate fluctuations in the normal course of our business, in particular to changes in the Canadian dollar on account of large costs that are incurred from our centralized Canadian operations, which are denominated in Canadian dollars. As part of our risk management strategy, we use foreign currency forward contracts to hedge portions of our payroll exposure with typical maturities of between one and twelve months. We do not use derivatives for speculative purposes. We have designated these transactions as cash flow hedges of forecasted transactions under ASC Topic 815 “Derivatives and Hedging” (Topic 815). As the critical terms of the hedging instrument, and of the entire hedged forecasted transaction, are the same, in accordance with Topic 815 we have been able to conclude that changes in fair value or cash flows attributable to the risk being hedged are expected to 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. The fair value of the contracts, as of September 30, 2016, is recorded within "Prepaid expenses and other current assets”. As of September 30, 2016, the notional amount of forward contracts we held to sell U.S. dollars in exchange for Canadian dollars was $34.1 million (June 30, 2016—$33.2 million). Fair Value of Derivative Instruments and Effect of Derivative Instruments on Financial Performance The effect of these derivative instruments on our Condensed Consolidated Financial Statements for the periods indicated below were as follows (amounts presented do not include any income tax effects). Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets (see note 15)
Effects of Derivative Instruments on Income and Other Comprehensive Income (OCI)
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Special Charges (Recoveries) |
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Restructuring, Settlement and Impairment Provisions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SPECIAL CHARGES (RECOVERIES) | SPECIAL CHARGES (RECOVERIES) Special charges include costs 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.
Fiscal 2017 Restructuring Plan In the first quarter of Fiscal 2017 and in the context of the acquisition of Recommind, we began to implement restructuring activities to streamline our operations (Fiscal 2017 Restructuring Plan). The Fiscal 2017 Restructuring Plan charges relate to workforce reductions and facility consolidations. These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate. As of September 30, 2016, we expect total costs to be incurred in conjunction with the Fiscal 2017 Restructuring Plan to be approximately $2.0 million, of which $1.1 million has already been recorded within "Special charges (recoveries)" to date. A reconciliation of the beginning and ending liability for the three months ended September 30, 2016 is shown below.
Fiscal 2015 Restructuring Plan In the third quarter of Fiscal 2015 and in the context of the acquisition of Actuate Corporation (Actuate), we began to implement restructuring activities to streamline our operations (OpenText/Actuate Restructuring Plan). We subsequently announced, on May 20, 2015 that we were initiating a restructuring program in conjunction with organizational changes to support our cloud strategy and drive further operational efficiencies. These charges are combined with the OpenText/Actuate Restructuring Plan (collectively referred to as the Fiscal 2015 Restructuring Plan) and are presented below. The Fiscal 2015 Restructuring Plan charges relate to workforce reductions and facility consolidations. These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate. Since the inception of the plan, $30.4 million has been recorded within "Special charges (recoveries)" to date. We do not expect to incur any further significant charges related to this plan. A reconciliation of the beginning and ending liability for the three months ended September 30, 2016 is shown below.
OpenText/GXS Restructuring Plan In the third quarter of Fiscal 2014 and in the context of the acquisition of GXS, we began to implement restructuring activities to streamline our operations (OpenText/GXS Restructuring Plan). These charges relate to workforce reductions, facility consolidations and other miscellaneous direct costs. These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate. Since the inception of the plan, $24.9 million has been recorded within "Special charges (recoveries)". We do not expect to incur any further significant charges related to this plan. A reconciliation of the beginning and ending liability for the three months ended September 30, 2016 is shown below.
Acquisition-related costs Included within "Special charges (recoveries)" for the three months ended September 30, 2016 are costs incurred directly in relation to acquisitions in the amount of $6.8 million (three months ended September 30, 2015—$0.2 million). Other charges (recoveries) ERP Implementation Costs We are currently involved in a one-time project to implement a broad enterprise resource planning (ERP) system. For the three months ended September 30, 2016, we incurred costs of $2.4 million relating to the implementation of this project (three months ended September 30, 2015—$1.9 million). Other charges For the three months ended September 30, 2016, "Other charges" primarily include (i) $1.3 million relating to post-acquisition integration costs necessary to streamline an acquired company into our operations, (ii) $1.0 million relating to commitment fees, and (iii) $0.1 million relating to certain interest on pre-acquisition liabilities. These charges were offset by a recovery of $1.2 million relating to certain pre-acquisition sales and use tax liabilities being released upon becoming statute barred. Included within "Other charges (recoveries)" for the three months ended September 30, 2015 is (i) a recovery of $0.2 million relating to certain pre-acquisition sales and use tax liabilities being released upon settlement or becoming statute barred and (ii) a recovery of $0.2 million relating to interest released on certain pre-acquisition liabilities. The remaining amounts relate to miscellaneous other charges. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS | ACQUISITIONS Fiscal 2017 Acquisitions Material Definitive Agreement On September 12, 2016, we entered into a material definitive agreement with EMC Corporation, a Massachusetts corporation, and certain of its subsidiaries (collectively referred to as Dell-EMC) pursuant to which we have agreed to acquire certain assets and assume certain liabilities of the enterprise content division of Dell-EMC (the Dell-EMC Acquisition). The purchase price for the Dell-EMC Acquisition is expected to be approximately $1.62 billion and is subject to certain customary closing conditions, including the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Purchase of an Asset Group Constituting a Business - CCM Business On July 31, 2016, we acquired certain customer communications management software and services assets and liabilities from HP Inc. (CCM Business) for approximately $315.0 million, of which $2.8 million is currently held back and unpaid in accordance with the terms of the purchase agreement. In accordance with Topic 805 "Business Combinations" (Topic 805), this acquisition was accounted for as a business combination. We believe this acquisition will complement our current software portfolio, and allow us to better serve our customers by offering a wider set of CCM capabilities. The results of operations of this acquisition have been consolidated with those of OpenText beginning July 31, 2016. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of July 31, 2016, are set forth below:
The goodwill of $176.9 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $147.4 million is expected to be deductible for tax purposes. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for assets acquired and liabilities assumed. We expect to finalize this determination on or before June 30, 2017. Acquisition-related costs for CCM Business included in "Special charges (recoveries)" in the Condensed Consolidated Statements of Income for the three months ended September 30, 2016 were $0.7 million. The acquisition had no significant impact on revenues and net earnings for the three months ended September 30, 2016, since the date of acquisition. Pro forma results of operations for this acquisition have not been presented because they are not material to the consolidated results of operations. Acquisition of Recommind, Inc. On July 20, 2016, we acquired all of the equity interest in Recommind, a leading provider of eDiscovery and information analytics, for approximately $170.1 million. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition will complement our EIM solutions, and through eDiscovery and analytics, will provide increased visibility into structured and unstructured data. The results of operations of Recommind have been consolidated with those of OpenText beginning July 20, 2016. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of July 20, 2016, are set forth below:
The goodwill of $93.4 million is primarily attributable to the synergies expected to arise after the acquisition. No portion of this goodwill is expected to be deductible for tax purposes. The fair value of current assets acquired includes accounts receivable with a fair value of $28.7 million. The gross amount receivable was $29.6 million of which $0.9 million of this receivable was expected to be uncollectible. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for taxation-related balances and for potential adjustments to assets and liabilities. We expect to finalize this determination on or before June 30, 2017. Acquisition-related costs for Recommind included in "Special charges (recoveries)" in the Condensed Consolidated Statements of Income for the three months ended September 30, 2016 were $0.6 million. The acquisition had no significant impact on revenues and net earnings for the three months ended September 30, 2016, since the date of acquisition. Pro forma results of operations for this acquisition have not been presented because they are not material to the consolidated results of operations. Fiscal 2016 Acquisitions Acquisition of ANXe Business Corporation On May 1, 2016, we acquired all of the equity interest in ANXe Business Corporation (ANX), a leading provider of cloud-based information exchange services to the automotive and healthcare industries, for approximately $104.6 million. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition will strengthen our industry presence and reach in the automotive and healthcare industries through strong customer relationships and targeted business partner collaboration solutions. The results of operations of ANX have been consolidated with those of OpenText beginning May 1, 2016. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of May 1, 2016, are set forth below:
The goodwill of $65.2 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $7.0 million is expected to be deductible for tax purposes. The fair value of current assets acquired includes accounts receivable with a fair value of $5.7 million. The gross amount receivable was $5.8 million of which $0.1 million of this receivable was expected to be uncollectible. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for taxation-related balances and for potential adjustments to assets and liabilities. We expect to finalize this determination on or before March 31, 2017. Purchase of an Asset Group Constituting a Business - CEM Business On April 30, 2016, we acquired certain customer experience software and services assets and liabilities from HP Inc. (CEM Business) for approximately $160.0 million. Previously, $7.3 million was held back and unpaid in accordance with the terms of the purchase agreement. This amount has since been released and paid during the three months ended September 30, 2016. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition will complement our current software portfolio, particularly our Customer Experience Management and Cloud offerings. The results of operations of this acquisition have been consolidated with those of OpenText beginning April 30, 2016. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of April 30, 2016, are set forth below:
The goodwill of $90.4 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $77.0 million is expected to be deductible for tax purposes. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for assets acquired and liabilities assumed. We expect to finalize this determination on or before March 31, 2017. Adjustments made to goodwill in the first quarter of Fiscal 2017 in the amount of $0.3 million primarily related to working capital adjustments. |
Supplemental Cash Flow Disclosures |
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SUPPLEMENTAL CASH FLOW DISCLOSURES | SUPPLEMENTAL CASH FLOW DISCLOSURES
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share are computed by dividing net income, attributable to OpenText, by the weighted average number of Common Shares outstanding during the period. Diluted earnings per share are computed by dividing net income, attributable to OpenText, by the shares used in the calculation of basic earnings per share plus the dilutive effect of Common Share equivalents, such as stock options, using the treasury stock method. Common Share equivalents are excluded from the computation of diluted earnings per share if their effect is anti-dilutive.
(1) Please also see Note 14 for details relating to a one-time tax benefit of $876.1 million recorded during the three months ended September 30, 2016 in connection with an internal reorganization of our subsidiaries. (2) 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. |
Related Party Transactions |
3 Months Ended |
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Sep. 30, 2016 | |
Related Party Transaction, Due from (to) Related Party [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Our procedure regarding the approval of any related party transaction requires that the material facts of such transaction be reviewed by the independent members of the Audit Committee and the transaction be approved by a majority of the independent members of the Audit Committee. The Audit Committee reviews all transactions in which we are, or will be, a participant and any related party has or will have a direct or indirect interest in the transaction. In determining whether to approve a related party transaction, the Audit Committee generally takes into account, among other facts it deems appropriate, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances; the extent and nature of the related person’s interest in the transaction; the benefits to the Company of the proposed transaction; if applicable, the effects on a director’s independence; and if applicable, the availability of other sources of comparable services or products. During the three months ended September 30, 2016, Mr. Stephen Sadler, a director, earned $0.7 million (three months ended September 30, 2015—$6.0 thousand) in consulting fees from OpenText for assistance with acquisition-related business activities. Mr. Sadler abstained from voting on all transactions from which he would potentially derive consulting fees. |
Subsequent Event |
3 Months Ended |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT Cash Dividends As part of our quarterly, non-cumulative cash dividend program, we declared, on November 3, 2016, a dividend of $0.23 per Common Share. The record date for this dividend is December 2, 2016 and the payment date is December 22, 2016. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of our Board of Directors. |
Basis of Presentation (Policies) |
3 Months Ended |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements. These estimates, judgments and assumptions are evaluated on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. In particular, significant estimates, judgments and assumptions include those related to: (i) revenue recognition, (ii) allowance for doubtful accounts, (iii) testing of goodwill for impairment, (iv) the valuation of acquired intangible assets, (v) the valuation of long-lived assets, (vi) the recognition of contingencies, (vii) restructuring accruals, (viii) acquisition accruals and pre-acquisition contingencies, (ix) the realization of investment tax credits, (x) the valuation of stock options granted and obligations related to share-based payments, including the valuation of our long-term incentive plan, (xi) the valuation of pension assets and obligations, and (xii) accounting for income taxes. |
Recent Accounting Pronouncements | Statement of Cash Flows In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" (ASU 2016-15). ASU 2016-15 clarifies how companies should present and classify certain cash receipts and cash payments in the statement of cash flows. This standard is effective for us during the first quarter of our fiscal year ending June 30, 2019, with early adoption permitted. We are currently evaluating the impact of the pending adoption of ASU 2016-15 on our Condensed Consolidated Financial Statements. Financial Instruments In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for us in our first quarter for our fiscal year ending June 30, 2021, with earlier adoption permitted beginning in the first quarter of our fiscal year ending June 30, 2020. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our Condensed Consolidated Financial Statements. In January 2016, the FASB issued ASU 2016-01 “Financial Instruments - Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01). This update requires that all equity investments be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). This update also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. Additionally, this update eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. ASU 2016-01 is effective for our fiscal year ending June 30, 2019. We are currently evaluating the impact of the pending adoption of ASU 2016-01 on our Condensed Consolidated Financial Statements. Share-based Compensation In March 2016, the FASB issued ASU No. 2016-09, "Compensation-Stock Compensation (Topic 718)." This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for us during the first quarter of our fiscal year ending June 30, 2018, with early adoption permitted. We are currently assessing how the adoption of this standard will impact our Condensed Consolidated Financial Statements. Investments-Equity Method and Joint Ventures In March 2016, the FASB issued ASU No. 2016-07, "Investments - Equity Method and Join Ventures (Topic 323): Simplifying the Transition to Equity Method of Accounting" (ASU 2016-07). The amendments in this update require that the equity method investor add the cost of acquiring any additional interest in an investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Upon qualifying for equity method accounting, no retroactive adjustment of the investment is required. We adopted ASU 2016-07 in the first quarter of our Fiscal 2017. The adoption did not have a material impact on our reported financial position or results of operations and cash flows. Leases In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)” (ASU 2016-02), which supersedes the guidance in former ASC Topic 840 “Leases”. The most significant change will result in the recognition of lease assets for the right to use the underlying asset and lease liabilities for the obligation to make lease payments by lessees, for those leases classified as operating leases under current guidance. The new guidance will also require significant additional disclosures about the amount, timing and uncertainty of cash flows related to leases. This standard is effective for us for our fiscal year ending June 30, 2020, with early adoption permitted. Upon adoption of ASU 2016-02, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the effect that the pending adoption of ASU 2016-02 will have on our Condensed Consolidated Balance Sheets. Although we have not completed our assessment, we do not expect the adoption to change the recognition, measurement or presentation of lease expenses within the Condensed Consolidated Statements of Operations and Cash Flows. Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09) and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016 and May 2016 within ASU 2015-04, ASU 2016-08, ASU 2016-10 and ASU 2016-12, respectively. These updates supersede the revenue recognition requirements in ASC Topic 605, "Revenue Recognition" and nearly all other existing revenue recognition guidance under U.S. GAAP. The core principal of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 identifies five steps to be followed to achieve this core principal, which include (i) identifying contract(s) with customers, (ii) identifying performance obligations in the contract(s), (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations in the contract(s) and (v) recognizing revenue when (or as) the entity satisfies a performance obligation. In August 2015, the FASB voted to defer the effective date of ASU 2014-09 for one year. The new guidance will now be effective for us in the first quarter of our fiscal year ending June 30, 2019. Early adoption, prior to the original effective date, is not permitted. When applying ASU 2014-09 we can either apply the amendments: (i) retrospectively to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09 or (ii) retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined within ASU 2014-09. We are currently evaluating the effect that the pending adoption of the above mentioned ASUs will have on our Condensed Consolidated Financial Statements and related disclosures. Although it is expected to have a significant impact on our revenue recognition policies and disclosures, we have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting. There have been no other significant changes in our reported financial position or results of operations and cash flows as a result of our adoption of new accounting pronouncements or changes to our significant accounting policies that were disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2016. |
Allowance For Doubtful Accounts (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||
Changes in Carrying Amount of Allowance For Doubtful Accounts |
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Property and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Property and Equipment by Type |
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Goodwill (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||
Summary of Changes In Carrying Amount of Goodwill | The following table summarizes the changes in goodwill since June 30, 2016:
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Acquired Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Acquired Intangibles by Asset Class |
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Calculation of Estimated Future Amortization Expense | The following table shows the estimated future amortization expense for the fiscal years indicated. This calculation assumes no future adjustments to acquired intangible assets:
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Other Assets (Tables) |
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Other Assets, Noncurrent Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Other Assets |
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Accounts Payable And Accrued Liabilities (Tables) |
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Accounts Payable and Accrued Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Current Liabilities | Accounts payable and accrued liabilities are comprised of the following:
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Schedule of Long-Term Accrued Liabilities | Long-term accrued liabilities
* Other accrued liabilities consist primarily of tenant allowances, deferred rent and lease fair value adjustments relating to certain facilities acquired through business acquisitions. |
Long-Term Debt (Tables) |
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Long-term Debt, Unclassified [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Long-term debt is comprised of the following:
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Pension Plans and Other Post Retirement Benefits (Tables) |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Defined Benefit Plan and Long-Term Employee Benefit Obligations | The following table provides details of our defined benefit pension plans and long-term employee benefit obligations for Open Text Document Technologies GmbH (CDT), GXS GmbH (GXS GER) and GXS Philippines, Inc. (GXS PHP) as of September 30, 2016 and June 30, 2016:
*The current portion of the benefit obligation has been included within "Accrued salaries and commissions", all within "Accounts payable and accrued liabilities" in the Condensed Consolidated Balance Sheets (see Note 9). |
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Schedule of the Change in the Benefit Obligation of Defined Benefit Plan | The following are the details of the change in the benefit obligation for each of the above mentioned pension plans for the periods indicated:
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Components of Net Pension Expense for Pension Plan | The following are details of net pension expense relating to the following pension plans:
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Schedule of Weighted-Average Key Assumptions Used for CDT Pension Plan | In determining the fair value of the pension plan benefit obligations as of September 30, 2016 and June 30, 2016, respectively, we used the following weighted-average key assumptions:
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Anticipated Pension Payments Under Pension Plan | Anticipated pension payments under the pension plans for the fiscal years indicated below are as follows:
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Share Capital, Option Plans and Share-Based Payments (Tables) |
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Share-based Compensation Costs | Total share-based compensation expense for the periods indicated below is detailed as follows:
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Summary of Option Activity | A summary of activity under our stock option plans for the three months ended September 30, 2016 is as follows:
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Schedule of Weighted-Average Fair Value of Options and Weighted-Average Assumptions Used | For the periods indicated, the weighted-average fair value of options and weighted-average assumptions were as follows:
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Guarantees and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Obligations | We have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:
(1) Net of $6.2 million of sublease income to be received from properties which we have subleased to third parties. (2) On September 12, 2016, we entered into a commitment letter with Barclays Bank PLC in connection with the Dell-EMC Acquisition (as defined in note 18). On September 26, 2016, we amended and restated the commitment letter (as amended and restated, the Commitment Letter) to add Citigroup Global Markets Inc. and Royal Bank of Canada as lenders (together with Barclays Bank PLC, the Lenders). Under the Commitment Letter, we obtained a financing commitment from the Lenders, severally and not jointly, to provide a first lien term loan facility in an aggregate principal amount of up to $1.0 billion to finance a portion of the purchase price for the Dell-EMC acquisition. Under the terms of the Commitment Letter, we are subject to fees of $5.0 million with a maximum fee payable up to $10.0 million. We have included our maximum fee exposure under “Purchase Obligations” in the table above, although the final fees that we pay could ultimately be less. The Commitment Letter terminates on March 14, 2017, subject to extension. |
Income Taxes (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest and Penalties Related to Liabilities for Income Tax Expense | For the three months ended September 30, 2016 and 2015, we recognized the following amounts as income tax-related interest expense and penalties:
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Interest Accrued and Penalties Accrued Related to Income Tax Expense | As of September 30, 2016 and June 30, 2016, the following amounts have been accrued on account of income tax-related interest expense and penalties:
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Fair Value Measurement (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | Our financial assets and liabilities measured at fair value on a recurring basis consisted of the following types of instruments as of September 30, 2016 and June 30, 2016:
*These assets in the table above are classified as Level 2 as certain specific assets included within may not have quoted prices that are readily accessible in an active market or we may have relied on alternative pricing methods that do not rely exclusively on quoted prices to determine the fair value of the investments. |
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Fair Value, by Balance Sheet Grouping | A summary of our short-term investments outstanding as of September 30, 2016 and June 30, 2016 is as follows:
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Derivative Instruments and Hedging Activities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets | Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets (see note 15)
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Effects of Derivative Instruments on Income and Other Comprehensive Income (OCI) | Effects of Derivative Instruments on Income and Other Comprehensive Income (OCI)
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Special Charges (Recoveries) (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve | Special charges include costs 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.
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Fiscal 2017 Restructuring Plan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve | A reconciliation of the beginning and ending liability for the three months ended September 30, 2016 is shown below.
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Fiscal 2015 Restructuring Plan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve | A reconciliation of the beginning and ending liability for the three months ended September 30, 2016 is shown below.
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OpenText/GXS Restructuring Plan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve | A reconciliation of the beginning and ending liability for the three months ended September 30, 2016 is shown below.
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Acquisitions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||
CCM Business | |||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of July 31, 2016, are set forth below:
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Recommind Inc | |||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of July 20, 2016, are set forth below:
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ANXeBusiness Corp. | |||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of May 1, 2016, are set forth below:
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CEM Business | |||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of April 30, 2016, are set forth below:
|
Supplemental Cash Flow Disclosures (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosure of Cash Flow Information |
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Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share |
(1) Please also see Note 14 for details relating to a one-time tax benefit of $876.1 million recorded during the three months ended September 30, 2016 in connection with an internal reorganization of our subsidiaries. (2) Represents options to purchase Common Shares excluded from the calculation of diluted earnings per share because the exercise price of the stock options was greater than or equal to the average price of the Common Shares during the period. |
Basis of Presentation - Additional Information (Details) |
Sep. 30, 2016 |
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OT South Africa | |
Noncontrolling Interest [Line Items] | |
Ownership percentage by Open Text | 90.00% |
GXS Korea | |
Noncontrolling Interest [Line Items] | |
Ownership percentage by Open Text | 85.00% |
GXS Singapore | |
Noncontrolling Interest [Line Items] | |
Ownership percentage by Open Text | 81.00% |
Allowance For Doubtful Accounts - Changes In Carrying Amount (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
Balance as of June 30, 2016 | $ 6,740 | |
Bad debt expense | 1,639 | |
Write-off /adjustments | (1,109) | |
Balance as of September 30, 2016 | 7,270 | |
Unbilled receivables | $ 36,900 | $ 35,600 |
Goodwill - Summary Of Changes In Carrying Amount Of Goodwill (Details) $ in Thousands |
3 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Goodwill [Roll Forward] | |
Balance as of June 30, 2016 | $ 2,325,586 |
Adjustment relating to acquisition of CEM Business | (273) |
Balance as of September 30, 2016 | 2,595,614 |
Recommind Inc | |
Goodwill [Roll Forward] | |
Goodwill acquired | 93,424 |
CCM Business | |
Goodwill [Roll Forward] | |
Goodwill acquired | 176,877 |
CEM Business | |
Goodwill [Roll Forward] | |
Adjustment relating to acquisition of CEM Business | $ 300 |
Acquired Intangible Assets - Calculation Of Acquired Intangibles By Asset Class (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
|
Finite-Lived Intangible Assets, Net [Abstract] | ||
Cost | $ 1,391,779 | $ 1,150,079 |
Accumulated Amortization | (560,582) | (503,839) |
Total | 831,197 | 646,240 |
Technology Assets | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Cost | 485,373 | 359,573 |
Accumulated Amortization | (178,983) | (155,848) |
Total | $ 306,390 | 203,725 |
Weighted-average amortization period (in years) for acquired intangible assets | 5 years | |
Customer Assets | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Cost | $ 906,406 | 790,506 |
Accumulated Amortization | (381,599) | (347,991) |
Total | $ 524,807 | $ 442,515 |
Weighted-average amortization period (in years) for acquired intangible assets | 7 years |
Acquired Intangible Assets - Calculation Of Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2017 (nine months ended June 30) | $ 172,041 | |
2018 | 218,992 | |
2019 | 191,593 | |
2020 | 120,079 | |
2021 | 45,872 | |
2022 and beyond | 82,620 | |
Total | $ 831,197 | $ 646,240 |
Other Assets (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Jun. 30, 2016 |
|
Other Assets, Noncurrent Disclosure [Abstract] | |||
Deposits and restricted cash | $ 13,075,000 | $ 10,715,000 | |
Deferred implementation costs | 21,130,000 | 18,116,000 | |
Investments | 23,504,000 | 18,062,000 | |
Long-term prepaid expenses and other long-term assets | 7,824,000 | 6,804,000 | |
Total other assets | 65,533,000 | $ 53,697,000 | |
Schedule of Equity Method Investments [Line Items] | |||
Income from equity method investments | $ 5,529,000 | $ 0 | |
Minimum | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 4.00% | ||
Maximum | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 20.00% |
Deferred Charges and Credits (Details) |
3 Months Ended |
---|---|
Sep. 30, 2016 | |
Minimum | |
Schedule of Deferred Charges and Credits [Line Items] | |
Deferred charges and credits amortization, period | 6 years |
Maximum | |
Schedule of Deferred Charges and Credits [Line Items] | |
Deferred charges and credits amortization, period | 15 years |
Accounts Payable And Accrued Liabilities - Schedule Of Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||
Accounts payable—trade | $ 35,020 | $ 35,804 |
Accrued salaries and commissions | 60,528 | 77,813 |
Accrued liabilities | 110,792 | 113,272 |
Accrued interest on Senior Notes | 21,125 | 23,562 |
Amounts payable in respect of restructuring and other Special charges | 5,293 | 5,109 |
Asset retirement obligations | 778 | 1,890 |
Total | $ 233,536 | $ 257,450 |
Accounts Payable And Accrued Liabilities - Schedule Of Long-Term Accrued Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||
Amounts payable in respect of restructuring and other Special charges | $ 3,752 | $ 3,986 |
Other accrued liabilities | 19,338 | 19,138 |
Asset retirement obligations | 8,391 | 6,724 |
Total | $ 31,481 | $ 29,848 |
Accounts Payable And Accrued Liabilities - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||
Present value of asset retirement obligation | $ 9.2 | $ 8.6 |
Undiscounted value of asset retirement obligation | $ 9.9 | $ 9.2 |
Long-Term Debt - Schedule Of Long-Term Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 2,178,000 | $ 2,180,000 |
Debt issuance costs | (32,724) | (34,013) |
Total amount outstanding | 2,145,276 | 2,145,987 |
Less: | ||
Non-current portion of long-term debt | 2,137,276 | 2,137,987 |
Term Loan B | ||
Debt Instrument [Line Items] | ||
Total debt | 778,000 | 780,000 |
Less: | ||
Current portion of long-term debt | 8,000 | 8,000 |
Senior Notes | Senior Notes 2026 | ||
Debt Instrument [Line Items] | ||
Total debt | 600,000 | 600,000 |
Senior Notes | Senior Notes 2023 | ||
Debt Instrument [Line Items] | ||
Total debt | $ 800,000 | $ 800,000 |
Long-Term Debt - Senior Unsecured Fixed Rate Notes (Details) - Senior Notes - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
May 31, 2016 |
Jan. 15, 2015 |
|
Senior Notes 2026 | ||||
Debt Instrument [Line Items] | ||||
Debt instrument face amount | $ 600,000,000 | |||
Debt instrument stated interest rate | 5.875% | |||
Interest expense | $ 8,800,000 | |||
Senior Notes 2023 | ||||
Debt Instrument [Line Items] | ||||
Debt instrument face amount | $ 800,000,000.0 | |||
Debt instrument stated interest rate | 5.625% | |||
Interest expense | $ 11,300,000 | $ 11,300,000 |
Long Term Debt - Term Loan B and Revolver (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Jan. 16, 2014 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Term Loan B | |||
Debt Instrument [Line Items] | |||
Credit agreement, maximum capacity | $ 800,000,000 | ||
Term loan period, years | 7 years | ||
Term loan quarterly repayment as percentage of principal | 0.25% | ||
Interest addition to floating rate | 0.75% | ||
Interest expense | $ 6,500,000 | $ 6,500,000 | |
Revolver | |||
Debt Instrument [Line Items] | |||
Credit agreement, maximum capacity | $ 300,000,000 | ||
London Interbank Offered Rate (LIBOR) | Term Loan B | |||
Debt Instrument [Line Items] | |||
Interest addition to floating rate | 2.50% |
Pension Plans and Other Post Retirement Benefits - Narrative (Details) - Pension Plan |
3 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
CDT | |
Assumptions: | |
Contributions made by employer to plan | $ 0 |
Amount to be amortized from accumulated other comprehensive income (loss) over the remainder of this fiscal year | 500,000 |
GXS Germany | |
Assumptions: | |
Contributions made by employer to plan | 0 |
Amount to be amortized from accumulated other comprehensive income (loss) over the remainder of this fiscal year | 129,200 |
GXS Philippines | |
Assumptions: | |
Contributions made by employer to plan | 0 |
Amount to be amortized from accumulated other comprehensive income (loss) over the remainder of this fiscal year | 36,400 |
Fair value of plan assets | $ 34,500 |
Pension Plans and Other Post Retirement Benefits - Components of Net Pension Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Jun. 30, 2016 |
|
Assumptions: | |||
Service cost | $ 660 | $ 2,409 | |
Interest cost | 289 | 1,467 | |
Net pension expense | 1,190 | $ 1,167 | |
Pension Plan | |||
Assumptions: | |||
Service cost | 660 | 637 | |
Interest cost | 289 | 363 | |
Amortization of actuarial (gains) and losses | 191 | 107 | |
Net pension expense | 1,140 | 1,107 | |
Pension Plan | CDT | |||
Assumptions: | |||
Service cost | 120 | 107 | 422 |
Interest cost | 117 | 154 | 610 |
Amortization of actuarial (gains) and losses | 160 | 107 | |
Net pension expense | 397 | 368 | |
Pension Plan | GXS Germany | |||
Assumptions: | |||
Service cost | 101 | 103 | 359 |
Interest cost | 96 | 128 | 543 |
Amortization of actuarial (gains) and losses | 43 | 0 | |
Net pension expense | 240 | 231 | |
Pension Plan | GXS Philippines | |||
Assumptions: | |||
Service cost | 439 | 427 | 1,628 |
Interest cost | 76 | 81 | $ 314 |
Amortization of actuarial (gains) and losses | (12) | 0 | |
Net pension expense | $ 503 | $ 508 |
Pension Plans And Other Post Retirement Benefits - Anticipated Pension Payments Under Pension Plans (Details) - Pension Plan $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
CDT | |
Assumptions: | |
2017 (nine months ended June 30) | $ 450 |
2018 | 641 |
2019 | 717 |
2020 | 784 |
2021 | 868 |
2022 to 2026 | 5,127 |
Total | 8,587 |
GXS Germany | |
Assumptions: | |
2017 (nine months ended June 30) | 592 |
2018 | 878 |
2019 | 937 |
2020 | 989 |
2021 | 1,004 |
2022 to 2026 | 5,550 |
Total | 9,950 |
GXS Philippines | |
Assumptions: | |
2017 (nine months ended June 30) | 54 |
2018 | 88 |
2019 | 138 |
2020 | 128 |
2021 | 159 |
2022 to 2026 | 1,701 |
Total | $ 2,268 |
Share Capital, Option Plans and Share-Based Payments - Cash Dividends, Share Capital, Treasury Stock, Share Repurchase Plan (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Jul. 26, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividends declared per common share (in dollars per share) | $ 0.23 | $ 0.2 | |
Payments of dividends | $ 27,791,000 | $ 23,312,000 | |
Preference shares issued (in shares) | 0 | ||
Amount authorized to be repurchased (up to) | $ 200,000,000 | ||
Common shares repurchased and cancelled during period, shares (in shares) | 1,131,812 | ||
Common shares repurchased and cancelled during period, value | $ 50,000,000 | ||
Long Term Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Issuance of treasury stock (in shares) | 4,167 | 0 |
Share Capital, Option Plans and Share-Based Payments - Schedule of Weighted-Average Fair Value Of Options And Weighted-Average Assumptions Used (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Weighted-average fair value of options granted (in dollars per share) | $ 13.06 | $ 11.23 |
Expected volatility | 29.42% | 32.65% |
Risk–free interest rate | 1.03% | 1.48% |
Expected dividend yield | 1.45% | 1.63% |
Expected life (in years) | 4 years 3 months 29 days | 4 years 3 months 29 days |
Forfeiture rate (based on historical rates) | 5.00% | 5.00% |
Average exercised share price (in dollars per share) | $ 59.49 | $ 45.73 |
Share Capital, Option Plans and Share-Based Payments - Long-Term Incentive Plans (Details) $ in Millions |
3 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unvested stock awards compensation cost, weighted average recognition period | 2 years 3 months 40 days |
Long Term Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Compensation cost related to unvested awards not yet recognized | $ 21.6 |
Unvested stock awards compensation cost, weighted average recognition period | 2 years 4 months |
Share Capital, Option Plans and Share-Based Payments - RSU's, DSU's and ESPP (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Jan. 01, 2016 |
Dec. 31, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Employee Share Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Awards purchase price discount | 15.00% | 5.00% | ||
Common shares eligible for issuance (in shares) | 51,816 | |||
Cash received from employee stock purchase plan | $ 2.9 | $ 1.0 | ||
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units granted (in shares) | 3,900 | 0 | ||
Award vesting period | 3 years | |||
Issuance of treasury stock (in shares) | 4,167 | 0 | ||
Issuance of treasury stock | $ 0.1 | |||
Deferred Stock Units (DSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units granted (in shares) | 1,221 | 556 |
Guarantees and Contingencies - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jul. 17, 2015 |
Sep. 30, 2016 |
|
GXS Group, Inc. | ||
Loss Contingencies [Line Items] | ||
Tax contingency, foreign, amount | $ 2.7 | |
Guarantor obligations, current carrying value | 4.0 | |
Loss contingency accrual | 5.3 | |
GXS India | ||
Loss Contingencies [Line Items] | ||
Loss contingency accrual | 1.5 | |
IRS Notice of Proposed Adjustment | ||
Loss Contingencies [Line Items] | ||
Expected federal taxes expense | $ 280.0 | 80.0 |
Additional tax expense | 20.00% | |
Estimate of probably loss | $ 550.0 |
Income Taxes - Interest And Penalties Related To Liabilities For Income Tax Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||
Interest expense | $ 1,282 | $ 1,777 |
Penalties expense (recoveries) | (106) | (130) |
Total | $ 1,176 | $ 1,647 |
Income Taxes - Interest Accrued And Penalties Accrued Related To Income Tax Expense (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Interest expense accrued | $ 35,574 | $ 34,476 |
Penalties accrued | $ 1,540 | $ 1,615 |
Income Taxes - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Jun. 30, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Possible decrease in tax expense in next 12 months | $ 3.1 | ||
Taxes paid on cash distribution | $ 16.7 | $ 15.9 | |
Effective income tax rate | (1606.80%) | 21.30% | |
Decrease in income tax expense | $ 870.6 | ||
Income tax benefit from reorganization | 876.1 | ||
Increase in income tax expense due to impact of foreign rates | 10.9 | ||
Decrease in changes in unrecognized tax benefits | $ 2.2 |
Fair Value Measurement - Schedule of Financial Assets and Liabilities (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instrument asset | $ 287 | $ 792 |
Total recurring assets fair value | 3,013 | 12,631 |
Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instrument asset | 287 | 792 |
Total recurring assets fair value | 3,013 | 12,631 |
Corporate Bond Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | 2,726 | 11,839 |
Corporate Bond Securities | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term investments | $ 2,726 | $ 11,839 |
Fair Value Measurement - Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Fair Value Disclosures [Abstract] | ||
Assets, Level 1 to Level 2 transfers | $ 0 | $ 0 |
Liabilities, Level 1 to Level 2 transfers | 0 | 0 |
Assets, Level 2 to Level 1 transfers | 0 | 0 |
Liabilities, Level 2 to Level 1 transfers | 0 | 0 |
Asset transfers into Level 3 | 0 | 0 |
Liability transfers into Level 3 | 0 | 0 |
Asset transfers out of Level 3 | 0 | 0 |
Liability transfers out of Level 3 | $ 0 | $ 0 |
Fair Value Measurement - Cash and Short term Investments (Details) - Short-term Investments - Corporate Bond Securities - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cost | $ 2,405 | $ 11,406 |
Gross Unrealized Gains | 321 | 436 |
Gross Unrealized (Losses) | 0 | (3) |
Estimated Fair Value | $ 2,726 | $ 11,839 |
Derivative Instruments and Hedging Activities - Fair Value in the Condensed Consolidated Balance Sheets (Details) - Foreign currency forward contracts - USD ($) $ in Thousands |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Notional amount of forward contracts held to sell U.S. dollars in exchange for Canadian dollars | $ 34,100 | $ 33,200 |
Prepaid expenses and other current assets | Cash Flow Hedging | Designated As Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value Asset (Liability) | $ 287 | $ 792 |
Derivative Instruments and Hedging Activities - Effects on Income and Other Comprehensive Income (OCI) (Details) - Cash Flow Hedging - Foreign currency forward contracts - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Derivatives, Fair Value [Line Items] | ||
Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion) | $ (483) | $ (4,612) |
Amount of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | 0 | 0 |
Operating Expenses | ||
Derivatives, Fair Value [Line Items] | ||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | $ 22 | $ (696) |
Special Charges (Recoveries) - Schedule Of Special Charges Related To Restructuring Plan (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Restructuring Cost and Reserve [Line Items] | ||
Acquisition-related costs | $ 6,774 | $ 177 |
Other charges | 3,762 | 1,838 |
Total | 12,454 | 17,337 |
Fiscal 2017 Restructuring Plan | ||
Restructuring Cost and Reserve [Line Items] | ||
Special charges | 1,095 | 0 |
Fiscal 2015 Restructuring Plan | ||
Restructuring Cost and Reserve [Line Items] | ||
Special charges | (15) | 15,474 |
OpenText/GXS Restructuring Plan | ||
Restructuring Cost and Reserve [Line Items] | ||
Special charges | 854 | (152) |
Restructuring Plans prior to OpenText/GXS Restructuring Plan | ||
Restructuring Cost and Reserve [Line Items] | ||
Special charges | $ (16) | $ 0 |
Acquisitions - Material Definitive Agreement (Details) $ in Millions |
10 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
Forecast | Dell - EMC | |
Business Acquisition [Line Items] | |
Purchase consideration | $ 1,620 |
Acquisitions - Purchase of an Asset Group Constituting a Business - CCM Business (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Jul. 31, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Jun. 30, 2016 |
|
Business Acquisition [Line Items] | ||||
Goodwill | $ 2,595,614 | $ 2,325,586 | ||
Acquisition-related costs | 6,774 | $ 177 | ||
CCM Business | ||||
Business Acquisition [Line Items] | ||||
Purchase consideration | $ 315,000 | |||
Amount held back and unpaid | 2,800 | |||
Current assets | 262 | |||
Non-current deferred tax asset | 6,916 | |||
Non-current tangible assets | 2,348 | |||
Liabilities assumed | (36,403) | |||
Total identifiable net assets | 138,123 | |||
Goodwill | 176,877 | |||
Net assets acquired | 315,000 | |||
Goodwill expected to be tax deductible | 147,400 | |||
CCM Business | Special Charges | ||||
Business Acquisition [Line Items] | ||||
Acquisition-related costs | $ 700 | |||
CCM Business | Customer Assets | ||||
Business Acquisition [Line Items] | ||||
Acquired intangible assets | 64,000 | |||
CCM Business | Technology Assets | ||||
Business Acquisition [Line Items] | ||||
Acquired intangible assets | $ 101,000 |
Acquisitions - Acquisition of Recommind, Inc. (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Jul. 20, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Jun. 30, 2016 |
|
Business Acquisition [Line Items] | ||||
Goodwill | $ 2,595,614 | $ 2,325,586 | ||
Acquisition-related costs | 6,774 | $ 177 | ||
Recommind Inc | ||||
Business Acquisition [Line Items] | ||||
Purchase consideration | $ 170,100 | |||
Current assets | 30,034 | |||
Non-current tangible assets | 1,245 | |||
Deferred tax liabilities | (4,049) | |||
Other liabilities assumed | (27,247) | |||
Total identifiable net assets | 76,683 | |||
Goodwill | 93,424 | |||
Net assets acquired | 170,107 | |||
Acquired receivables, fair value | 28,700 | |||
Acquired receivables, gross contractual amount | 29,600 | |||
Acquired receivables, estimated uncollectible | 900 | |||
Recommind Inc | Special Charges | ||||
Business Acquisition [Line Items] | ||||
Acquisition-related costs | $ 600 | |||
Recommind Inc | Customer Assets | ||||
Business Acquisition [Line Items] | ||||
Acquired intangible assets | 51,900 | |||
Recommind Inc | Technology Assets | ||||
Business Acquisition [Line Items] | ||||
Acquired intangible assets | $ 24,800 |
Acquisitions - Acquisition of ANXe Business Corporation (Details) - USD ($) $ in Thousands |
May 01, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 2,595,614 | $ 2,325,586 | |
ANXeBusiness Corp. | |||
Business Acquisition [Line Items] | |||
Purchase consideration | $ 104,600 | ||
Current assets | 9,712 | ||
Non-current tangible assets | 511 | ||
Liabilities assumed | (26,190) | ||
Total identifiable net assets | 39,333 | ||
Goodwill | 65,237 | ||
Net assets acquired | 104,570 | ||
Goodwill expected to be tax deductible | 7,000 | ||
Acquired receivables, fair value | 5,700 | ||
Acquired receivables, gross contractual amount | 5,800 | ||
Acquired receivables, estimated uncollectible | 100 | ||
ANXeBusiness Corp. | Customer Assets | |||
Business Acquisition [Line Items] | |||
Acquired intangible assets | 49,700 | ||
ANXeBusiness Corp. | Technology Assets | |||
Business Acquisition [Line Items] | |||
Acquired intangible assets | $ 5,600 |
Acquisitions - Purchase of an Asset Group Consituting a Business - CEM Business (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Apr. 30, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
|
Business Acquisition [Line Items] | |||
Goodwill | $ 2,595,614 | $ 2,325,586 | |
Adjustment relating to acquisition | (273) | ||
CEM Business | |||
Business Acquisition [Line Items] | |||
Purchase consideration | $ 160,000 | ||
Amount held back and unpaid | 7,300 | ||
Current assets | 3,078 | ||
Non-current tangible assets | 12,589 | ||
Liabilities assumed | (26,106) | ||
Total identifiable net assets | 69,561 | ||
Goodwill | 90,439 | ||
Net assets acquired | 160,000 | ||
Goodwill expected to be tax deductible | 77,000 | ||
Adjustment relating to acquisition | $ 300 | ||
Customer Assets | CEM Business | |||
Business Acquisition [Line Items] | |||
Acquired intangible assets | 33,000 | ||
Technology Assets | CEM Business | |||
Business Acquisition [Line Items] | |||
Acquired intangible assets | $ 47,000 |
Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Supplemental Cash Flow Information [Abstract] | ||
Cash paid during the period for interest | $ 29,191 | $ 29,294 |
Cash received during the period for interest | 770 | 283 |
Cash paid during the period for income taxes | $ 6,820 | $ 7,405 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Basic earnings per share | ||
Net income attributable to OpenText | $ 912,884 | $ 41,286 |
Basic earnings per share attributable to OpenText (in dollars per share) | $ 7.52 | $ 0.34 |
Diluted earnings per share | ||
Net income attributable to OpenText | $ 912,884 | $ 41,286 |
Diluted earnings per share attributable to OpenText (in dollars per share) | $ 7.46 | $ 0.34 |
Weighted-average number of shares outstanding | ||
Basic (in shares) | 121,455 | 122,160 |
Effect of dilutive securities (in shares) | 916 | 480 |
Diluted (in shares) | 122,371 | 122,640 |
Excluded as anti-dilutive (in shares) | 914 | 2,547 |
Income tax benefit from reorganization | $ 876,100 |
Related Party Transactions (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Stephen Sadler | ||
Related Party Transaction [Line Items] | ||
Consultancy fees earned by director for business acquisition-related activities | $ 700,000 | $ 6,000 |
Subsequent Event (Details) - $ / shares |
3 Months Ended | ||
---|---|---|---|
Nov. 03, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Subsequent Event [Line Items] | |||
Dividends declared per common share (in dollars per share) | $ 0.23 | $ 0.2 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Dividends declared per common share (in dollars per share) | $ 0.23 |
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