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 Sheets as of March 31, 2018 (unaudited) and June 30, 2017 | ||
Condensed Consolidated Statements of Income - Three and Nine Months Ended March 31, 2018 and 2017 (unaudited) | ||
Condensed Consolidated Statements of Comprehensive Income - Three and Nine Months Ended March 31, 2018 and 2017 (unaudited) | ||
Condensed Consolidated Statements of Cash Flows - Nine Months Ended March 31, 2018 and 2017 (unaudited) | ||
Notes to Condensed Consolidated Financial Statements (unaudited) | ||
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | ||
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 |
March 31, 2018 | June 30, 2017 | ||||||
ASSETS | (unaudited) | ||||||
Cash and cash equivalents | $ | 605,497 | $ | 443,357 | |||
Accounts receivable trade, net of allowance for doubtful accounts of $9,007 as of March 31, 2018 and $6,319 as of June 30, 2017 (note 3) | 515,012 | 445,812 | |||||
Income taxes recoverable (note 14) | 42,880 | 32,683 | |||||
Prepaid expenses and other current assets | 105,657 | 81,625 | |||||
Total current assets | 1,269,046 | 1,003,477 | |||||
Property and equipment (note 4) | 264,859 | 227,418 | |||||
Goodwill (note 5) | 3,592,598 | 3,416,749 | |||||
Acquired intangible assets (note 6) | 1,391,413 | 1,472,542 | |||||
Deferred tax assets (note 14) | 1,142,385 | 1,215,712 | |||||
Other assets (note 7) | 99,732 | 93,763 | |||||
Deferred charges (note 8) | 39,148 | 42,344 | |||||
Long-term income taxes recoverable (note 14) | 21,696 | 8,557 | |||||
Total assets | $ | 7,820,877 | $ | 7,480,562 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities (note 9) | $ | 295,165 | $ | 342,120 | |||
Current portion of long-term debt (note 10) | 282,760 | 182,760 | |||||
Deferred revenues | 689,189 | 570,328 | |||||
Income taxes payable (note 14) | 33,685 | 31,835 | |||||
Total current liabilities | 1,300,799 | 1,127,043 | |||||
Long-term liabilities: | |||||||
Accrued liabilities (note 9) | 52,688 | 50,338 | |||||
Deferred credits (note 8) | 3,366 | 5,283 | |||||
Pension liability (note 11) | 62,996 | 58,627 | |||||
Long-term debt (note 10) | 2,385,322 | 2,387,057 | |||||
Deferred revenues | 72,176 | 61,678 | |||||
Long-term income taxes payable (note 14) | 171,174 | 162,493 | |||||
Deferred tax liabilities (note 14) | 75,376 | 94,724 | |||||
Total long-term liabilities | 2,823,098 | 2,820,200 | |||||
Shareholders’ equity: | |||||||
Share capital and additional paid-in capital (note 12) | |||||||
267,266,442 and 264,059,567 Common Shares issued and outstanding at March 31, 2018 and June 30, 2017, respectively; authorized Common Shares: unlimited | 1,689,997 | 1,613,454 | |||||
Accumulated other comprehensive income | 51,810 | 48,800 | |||||
Retained earnings | 1,973,129 | 1,897,624 | |||||
Treasury stock, at cost (694,169 shares at March 31, 2018 and 1,101,612 at June 30, 2017, respectively) | (18,823 | ) | (27,520 | ) | |||
Total OpenText shareholders' equity | 3,696,113 | 3,532,358 | |||||
Non-controlling interests | 867 | 961 | |||||
Total shareholders’ equity | 3,696,980 | 3,533,319 | |||||
Total liabilities and shareholders’ equity | $ | 7,820,877 | $ | 7,480,562 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
License | $ | 84,113 | $ | 87,227 | $ | 297,588 | $ | 245,647 | |||||||
Cloud services and subscriptions | 209,102 | 177,109 | 611,076 | 521,857 | |||||||||||
Customer support | 312,279 | 263,436 | 915,753 | 693,298 | |||||||||||
Professional service and other | 80,385 | 65,358 | 236,554 | 166,701 | |||||||||||
Total revenues | 685,879 | 593,130 | 2,060,971 | 1,627,503 | |||||||||||
Cost of revenues: | |||||||||||||||
License | 3,098 | 4,008 | 10,645 | 10,244 | |||||||||||
Cloud services and subscriptions | 94,264 | 77,225 | 269,012 | 220,667 | |||||||||||
Customer support | 33,820 | 34,442 | 99,805 | 87,529 | |||||||||||
Professional service and other | 64,246 | 55,529 | 188,690 | 137,167 | |||||||||||
Amortization of acquired technology-based intangible assets (note 6) | 47,303 | 39,285 | 138,391 | 87,268 | |||||||||||
Total cost of revenues | 242,731 | 210,489 | 706,543 | 542,875 | |||||||||||
Gross profit | 443,148 | 382,641 | 1,354,428 | 1,084,628 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 83,522 | 77,086 | 241,455 | 200,379 | |||||||||||
Sales and marketing | 129,987 | 117,498 | 381,951 | 315,297 | |||||||||||
General and administrative | 54,817 | 44,828 | 152,717 | 122,939 | |||||||||||
Depreciation | 23,093 | 16,557 | 64,042 | 47,128 | |||||||||||
Amortization of acquired customer-based intangible assets (note 6) | 46,762 | 40,825 | 136,819 | 108,248 | |||||||||||
Special charges (recoveries) (note 17) | 2,644 | 20,586 | 21,390 | 44,157 | |||||||||||
Total operating expenses | 340,825 | 317,380 | 998,374 | 838,148 | |||||||||||
Income from operations | 102,323 | 65,261 | 356,054 | 246,480 | |||||||||||
Other income (expense), net | 11,140 | 1,424 | 26,911 | 4,565 | |||||||||||
Interest and other related expense, net | (34,534 | ) | (31,734 | ) | (101,914 | ) | (86,752 | ) | |||||||
Income before income taxes | 78,929 | 34,951 | 281,051 | 164,293 | |||||||||||
Provision for (recovery of) income taxes (note 14) | 20,129 | 13,239 | 100,644 | (815,364 | ) | ||||||||||
Net income for the period | $ | 58,800 | $ | 21,712 | $ | 180,407 | $ | 979,657 | |||||||
Net (income) loss attributable to non-controlling interests | (6 | ) | (96 | ) | 94 | (135 | ) | ||||||||
Net income attributable to OpenText | $ | 58,794 | $ | 21,616 | $ | 180,501 | $ | 979,522 | |||||||
Earnings per share—basic attributable to OpenText (note 20) | $ | 0.22 | $ | 0.08 | $ | 0.68 | $ | 3.91 | |||||||
Earnings per share—diluted attributable to OpenText (note 20) | $ | 0.22 | $ | 0.08 | $ | 0.68 | $ | 3.88 | |||||||
Weighted average number of Common Shares outstanding—basic (in '000's) | 266,572 | 263,329 | 265,619 | 250,538 | |||||||||||
Weighted average number of Common Shares outstanding—diluted (in '000's) | 267,764 | 265,440 | 266,954 | 252,469 | |||||||||||
Dividends declared per Common Share | $ | 0.1320 | $ | 0.1150 | $ | 0.3960 | $ | 0.3450 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income for the period | $ | 58,800 | $ | 21,712 | $ | 180,407 | $ | 979,657 | |||||||
Other comprehensive income (loss)—net of tax: | |||||||||||||||
Net foreign currency translation adjustments | 3,823 | 2,725 | 3,283 | (7,582 | ) | ||||||||||
Unrealized gain (loss) on cash flow hedges: | |||||||||||||||
Unrealized gain (loss) - net of tax expense (recovery) effect of ($338) and $125 for the three months ended March 31, 2018 and 2017, respectively; $65 and ($254) for the nine months ended March 31, 2018 and 2017, respectively | (935 | ) | 348 | 182 | (705 | ) | |||||||||
(Gain) loss reclassified into net income - net of tax (expense) recovery effect of ($112) and $14 for the three months ended March 31, 2018 and 2017, respectively; ($540) and ($24) for the nine months ended March 31, 2018 and 2017, respectively | (311 | ) | 40 | (1,499 | ) | (68 | ) | ||||||||
Actuarial gain (loss) relating to defined benefit pension plans: | |||||||||||||||
Actuarial gain (loss) - net of tax expense (recovery) effect of $413 and ($64) for the three months ended March 31, 2018 and 2017, respectively; $177 and $420 for the nine months ended March 31, 2018 and 2017, respectively | 1,648 | 686 | 1,485 | 5,047 | |||||||||||
Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $45 and $59 for the three months ended March 31, 2018 and 2017, respectively; $130 and $178 for the nine months ended March 31, 2018 and 2017, respectively | 64 | 139 | 176 | 420 | |||||||||||
Unrealized net gain (loss) on marketable securities - net of tax effect of nil for the three and nine months ended March 31, 2018 and 2017, respectively | — | (541 | ) | — | (141 | ) | |||||||||
Release of unrealized gain on marketable securities - net of tax effect of nil for the three and nine months ended March 31, 2018 and 2017, respectively | — | — | (617 | ) | — | ||||||||||
Total other comprehensive income (loss) net, for the period | 4,289 | 3,397 | 3,010 | (3,029 | ) | ||||||||||
Total comprehensive income | 63,089 | 25,109 | 183,417 | 976,628 | |||||||||||
Comprehensive (income) loss attributable to non-controlling interests | (6 | ) | (96 | ) | 94 | (135 | ) | ||||||||
Total comprehensive income attributable to OpenText | $ | 63,083 | $ | 25,013 | $ | 183,511 | $ | 976,493 |
Nine Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income for the period | $ | 180,407 | $ | 979,657 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization of intangible assets | 339,252 | 242,644 | |||||
Share-based compensation expense | 20,473 | 22,373 | |||||
Excess tax (benefits) expense on share-based compensation expense | — | (1,586 | ) | ||||
Pension expense | 2,834 | 2,953 | |||||
Amortization of debt issuance costs | 3,835 | 3,781 | |||||
Amortization of deferred charges and credits | 3,175 | 6,438 | |||||
Loss on sale and write down of property and equipment | 489 | — | |||||
Release of unrealized gain on marketable securities to income | (841 | ) | — | ||||
Write off of unamortized debt issuance costs | — | 833 | |||||
Deferred taxes | 62,640 | (890,244 | ) | ||||
Share in net (income) loss of equity investees | 503 | (6,153 | ) | ||||
Other non-cash charges | — | 1,033 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (55,698 | ) | (37,095 | ) | |||
Prepaid expenses and other current assets | (10,535 | ) | (6,234 | ) | |||
Income taxes and deferred charges and credits | (22,068 | ) | 1,570 | ||||
Accounts payable and accrued liabilities | (92,278 | ) | 16,521 | ||||
Deferred revenue | 74,704 | 6,917 | |||||
Other assets | (2,466 | ) | (6,635 | ) | |||
Net cash provided by operating activities | 504,426 | 336,773 | |||||
Cash flows from investing activities: | |||||||
Additions of property and equipment | (83,038 | ) | (50,071 | ) | |||
Proceeds from maturity of short-term investments | — | 9,212 | |||||
Purchase of Hightail, Inc. | (20,466 | ) | — | ||||
Purchase of Guidance Software, Inc., net of cash acquired | (229,275 | ) | — | ||||
Purchase of Covisint Corporation, net of cash acquired | (71,279 | ) | — | ||||
Purchase of ECD Business | — | (1,622,394 | ) | ||||
Purchase of HP Inc. CCM Business | — | (315,000 | ) | ||||
Purchase of Recommind, Inc. | — | (170,107 | ) | ||||
Purchase consideration for acquisitions completed prior to Fiscal 2017 | — | (7,146 | ) | ||||
Other investing activities | (11,179 | ) | (3,013 | ) | |||
Net cash used in investing activities | (415,237 | ) | (2,158,519 | ) | |||
Cash flows from financing activities: | |||||||
Excess tax benefits (expense) on share-based compensation expense | — | 1,586 | |||||
Proceeds from long-term debt and Revolver | 200,000 | 481,875 | |||||
Proceeds from issuance of Common Shares from exercise of stock options and ESPP | 66,064 | 26,668 | |||||
Proceeds from issuance of Common Shares under the public Equity Offering | — | 604,223 | |||||
Repayment of long-term debt and Revolver | (105,820 | ) | (5,940 | ) | |||
Debt issuance costs | — | (6,200 | ) | ||||
Equity issuance costs | — | (19,472 | ) | ||||
Purchase of Treasury Stock | — | (4,245 | ) | ||||
Payments of dividends to shareholders | (104,996 | ) | (85,953 | ) | |||
Net cash provided by (used in) financing activities | 55,248 | 992,542 | |||||
Foreign exchange gain (loss) on cash held in foreign currencies | 17,703 | (5,553 | ) | ||||
Increase (decrease) in cash and cash equivalents during the period | 162,140 | (834,757 | ) | ||||
Cash and cash equivalents at beginning of the period | 443,357 | 1,283,757 | |||||
Cash and cash equivalents at end of the period | $ | 605,497 | $ | 449,000 |
• | ASU 2016-09 "Compensation-Stock Compensation (Topic 718)" |
Balance as of June 30, 2017 | $ | 6,319 | |
Bad debt expense | 6,561 | ||
Write-off /adjustments | (3,873 | ) | |
Balance as of March 31, 2018 | $ | 9,007 |
As of March 31, 2018 | |||||||||||
Cost | Accumulated Depreciation | Net | |||||||||
Furniture and fixtures | $ | 30,433 | $ | (16,501 | ) | $ | 13,932 | ||||
Office equipment | 1,445 | (716 | ) | 729 | |||||||
Computer hardware | 198,432 | (126,397 | ) | 72,035 | |||||||
Computer software | 82,791 | (44,767 | ) | 38,024 | |||||||
Capitalized software development costs | 77,592 | (38,163 | ) | 39,429 | |||||||
Leasehold improvements | 113,171 | (49,824 | ) | 63,347 | |||||||
Land and buildings | 48,484 | (11,121 | ) | 37,363 | |||||||
Total | $ | 552,348 | $ | (287,489 | ) | $ | 264,859 |
As of June 30, 2017 | |||||||||||
Cost | Accumulated Depreciation | Net | |||||||||
Furniture and fixtures | $ | 23,026 | $ | (14,879 | ) | $ | 8,147 | ||||
Office equipment | 1,245 | (597 | ) | 648 | |||||||
Computer hardware | 164,268 | (104,572 | ) | 59,696 | |||||||
Computer software | 72,835 | (33,862 | ) | 38,973 | |||||||
Capitalized software development costs | 67,092 | (28,430 | ) | 38,662 | |||||||
Leasehold improvements | 81,564 | (38,642 | ) | 42,922 | |||||||
Land and buildings | 48,431 | (10,061 | ) | 38,370 | |||||||
Total | $ | 458,461 | $ | (231,043 | ) | $ | 227,418 |
Balance as of June 30, 2017 | $ | 3,416,749 | |
Acquisition of Hightail (note 18) | 7,127 | ||
Acquisition of Guidance (note 18) | 130,334 | ||
Acquisition of Covisint (note 18) | 26,905 | ||
Adjustments relating to acquisitions prior to Fiscal 2018 that had open measurement periods (note 18) | (1,458 | ) | |
Adjustments on account of foreign exchange | 12,941 | ||
Balance as of March 31, 2018 | $ | 3,592,598 |
As of March 31, 2018 | |||||||||||
Cost | Accumulated Amortization | Net | |||||||||
Technology assets | $ | 985,226 | $ | (392,297 | ) | $ | 592,929 | ||||
Customer assets | 1,348,510 | (550,026 | ) | 798,484 | |||||||
Total | $ | 2,333,736 | $ | (942,323 | ) | $ | 1,391,413 | ||||
As of June 30, 2017 | |||||||||||
Cost | Accumulated Amortization | Net | |||||||||
Technology assets | $ | 930,841 | $ | (272,872 | ) | $ | 657,969 | ||||
Customer assets | 1,230,806 | (416,233 | ) | 814,573 | |||||||
Total | $ | 2,161,647 | $ | (689,105 | ) | $ | 1,472,542 |
Fiscal years ending June 30, | |||
2018 (three months ended June 30) | $ | 94,776 | |
2019 | 352,401 | ||
2020 | 280,888 | ||
2021 | 190,763 | ||
2022 | 177,208 | ||
2023 and beyond | 295,377 | ||
Total | $ | 1,391,413 |
As of March 31, 2018 | As of June 30, 2017 | ||||||
Deposits and restricted cash | $ | 11,479 | $ | 15,821 | |||
Deferred implementation costs | 28,916 | 28,833 | |||||
Investments | 36,776 | 27,886 | |||||
Marketable securities | — | 3,023 | |||||
Long-term prepaid expenses and other long-term assets | 22,561 | 18,200 | |||||
Total | $ | 99,732 | $ | 93,763 |
As of March 31, 2018 | As of June 30, 2017 | ||||||
Accounts payable—trade | $ | 39,283 | $ | 43,699 | |||
Accrued salaries and commissions | 103,245 | 121,958 | |||||
Accrued liabilities | 118,628 | 135,512 | |||||
Accrued interest on Senior Notes | 26,021 | 24,787 | |||||
Amounts payable in respect of restructuring and other Special charges | 5,000 | 13,728 | |||||
Asset retirement obligations | 2,988 | 2,436 | |||||
Total | $ | 295,165 | $ | 342,120 |
As of March 31, 2018 | As of June 30, 2017 | ||||||
Amounts payable in respect of restructuring and other Special charges | $ | 2,124 | $ | 2,686 | |||
Other accrued liabilities* | 37,164 | 36,702 | |||||
Asset retirement obligations | 13,400 | 10,950 | |||||
Total | $ | 52,688 | $ | 50,338 |
As of March 31, 2018 | As of June 30, 2017 | ||||||
Total debt | |||||||
Senior Notes 2026 | $ | 850,000 | $ | 850,000 | |||
Senior Notes 2023 | 800,000 | 800,000 | |||||
Term Loan B | 766,300 | 772,120 | |||||
Revolver | 275,000 | 175,000 | |||||
Total principal payments due | 2,691,300 | 2,597,120 | |||||
Premium on Senior Notes 2026 | 6,164 | 6,597 | |||||
Debt issuance costs | (29,382 | ) | (33,900 | ) | |||
Total amount outstanding | 2,668,082 | 2,569,817 | |||||
Less: | |||||||
Current portion of long-term debt | |||||||
Term Loan B | 7,760 | 7,760 | |||||
Revolver | 275,000 | 175,000 | |||||
Total current portion of long-term debt | 282,760 | 182,760 | |||||
Non-current portion of long-term debt | $ | 2,385,322 | $ | 2,387,057 |
As of March 31, 2018 | |||||||||||
Total benefit obligation | Current portion of benefit obligation* | Non-current portion of benefit obligation | |||||||||
CDT defined benefit plan | $ | 31,700 | $ | 688 | $ | 31,012 | |||||
GXS Germany defined benefit plan | 25,873 | 1,035 | 24,838 | ||||||||
GXS Philippines defined benefit plan | 3,801 | 102 | 3,699 | ||||||||
Other plans | 3,624 | 177 | 3,447 | ||||||||
Total | $ | 64,998 | $ | 2,002 | $ | 62,996 |
As of June 30, 2017 | |||||||||||
Total benefit obligation | Current portion of benefit obligation* | Non-current portion of benefit obligation | |||||||||
CDT defined benefit plan | $ | 28,881 | $ | 583 | $ | 28,298 | |||||
GXS Germany defined benefit plan | 23,730 | 926 | 22,804 | ||||||||
GXS Philippines defined benefit plan | 4,495 | 81 | 4,414 | ||||||||
Other plans | 3,256 | 145 | 3,111 | ||||||||
Total | $ | 60,362 | $ | 1,735 | $ | 58,627 |
As of March 31, 2018 | As of June 30, 2017 | ||||||||||||||||||||||||||||||
CDT | GXS GER | GXS PHP | Total | CDT | GXS GER | GXS PHP | Total | ||||||||||||||||||||||||
Benefit obligation—beginning of period | $ | 28,881 | $ | 23,730 | $ | 4,495 | $ | 57,106 | $ | 29,450 | $ | 24,729 | $ | 7,341 | $ | 61,520 | |||||||||||||||
Service cost | 379 | 357 | 657 | 1,393 | 467 | 395 | 1,051 | 1,913 | |||||||||||||||||||||||
Interest cost | 459 | 370 | 176 | 1,005 | 456 | 377 | 226 | 1,059 | |||||||||||||||||||||||
Benefits paid | (428 | ) | (736 | ) | (82 | ) | (1,246 | ) | (469 | ) | (807 | ) | (53 | ) | (1,329 | ) | |||||||||||||||
Actuarial (gain) loss | (327 | ) | (96 | ) | (1,269 | ) | (1,692 | ) | (1,708 | ) | (1,548 | ) | (3,728 | ) | (6,984 | ) | |||||||||||||||
Foreign exchange (gain) loss | 2,736 | 2,248 | (176 | ) | 4,808 | 685 | 584 | (342 | ) | 927 | |||||||||||||||||||||
Benefit obligation—end of period | 31,700 | 25,873 | 3,801 | 61,374 | 28,881 | 23,730 | 4,495 | 57,106 | |||||||||||||||||||||||
Less: Current portion | (688 | ) | (1,035 | ) | (102 | ) | (1,825 | ) | (583 | ) | (926 | ) | (81 | ) | (1,590 | ) | |||||||||||||||
Non-current portion of benefit obligation | $ | 31,012 | $ | 24,838 | $ | 3,699 | $ | 59,549 | $ | 28,298 | $ | 22,804 | $ | 4,414 | $ | 55,516 |
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||||||||||
Pension expense: | CDT | GXS GER | GXS PHP | Total | CDT | GXS GER | GXS PHP | Total | ||||||||||||||||||||||||
Service cost | $ | 130 | $ | 123 | $ | 210 | $ | 463 | $ | 115 | $ | 97 | $ | 196 | $ | 408 | ||||||||||||||||
Interest cost | 158 | 127 | 62 | 347 | 113 | 93 | 51 | 257 | ||||||||||||||||||||||||
Amortization of actuarial (gains) and losses | 141 | 19 | (59 | ) | 101 | 155 | 42 | (12 | ) | 185 | ||||||||||||||||||||||
Net pension expense | $ | 429 | $ | 269 | $ | 213 | $ | 911 | $ | 383 | $ | 232 | $ | 235 | $ | 850 |
Nine Months Ended March 31, | ||||||||||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||||||||||
Pension expense: | CDT | GXS GER | GXS PHP | Total | CDT | GXS GER | GXS PHP | Total | ||||||||||||||||||||||||
Service cost | $ | 379 | $ | 357 | $ | 657 | $ | 1,393 | $ | 347 | $ | 292 | $ | 838 | $ | 1,477 | ||||||||||||||||
Interest cost | 459 | 370 | 176 | 1,005 | 339 | 279 | 172 | 790 | ||||||||||||||||||||||||
Amortization of actuarial (gains) and losses | 409 | 55 | (182 | ) | 282 | 465 | 125 | (36 | ) | 554 | ||||||||||||||||||||||
Net pension expense | $ | 1,247 | $ | 782 | $ | 651 | $ | 2,680 | $ | 1,151 | $ | 696 | $ | 974 | $ | 2,821 |
As of March 31, 2018 | As of June 30, 2017 | ||||||||||
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% | N/A | 1.75% | 2.00% | N/A | |||||
Discount rate | 2.05% | 2.05% | 7.00% | 2.00% | 2.00% | 5.00% | |||||
Normal retirement age | 65 | 65-67 | 60 | 65 | 65-67 | 60 | |||||
Employee fluctuation rate: | |||||||||||
to age 20 | —% | —% | 12.19% | —% | —% | 12.19% | |||||
to age 25 | —% | —% | 16.58% | —% | —% | 16.58% | |||||
to age 30 | 1.00% | —% | 13.97% | 1.00% | —% | 13.97% | |||||
to age 35 | 0.50% | —% | 10.77% | 0.50% | —% | 10.77% | |||||
to age 40 | —% | —% | 7.39% | —% | —% | 7.39% | |||||
to age 45 | 0.50% | —% | 3.28% | 0.50% | —% | 3.28% | |||||
to age 50 | 0.50% | —% | —% | 0.50% | —% | —% | |||||
from age 51 | 1.00% | —% | —% | 1.00% | —% | —% |
Fiscal years ending June 30, | |||||||||||
CDT | GXS GER | GXS PHP | |||||||||
2018 (three months ended June 30) | $ | 159 | $ | 253 | $ | 25 | |||||
2019 | 706 | 1,042 | 115 | ||||||||
2020 | 760 | 1,050 | 154 | ||||||||
2021 | 858 | 1,095 | 194 | ||||||||
2022 | 945 | 1,106 | 297 | ||||||||
2023 to 2027 | 5,912 | 5,895 | 2,056 | ||||||||
Total | $ | 9,340 | $ | 10,441 | $ | 2,841 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Stock options | $ | 983 | $ | 2,365 | $ | 7,014 | $ | 9,040 | |||||||
Performance Share Units (issued under LTIP) | 751 | 926 | 2,723 | 2,754 | |||||||||||
Restricted Share Units (issued under LTIP) | 1,588 | 1,573 | 4,987 | 4,940 | |||||||||||
Restricted Share Units (other) | 146 | 534 | 823 | 2,029 | |||||||||||
Deferred Share Units (directors) | 701 | 558 | 2,193 | 1,899 | |||||||||||
Employee Share Purchase Plan | 911 | 705 | 2,733 | 1,711 | |||||||||||
Total share-based compensation expense | $ | 5,080 | $ | 6,661 | $ | 20,473 | $ | 22,373 |
Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (years) | Aggregate Intrinsic Value ($’000s) | |||||||||
Outstanding at June 30, 2017 | 8,977,830 | $ | 24.57 | |||||||||
Granted | 848,830 | 34.55 | ||||||||||
Exercised | (2,683,814 | ) | 18.68 | |||||||||
Forfeited or expired | (296,166 | ) | 30.48 | |||||||||
Outstanding at March 31, 2018 | 6,846,680 | $ | 27.86 | 4.48 | $ | 47,591 | ||||||
Exercisable at March 31, 2018 | 2,303,668 | $ | 23.91 | 3.22 | $ | 25,095 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Weighted–average fair value of options granted | $ | 8.14 | $ | 7.32 | $ | 7.48 | $ | 6.86 | |||||||
Weighted-average assumptions used: | |||||||||||||||
Expected volatility | 26.95 | % | 27.64 | % | 27.10 | % | 28.61 | % | |||||||
Risk–free interest rate | 2.44 | % | 1.70 | % | 1.83 | % | 1.32 | % | |||||||
Expected dividend yield | 1.45 | % | 1.37 | % | 1.45 | % | 1.42 | % | |||||||
Expected life (in years) | 4.33 | 4.34 | 4.42 | 4.33 | |||||||||||
Forfeiture rate (based on historical rates) | 6 | % | 5 | % | 6 | % | 5 | % | |||||||
Average exercise share price | $ | 36.50 | $ | 33.48 | $ | 34.55 | $ | 31.34 |
Payments due between | |||||||||||||||||||
Total | April 1, 2018— June 30, 2018 | July 1, 2018— June 30, 2020 | July 1, 2020— June 30, 2022 | July 1, 2022 and beyond | |||||||||||||||
Long-term debt obligations (1) | $ | 3,424,525 | $ | 186,654 | $ | 389,329 | $ | 953,792 | $ | 1,894,750 | |||||||||
Operating lease obligations (2) | 397,539 | 20,530 | 140,044 | 105,496 | 131,469 | ||||||||||||||
Purchase obligations | 17,867 | 2,622 | 14,439 | 806 | — | ||||||||||||||
$ | 3,839,931 | $ | 209,806 | $ | 543,812 | $ | 1,060,094 | $ | 2,026,219 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Interest expense | $ | 18 | $ | 1,673 | $ | 3,915 | $ | 4,456 | |||||||
Penalties expense (recoveries) | 453 | 6 | (90 | ) | (318 | ) | |||||||||
Total | $ | 471 | $ | 1,679 | $ | 3,825 | $ | 4,138 |
As of March 31, 2018 | As of June 30, 2017 | ||||||
Interest expense accrued * | $ | 52,094 | $ | 47,402 | |||
Penalties accrued * | $ | 2,325 | $ | 2,160 |
• | 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. |
March 31, 2018 | June 30, 2017 | ||||||||||||||||||||||
Fair Market Measurements using: | Fair Market Measurements using: | ||||||||||||||||||||||
March 31, 2018 | Quoted prices in active markets for identical assets/ (liabilities) | Significant other observable inputs | Significant unobservable inputs | June 30, 2017 | 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: | |||||||||||||||||||||||
Marketable securities | N/A | N/A | N/A | N/A | $ | 3,023 | N/A | $ | 3,023 | N/A | |||||||||||||
Derivative financial instrument asset (note 16) | — | N/A | — | N/A | 1,174 | N/A | 1,174 | N/A | |||||||||||||||
$ | — | N/A | $ | — | N/A | $ | 4,197 | N/A | $ | 4,197 | N/A | ||||||||||||
Financial Liabilities: | |||||||||||||||||||||||
Derivative financial instrument liability (note 16) | $ | (618 | ) | N/A | $ | (618 | ) | N/A | $ | — | N/A | $ | — | N/A | |||||||||
$ | (618 | ) | N/A | $ | (618 | ) | N/A | $ | — | N/A | $ | — | N/A |
As of March 31, 2018 | As of June 30, 2017 | ||||||||||||||||||||||
Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | Cost | Gross Unrealized Gains | Gross Unrealized (Losses) | Estimated Fair Value | ||||||||||||||||
Marketable securities | N/A | N/A | N/A | N/A | $ | 2,406 | $ | 617 | $ | — | $ | 3,023 |
As of March 31, 2018 | As of June 30, 2017 | |||||||
Derivatives | Balance Sheet Location | Fair Value Asset (Liability) | Fair Value Asset (Liability) | |||||
Foreign currency forward contracts designated as cash flow hedges | Prepaid expenses and other current assets (Accounts payable and accrued liabilities) | $ | (618 | ) | $ | 1,174 |
Three and Nine Months Ended March 31, 2018 | |||||||||||||||||||||||||||
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) | ||||||||||||||||||||||
Three Months Ended March 31, 2018 | Nine Months Ended March 31, 2018 | Three Months Ended March 31, 2018 | Nine Months Ended March 31, 2018 | Three Months Ended March 31, 2018 | Nine Months Ended March 31, 2018 | ||||||||||||||||||||||
Foreign currency forward contracts | $ | (1,273 | ) | $ | 247 | Operating expenses | $ | 423 | $ | 2,039 | N/A | $ | — | $ | — | ||||||||||||
Three and Nine Months Ended March 31, 2017 | |||||||||||||||||||||||||||
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) | ||||||||||||||||||||||
Three Months Ended March 31, 2017 | Nine Months Ended March 31, 2017 | Three Months Ended March 31, 2017 | Nine Months Ended March 31, 2017 | Three Months Ended March 31, 2017 | Nine Months Ended March 31, 2017 | ||||||||||||||||||||||
Foreign currency forward contracts | $ | 473 | $ | (960 | ) | Operating expenses | $ | (54 | ) | $ | 92 | N/A | $ | — | $ | — |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Fiscal 2018 Restructuring Plan | $ | 553 | $ | — | $ | 8,907 | $ | — | |||||||
Fiscal 2017 Restructuring Plan | 525 | 18,888 | 3,947 | 20,744 | |||||||||||
Restructuring Plans prior to Fiscal 2017 Restructuring Plan | 4 | (68 | ) | 260 | (1,872 | ) | |||||||||
Acquisition-related costs | 1,172 | 4,639 | 4,625 | 15,305 | |||||||||||
Other charges (recoveries) | 390 | (2,873 | ) | 3,651 | 9,980 | ||||||||||
Total | $ | 2,644 | $ | 20,586 | $ | 21,390 | $ | 44,157 |
Fiscal 2018 Restructuring Plan | Workforce reduction | Facility costs | Total | ||||||||
Balance payable as at June 30, 2017 | $ | — | $ | — | $ | — | |||||
Accruals and adjustments | 7,977 | 930 | 8,907 | ||||||||
Cash payments | (8,637 | ) | (187 | ) | (8,824 | ) | |||||
Foreign exchange and other non-cash adjustments | 912 | (85 | ) | 827 | |||||||
Balance payable as at March 31, 2018 | $ | 252 | $ | 658 | $ | 910 |
Fiscal 2017 Restructuring Plan | Workforce reduction | Facility costs | Total | ||||||||
Balance payable as at June 30, 2017 | $ | 10,045 | $ | 1,369 | $ | 11,414 | |||||
Accruals and adjustments | 3,371 | 576 | 3,947 | ||||||||
Cash payments | (12,068 | ) | (1,312 | ) | (13,380 | ) | |||||
Foreign exchange and other non-cash adjustments | 590 | (19 | ) | 571 | |||||||
Balance payable as at March 31, 2018 | $ | 1,938 | $ | 614 | $ | 2,552 |
Current assets | $ | 1,327 | |
Non-current tangible assets | 1,265 | ||
Intangible customer assets | 12,900 | ||
Intangible technology assets | 4,200 | ||
Liabilities assumed | (6,353 | ) | |
Total identifiable net assets | 13,339 | ||
Goodwill | 7,127 | ||
Net assets acquired | $ | 20,466 |
Cash consideration* | $ | 237,291 | |
Guidance shares already owned by OpenText through open market purchases (at fair value) | 3,247 | ||
Preliminary purchase consideration | $ | 240,538 |
Current assets (inclusive of cash acquired of $5.7 million) | $ | 25,253 | |
Non-current tangible assets | 10,540 | ||
Intangible customer assets | 71,230 | ||
Intangible technology assets | 51,851 | ||
Liabilities assumed | (48,670 | ) | |
Total identifiable net assets | 110,204 | ||
Goodwill | 130,334 | ||
Net assets acquired | $ | 240,538 |
Current assets (inclusive of cash acquired of $31.5 million) | $ | 41,586 | |
Non-current tangible assets | 3,426 | ||
Intangible customer assets | 36,600 | ||
Intangible technology assets | 17,300 | ||
Liabilities assumed | (23,033 | ) | |
Total identifiable net assets | 75,879 | ||
Goodwill | 26,905 | ||
Net assets acquired | $ | 102,784 |
Current assets | $ | 11,339 | |
Non-current tangible assets | 103,672 | ||
Intangible customer assets | 407,000 | ||
Intangible technology assets | 459,000 | ||
Liabilities assumed | (182,301 | ) | |
Total identifiable net assets | 798,710 | ||
Goodwill | 823,684 | ||
Net assets acquired | $ | 1,622,394 |
Current assets | $ | 683 | |
Non-current deferred tax asset | 11,861 | ||
Non-current tangible assets | 2,348 | ||
Intangible customer assets | 64,000 | ||
Intangible technology assets | 101,000 | ||
Liabilities assumed | (38,090 | ) | |
Total identifiable net assets | 141,802 | ||
Goodwill | 173,198 | ||
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 | ||
Long-term deferred tax liabilities | (1,780 | ) | |
Other liabilities assumed | (27,497 | ) | |
Total identifiable net assets | 78,702 | ||
Goodwill | 91,405 | ||
Net assets acquired | $ | 170,107 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cash paid during the period for interest | $ | 32,489 | $ | 29,889 | $ | 97,353 | $ | 83,474 | |||||||
Cash received during the period for interest | $ | 332 | $ | 1,164 | $ | 873 | $ | 2,634 | |||||||
Cash paid during the period for income taxes | $ | 23,654 | $ | 21,146 | $ | 52,488 | $ | 60,828 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Basic earnings per share | ||||||||||||||||
Net income attributable to OpenText | $ | 58,794 | $ | 21,616 | $ | 180,501 | $ | 979,522 | (1) | |||||||
Basic earnings per share attributable to OpenText | $ | 0.22 | $ | 0.08 | $ | 0.68 | $ | 3.91 | ||||||||
Diluted earnings per share | ||||||||||||||||
Net income attributable to OpenText | $ | 58,794 | $ | 21,616 | $ | 180,501 | $ | 979,522 | (1) | |||||||
Diluted earnings per share attributable to OpenText | $ | 0.22 | $ | 0.08 | $ | 0.68 | $ | 3.88 | ||||||||
Weighted-average number of shares outstanding | ||||||||||||||||
Basic | 266,572 | 263,329 | 265,619 | 250,538 | ||||||||||||
Effect of dilutive securities | 1,192 | 2,111 | 1,335 | 1,931 | ||||||||||||
Diluted | 267,764 | 265,440 | 266,954 | 252,469 | ||||||||||||
Excluded as anti-dilutive(2) | 2,102 | 1,117 | 2,690 | 1,577 |
• | Total revenue was $685.9 million, up 15.6% compared to the same period in the prior fiscal year; up 10.8% after factoring the impact of $28.7 million of foreign exchange rate changes. |
• | Total annual recurring revenue, which we define as the sum of cloud services and subscriptions revenue and customer support revenue, was $521.4 million, up 18.3% compared to the same period in the prior fiscal year; up 13.9% after factoring the impact of $19.5 million of foreign exchange rate changes. |
• | Cloud services and subscriptions revenue was $209.1 million, up 18.1% compared to the same period in the prior fiscal year; up 15.2% after factoring the impact of $5.1 million of foreign exchange rate changes. |
• | License revenue was $84.1 million, down 3.6% compared to the same period in the prior fiscal year; down 8.3% after factoring the impact of $4.2 million of foreign exchange rate changes. |
• | GAAP-based EPS, diluted, was $0.22 compared to $0.08 in the same period in the prior fiscal year. |
• | Non-GAAP-based EPS, diluted, was $0.54 compared to $0.45 in the same period in the prior fiscal year. |
• | GAAP-based gross margin was 64.6% compared to 64.5% in the same period in the prior fiscal year. |
• | Non-GAAP-based gross margin was 71.6% compared to 71.2% in the same period in the prior fiscal year. |
• | GAAP-based operating margin was 14.9% compared to 11.0% in the same period in the prior fiscal year. |
• | Non-GAAP-based operating margin was 29.8% compared to 29.1% in the same period in the prior fiscal year. |
• | GAAP-based net income attributable to OpenText was $58.8 million compared to $21.6 million in the same period in the prior fiscal year. |
• | Non-GAAP-based net income attributable to OpenText was $145.8 million compared to $119.8 million in the same period in the prior fiscal year. |
• | Adjusted EBITDA was $227.2 million compared to $189.1 million in the same period in the prior fiscal year. |
• | Operating cash flow was $504.4 million for the nine months ended March 31, 2018, up 49.8% from the same period in the prior fiscal year. |
• | Cash and cash equivalents was $605.5 million as of March 31, 2018, compared to $443.4 million as of June 30, 2017. |
(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 March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
Total Revenues by Product Type: | ||||||||||||||||||||||||
License | $ | 84,113 | $ | (3,114 | ) | $ | 87,227 | $ | 297,588 | $ | 51,941 | $ | 245,647 | |||||||||||
Cloud services and subscriptions | 209,102 | 31,993 | 177,109 | 611,076 | 89,219 | 521,857 | ||||||||||||||||||
Customer support | 312,279 | 48,843 | 263,436 | 915,753 | 222,455 | 693,298 | ||||||||||||||||||
Professional service and other | 80,385 | 15,027 | 65,358 | 236,554 | 69,853 | 166,701 | ||||||||||||||||||
Total revenues | 685,879 | 92,749 | 593,130 | 2,060,971 | 433,468 | 1,627,503 | ||||||||||||||||||
Total Cost of Revenues | 242,731 | 32,242 | 210,489 | 706,543 | 163,668 | 542,875 | ||||||||||||||||||
Total GAAP-based Gross Profit | 443,148 | 60,507 | 382,641 | 1,354,428 | 269,800 | 1,084,628 | ||||||||||||||||||
Total GAAP-based Gross Margin % | 64.6 | % | 64.5 | % | 65.7 | % | 66.6 | % | ||||||||||||||||
Total GAAP-based Operating Expenses | 340,825 | 23,445 | 317,380 | 998,374 | 160,226 | 838,148 | ||||||||||||||||||
Total GAAP-based Income from Operations | $ | 102,323 | $ | 37,062 | $ | 65,261 | $ | 356,054 | $ | 109,574 | $ | 246,480 | ||||||||||||
% Revenues by Product Type: | ||||||||||||||||||||||||
License | 12.3 | % | 14.7 | % | 14.5 | % | 15.1 | % | ||||||||||||||||
Cloud services and subscriptions | 30.5 | % | 29.9 | % | 29.6 | % | 32.1 | % | ||||||||||||||||
Customer support | 45.5 | % | 44.4 | % | 44.4 | % | 42.6 | % | ||||||||||||||||
Professional service and other | 11.7 | % | 11.0 | % | 11.5 | % | 10.2 | % | ||||||||||||||||
Total Cost of Revenues by Product Type: | ||||||||||||||||||||||||
License | $ | 3,098 | $ | (910 | ) | $ | 4,008 | $ | 10,645 | $ | 401 | $ | 10,244 | |||||||||||
Cloud services and subscriptions | 94,264 | 17,039 | 77,225 | 269,012 | 48,345 | 220,667 | ||||||||||||||||||
Customer support | 33,820 | (622 | ) | 34,442 | 99,805 | 12,276 | 87,529 | |||||||||||||||||
Professional service and other | 64,246 | 8,717 | 55,529 | 188,690 | 51,523 | 137,167 | ||||||||||||||||||
Amortization of acquired technology-based intangible assets | 47,303 | 8,018 | 39,285 | 138,391 | 51,123 | 87,268 | ||||||||||||||||||
Total cost of revenues | $ | 242,731 | $ | 32,242 | $ | 210,489 | $ | 706,543 | $ | 163,668 | $ | 542,875 | ||||||||||||
% GAAP-based Gross Margin by Product Type: | ||||||||||||||||||||||||
License | 96.3 | % | 95.4 | % | 96.4 | % | 95.8 | % | ||||||||||||||||
Cloud services and subscriptions | 54.9 | % | 56.4 | % | 56.0 | % | 57.7 | % | ||||||||||||||||
Customer support | 89.2 | % | 86.9 | % | 89.1 | % | 87.4 | % | ||||||||||||||||
Professional service and other | 20.1 | % | 15.0 | % | 20.2 | % | 17.7 | % | ||||||||||||||||
Total Revenues by Geography:(1) | ||||||||||||||||||||||||
Americas (2) | $ | 395,453 | $ | 51,545 | $ | 343,908 | $ | 1,191,579 | $ | 234,471 | $ | 957,108 | ||||||||||||
EMEA (3) | 222,565 | 26,984 | 195,581 | 662,403 | 142,917 | 519,486 | ||||||||||||||||||
Asia Pacific (4) | 67,861 | 14,220 | 53,641 | 206,989 | 56,080 | 150,909 | ||||||||||||||||||
Total revenues | $ | 685,879 | $ | 92,749 | $ | 593,130 | $ | 2,060,971 | $ | 433,468 | $ | 1,627,503 | ||||||||||||
% Revenues by Geography: | ||||||||||||||||||||||||
Americas (2) | 57.7 | % | 58.0 | % | 57.8 | % | 58.8 | % | ||||||||||||||||
EMEA (3) | 32.4 | % | 33.0 | % | 32.1 | % | 31.9 | % | ||||||||||||||||
Asia Pacific (4) | 9.9 | % | 9.0 | % | 10.1 | % | 9.3 | % |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
GAAP-based gross margin | 64.6 | % | 64.5 | % | 65.7 | % | 66.6 | % | |||||||||||||
GAAP-based operating margin | 14.9 | % | 11.0 | % | 17.3 | % | 15.1 | % | |||||||||||||
GAAP-based EPS, diluted | $ | 0.22 | $ | 0.08 | $ | 0.68 | $ | 3.88 | (6) | ||||||||||||
Net income, attributable to OpenText | $ | 58,794 | $ | 21,616 | $ | 180,501 | $ | 979,522 | (6) | ||||||||||||
Non-GAAP-based gross margin (5) | 71.6 | % | 71.2 | % | 72.6 | % | 72.2 | % | |||||||||||||
Non-GAAP-based operating margin (5) | 29.8 | % | 29.1 | % | 32.7 | % | 31.2 | % | |||||||||||||
Non-GAAP-based EPS, diluted (5) | $ | 0.54 | $ | 0.45 | $ | 1.84 | $ | 1.42 | |||||||||||||
Adjusted EBITDA (5) | $ | 227,199 | $ | 189,079 | $ | 737,263 | $ | 555,519 |
(1) | Total revenues by geography are determined based on the location of our end customer. |
(2) | Americas consists of countries in North, Central and South America. |
(3) | EMEA primarily consists of countries in Europe, the Middle East and Africa. |
(4) | Asia Pacific primarily consists of the countries Japan, Australia, China, Korea, Philippines, Singapore and New Zealand. |
(5) | See "Use of Non-GAAP Financial Measures" (discussed later in the MD&A) for definitions and reconciliations of GAAP-based measures to Non-GAAP-based measures. |
(6) | We recorded a significant tax benefit in the first quarter of Fiscal 2017 of $876.1 million. This significant tax benefit is specifically tied to the Company's internal reorganization and applied to the first quarter of Fiscal 2017 only and as a result, has not and will not continue in future periods. |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
License Revenues: | ||||||||||||||||||||||||
Americas | $ | 37,984 | $ | (1,263 | ) | $ | 39,247 | $ | 139,539 | $ | 21,717 | $ | 117,822 | |||||||||||
EMEA | 29,971 | (8,344 | ) | 38,315 | 110,150 | 9,517 | 100,633 | |||||||||||||||||
Asia Pacific | 16,158 | 6,493 | 9,665 | 47,899 | 20,707 | 27,192 | ||||||||||||||||||
Total License Revenues | 84,113 | (3,114 | ) | 87,227 | 297,588 | 51,941 | 245,647 | |||||||||||||||||
Cost of License Revenues | 3,098 | (910 | ) | 4,008 | 10,645 | 401 | 10,244 | |||||||||||||||||
GAAP-based License Gross Profit | $ | 81,015 | $ | (2,204 | ) | $ | 83,219 | $ | 286,943 | $ | 51,540 | $ | 235,403 | |||||||||||
GAAP-based License Gross Margin % | 96.3 | % | 95.4 | % | 96.4 | % | 95.8 | % | ||||||||||||||||
% License Revenues by Geography: | ||||||||||||||||||||||||
Americas | 45.2 | % | 45.0 | % | 46.9 | % | 48.0 | % | ||||||||||||||||
EMEA | 35.6 | % | 43.9 | % | 37.0 | % | 41.0 | % | ||||||||||||||||
Asia Pacific | 19.2 | % | 11.1 | % | 16.1 | % | 11.0 | % |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
Cloud Services and Subscriptions: | ||||||||||||||||||||||||
Americas | $ | 142,246 | $ | 21,986 | $ | 120,260 | $ | 410,960 | $ | 56,352 | $ | 354,608 | ||||||||||||
EMEA | 47,652 | 8,271 | 39,381 | 139,907 | 23,664 | 116,243 | ||||||||||||||||||
Asia Pacific | 19,204 | 1,736 | 17,468 | 60,209 | 9,203 | 51,006 | ||||||||||||||||||
Total Cloud Services and Subscriptions Revenues | 209,102 | 31,993 | 177,109 | 611,076 | 89,219 | 521,857 | ||||||||||||||||||
Cost of Cloud Services and Subscriptions Revenues | 94,264 | 17,039 | 77,225 | 269,012 | 48,345 | 220,667 | ||||||||||||||||||
GAAP-based Cloud Services and Subscriptions Gross Profit | $ | 114,838 | $ | 14,954 | $ | 99,884 | $ | 342,064 | $ | 40,874 | $ | 301,190 | ||||||||||||
GAAP-based Cloud Services and Subscriptions Gross Margin % | 54.9 | % | 56.4 | % | 56.0 | % | 57.7 | % | ||||||||||||||||
% Cloud Services and Subscriptions Revenues by Geography: | ||||||||||||||||||||||||
Americas | 68.0 | % | 67.9 | % | 67.3 | % | 68.0 | % | ||||||||||||||||
EMEA | 22.8 | % | 22.2 | % | 22.9 | % | 22.3 | % | ||||||||||||||||
Asia Pacific | 9.2 | % | 9.9 | % | 9.8 | % | 9.7 | % |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
Customer Support Revenues: | ||||||||||||||||||||||||
Americas | $ | 178,355 | $ | 24,853 | $ | 153,502 | $ | 527,961 | $ | 120,479 | $ | 407,482 | ||||||||||||
EMEA | 109,584 | 20,579 | 89,005 | 312,949 | 83,660 | 229,289 | ||||||||||||||||||
Asia Pacific | 24,340 | 3,411 | 20,929 | 74,843 | 18,316 | 56,527 | ||||||||||||||||||
Total Customer Support Revenues | 312,279 | 48,843 | 263,436 | 915,753 | 222,455 | 693,298 | ||||||||||||||||||
Cost of Customer Support Revenues | 33,820 | (622 | ) | 34,442 | 99,805 | 12,276 | 87,529 | |||||||||||||||||
GAAP-based Customer Support Gross Profit | $ | 278,459 | $ | 49,465 | $ | 228,994 | $ | 815,948 | $ | 210,179 | $ | 605,769 | ||||||||||||
GAAP-based Customer Support Gross Margin % | 89.2 | % | 86.9 | % | 89.1 | % | 87.4 | % | ||||||||||||||||
% Customer Support Revenues by Geography: | ||||||||||||||||||||||||
Americas | 57.1 | % | 58.3 | % | 57.7 | % | 58.8 | % | ||||||||||||||||
EMEA | 35.1 | % | 33.8 | % | 34.2 | % | 33.1 | % | ||||||||||||||||
Asia Pacific | 7.8 | % | 7.9 | % | 8.1 | % | 8.1 | % |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
Professional Service and Other Revenues: | ||||||||||||||||||||||||
Americas | $ | 36,868 | $ | 5,969 | $ | 30,899 | $ | 113,119 | $ | 35,923 | $ | 77,196 | ||||||||||||
EMEA | 35,358 | 6,478 | 28,880 | 99,397 | 26,076 | 73,321 | ||||||||||||||||||
Asia Pacific | 8,159 | 2,580 | 5,579 | 24,038 | 7,854 | 16,184 | ||||||||||||||||||
Total Professional Service and Other Revenues | 80,385 | 15,027 | 65,358 | 236,554 | 69,853 | 166,701 | ||||||||||||||||||
Cost of Professional Service and Other Revenues | 64,246 | 8,717 | 55,529 | 188,690 | 51,523 | 137,167 | ||||||||||||||||||
GAAP-based Professional Service and Other Gross Profit | $ | 16,139 | $ | 6,310 | $ | 9,829 | $ | 47,864 | $ | 18,330 | $ | 29,534 | ||||||||||||
GAAP-based Professional Service and Other Gross Margin % | 20.1 | % | 15.0 | % | 20.2 | % | 17.7 | % | ||||||||||||||||
% Professional Service and Other Revenues by Geography: | ||||||||||||||||||||||||
Americas | 45.9 | % | 47.3 | % | 47.8 | % | 46.3 | % | ||||||||||||||||
EMEA | 44.0 | % | 44.2 | % | 42.0 | % | 44.0 | % | ||||||||||||||||
Asia Pacific | 10.1 | % | 8.5 | % | 10.2 | % | 9.7 | % |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
Amortization of acquired technology-based intangible assets | $ | 47,303 | $ | 8,018 | $ | 39,285 | $ | 138,391 | $ | 51,123 | $ | 87,268 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
Research and development | $ | 83,522 | $ | 6,436 | $ | 77,086 | $ | 241,455 | $ | 41,076 | $ | 200,379 | ||||||||||||
Sales and marketing | 129,987 | 12,489 | 117,498 | 381,951 | 66,654 | 315,297 | ||||||||||||||||||
General and administrative | 54,817 | 9,989 | 44,828 | 152,717 | 29,778 | 122,939 | ||||||||||||||||||
Depreciation | 23,093 | 6,536 | 16,557 | 64,042 | 16,914 | 47,128 | ||||||||||||||||||
Amortization of acquired customer-based intangible assets | 46,762 | 5,937 | 40,825 | 136,819 | 28,571 | 108,248 | ||||||||||||||||||
Special charges (recoveries) | 2,644 | (17,942 | ) | 20,586 | 21,390 | (22,767 | ) | 44,157 | ||||||||||||||||
Total operating expenses | $ | 340,825 | $ | 23,445 | $ | 317,380 | $ | 998,374 | $ | 160,226 | $ | 838,148 | ||||||||||||
% of Total Revenues: | ||||||||||||||||||||||||
Research and development | 12.2 | % | 13.0 | % | 11.7 | % | 12.3 | % | ||||||||||||||||
Sales and marketing | 19.0 | % | 19.8 | % | 18.5 | % | 19.4 | % | ||||||||||||||||
General and administrative | 8.0 | % | 7.6 | % | 7.4 | % | 7.6 | % | ||||||||||||||||
Depreciation | 3.4 | % | 2.8 | % | 3.1 | % | 2.9 | % | ||||||||||||||||
Amortization of acquired customer-based intangible assets | 6.8 | % | 6.9 | % | 6.6 | % | 6.7 | % | ||||||||||||||||
Special charges (recoveries) | 0.4 | % | 3.5 | % | 1.0 | % | 2.7 | % |
Quarter-over-Quarter Change between Fiscal | YTD-over-YTD Change between Fiscal | |||||||
(In thousands) | 2018 and 2017 | 2018 and 2017 | ||||||
Payroll and payroll-related benefits | $ | 8,413 | $ | 33,249 | ||||
Contract labour and consulting | (2,070 | ) | 363 | |||||
Share-based compensation | (641 | ) | (1,166 | ) | ||||
Travel and communication | (407 | ) | (267 | ) | ||||
Facilities | 688 | 8,278 | ||||||
Other miscellaneous | 453 | 619 | ||||||
Total year-over-year change in research and development expenses | $ | 6,436 | $ | 41,076 |
Quarter-over-Quarter Change between Fiscal | YTD-over-YTD Change between Fiscal | |||||||
(In thousands) | 2018 and 2017 | 2018 and 2017 | ||||||
Payroll and payroll-related benefits | $ | 11,688 | $ | 41,122 | ||||
Commissions | (140 | ) | 12,691 | |||||
Contract labour and consulting | (94 | ) | 645 | |||||
Share-based compensation | (590 | ) | (556 | ) | ||||
Travel and communication | (1,434 | ) | 1,513 | |||||
Marketing expenses | (2,277 | ) | 104 | |||||
Facilities | 2,087 | 6,741 | ||||||
Other miscellaneous | 3,249 | 4,394 | ||||||
Total year-over-year change in sales and marketing expenses | $ | 12,489 | $ | 66,654 |
Quarter-over-Quarter Change between Fiscal | YTD-over-YTD Change between Fiscal | |||||||
(In thousands) | 2018 and 2017 | 2018 and 2017 | ||||||
Payroll and payroll-related benefits | $ | 6,035 | $ | 18,095 | ||||
Contract labour and consulting | (556 | ) | (2,289 | ) | ||||
Share-based compensation | (266 | ) | (944 | ) | ||||
Travel and communication | (101 | ) | 969 | |||||
Facilities | 85 | 1,934 | ||||||
Other miscellaneous | 4,792 | 12,013 | ||||||
Total year-over-year change in general and administrative expenses | $ | 9,989 | $ | 29,778 |
Three Months Ended March 31, | Nine Months Ended March 31, | ||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | |||||||||||||||
Depreciation | $ | 23,093 | $ | 6,536 | $ | 16,557 | 64,042 | 16,914 | 47,128 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
Amortization of acquired customer-based intangible assets | $ | 46,762 | $ | 5,937 | $ | 40,825 | $ | 136,819 | $ | 28,571 | $ | 108,248 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
Special charges (recoveries) | $ | 2,644 | $ | (17,942 | ) | $ | 20,586 | $ | 21,390 | $ | (22,767 | ) | $ | 44,157 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
Foreign exchange gains (losses) | $ | 9,980 | $ | 8,874 | $ | 1,106 | $ | 19,090 | $ | 20,856 | $ | (1,766 | ) | |||||||||||
OpenText share in net income (loss) of equity investees | (304 | ) | (467 | ) | 163 | (502 | ) | (6,663 | ) | 6,161 | ||||||||||||||
Income from long-term other receivable | 1,327 | 1,327 | — | 1,327 | 1,327 | — | ||||||||||||||||||
Gain on shares held in Guidance (1) | — | — | — | 841 | 841 | — | ||||||||||||||||||
Gain from contractual settlement (2) | — | — | — | 5,000 | 5,000 | — | ||||||||||||||||||
Other miscellaneous income (expense) | 137 | (18 | ) | 155 | 1,155 | 985 | 170 | |||||||||||||||||
Total other income (expense), net | $ | 11,140 | $ | 9,716 | $ | 1,424 | $ | 26,911 | $ | 22,346 | $ | 4,565 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
Interest and other related expense, net | $ | 34,534 | $ | 2,800 | $ | 31,734 | $ | 101,914 | $ | 15,162 | $ | 86,752 |
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||||||||||
(In thousands) | 2018 | Change increase (decrease) | 2017 | 2018 | Change increase (decrease) | 2017 | ||||||||||||||||||
Provision for (recovery of) income taxes | $ | 20,129 | $ | 6,890 | $ | 13,239 | $ | 100,644 | $ | 916,008 | $ | (815,364 | ) |
Three Months Ended March 31, 2018 | ||||||||||||
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 | $ | 94,264 | $ | (135 | ) | (1) | $ | 94,129 | ||||
Customer support | 33,820 | (277 | ) | (1) | 33,543 | |||||||
Professional service and other | 64,246 | (122 | ) | (1) | 64,124 | |||||||
Amortization of acquired technology-based intangible assets | 47,303 | (47,303 | ) | (2) | — | |||||||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 443,148 | 64.6% | 47,837 | (3) | 490,985 | 71.6% | ||||||
Operating expenses | ||||||||||||
Research and development | 83,522 | (993 | ) | (1) | 82,529 | |||||||
Sales and marketing | 129,987 | (1,496 | ) | (1) | 128,491 | |||||||
General and administrative | 54,817 | (2,057 | ) | (1) | 52,760 | |||||||
Amortization of acquired customer-based intangible assets | 46,762 | (46,762 | ) | (2) | — | |||||||
Special charges (recoveries) | 2,644 | (2,644 | ) | (4) | — | |||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) | 102,323 | 14.9% | 101,789 | (5) | 204,112 | 29.8% | ||||||
Other income (expense), net | 11,140 | (11,140 | ) | (6) | — | |||||||
Provision for (recovery of) income taxes | 20,129 | 3,612 | (7) | 23,741 | ||||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 58,794 | 87,037 | (8) | 145,831 | ||||||||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText | $ | 0.22 | $ | 0.32 | (8) | $ | 0.54 |
(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 relevant to an acquisition 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 Condensed 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 provision rate of approximately 26% and a Non-GAAP-based tax rate of approximately 14%; 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 "Income Taxes") 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 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense. We also took into consideration changes in US tax reform legislation that was enacted on December 22, 2017 through the Tax Cuts and Jobs Act. |
(8) | Reconciliation of GAAP-based net income to Non-GAAP-based net income: |
Three Months Ended March 31, 2018 | ||||||
Per share diluted | ||||||
GAAP-based net income, attributable to OpenText | $ | 58,794 | $ | 0.22 | ||
Add: | ||||||
Amortization | 94,065 | 0.35 | ||||
Share-based compensation | 5,080 | 0.02 | ||||
Special charges (recoveries) | 2,644 | 0.01 | ||||
Other (income) expense, net | (11,140 | ) | (0.04 | ) | ||
GAAP-based provision for (recovery of) income taxes | 20,129 | 0.07 | ||||
Non-GAAP-based provision for income taxes | (23,741 | ) | (0.09 | ) | ||
Non-GAAP-based net income, attributable to OpenText | $ | 145,831 | $ | 0.54 |
Three Months Ended March 31, 2018 | |||
GAAP-based net income, attributable to OpenText | $ | 58,794 | |
Add: | |||
Provision for (recovery of) income taxes | 20,129 | ||
Interest and other related expense, net | 34,534 | ||
Amortization of acquired technology-based intangible assets | 47,303 | ||
Amortization of acquired customer-based intangible assets | 46,762 | ||
Depreciation | 23,093 | ||
Share-based compensation | 5,080 | ||
Special charges (recoveries) | 2,644 | ||
Other (income) expense, net | (11,140 | ) | |
Adjusted EBITDA | $ | 227,199 |
Three Months Ended March 31, 2017 | ||||||||||||
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 | $ | 77,225 | $ | (268 | ) | (1) | $ | 76,957 | ||||
Customer support | 34,442 | (261 | ) | (1) | 34,181 | |||||||
Professional service and other | 55,529 | (89 | ) | (1) | 55,440 | |||||||
Amortization of acquired technology-based intangible assets | 39,285 | (39,285 | ) | (2) | — | |||||||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 382,641 | 64.5% | 39,903 | (3) | 422,544 | 71.2% | ||||||
Operating expenses | ||||||||||||
Research and development | 77,086 | (1,634 | ) | (1) | 75,452 | |||||||
Sales and marketing | 117,498 | (2,081 | ) | (1) | 115,417 | |||||||
General and administrative | 44,828 | (2,328 | ) | (1) | 42,500 | |||||||
Amortization of acquired customer-based intangible assets | 40,825 | (40,825 | ) | (2) | — | |||||||
Special charges (recoveries) | 20,586 | (20,586 | ) | (4) | — | |||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) | 65,261 | 11.0% | 107,357 | (5) | 172,618 | 29.1% | ||||||
Other income (expense), net | 1,424 | (1,424 | ) | (6) | — | |||||||
Provision for (recovery of) income taxes | 13,239 | 7,798 | (7) | 21,037 | ||||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 21,616 | 98,135 | (8) | 119,751 | ||||||||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText | $ | 0.08 | $ | 0.37 | (8) | $ | 0.45 |
(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 relevant to an acquisition 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 Condensed 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 provision rate of approximately 38% 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 "Income Taxes") 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 March 31, 2017 | ||||||
Per share diluted | ||||||
GAAP-based net income, attributable to OpenText | $ | 21,616 | $ | 0.08 | ||
Add: | ||||||
Amortization | 80,110 | 0.30 | ||||
Share-based compensation | 6,661 | 0.03 | ||||
Special charges (recoveries) | 20,586 | 0.08 | ||||
Other (income) expense, net | (1,424 | ) | (0.01 | ) | ||
GAAP-based provision for (recovery of) income taxes | 13,239 | 0.05 | ||||
Non-GAAP-based provision for income taxes | (21,037 | ) | (0.08 | ) | ||
Non-GAAP-based net income, attributable to OpenText | $ | 119,751 | $ | 0.45 |
Three Months Ended March 31, 2017 | |||
GAAP-based net income, attributable to OpenText | $ | 21,616 | |
Add: | |||
Provision for (recovery of) income taxes | 13,239 | ||
Interest and other related expense, net | 31,734 | ||
Amortization of acquired technology-based intangible assets | 39,285 | ||
Amortization of acquired customer-based intangible assets | 40,825 | ||
Depreciation | 16,557 | ||
Share-based compensation | 6,661 | ||
Special charges (recoveries) | 20,586 | ||
Other (income) expense, net | (1,424 | ) | |
Adjusted EBITDA | $ | 189,079 |
Nine Months Ended March 31, 2018 | ||||||||||||
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 | $ | 269,012 | $ | (1,119 | ) | (1) | $ | 267,893 | ||||
Customer support | 99,805 | (933 | ) | (1) | 98,872 | |||||||
Professional service and other | 188,690 | (1,322 | ) | (1) | 187,368 | |||||||
Amortization of acquired technology-based intangible assets | 138,391 | (138,391 | ) | (2) | — | |||||||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 1,354,428 | 65.7% | 141,765 | (3) | 1,496,193 | 72.6% | ||||||
Operating expenses | ||||||||||||
Research and development | 241,455 | (4,206 | ) | (1) | 237,249 | |||||||
Sales and marketing | 381,951 | (6,679 | ) | (1) | 375,272 | |||||||
General and administrative | 152,717 | (6,214 | ) | (1) | 146,503 | |||||||
Amortization of acquired customer-based intangible assets | 136,819 | (136,819 | ) | (2) | — | |||||||
Special charges (recoveries) | 21,390 | (21,390 | ) | (4) | — | |||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) | 356,054 | 17.3% | 317,073 | (5) | 673,127 | 32.7% | ||||||
Other income (expense), net | 26,911 | (26,911 | ) | (6) | — | |||||||
Provision for (recovery of) income taxes | 100,644 | (20,674 | ) | (7) | 79,970 | |||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 180,501 | 310,836 | (8) | 491,337 | ||||||||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText | $ | 0.68 | $ | 1.16 | (8) | $ | 1.84 |
(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 relevant to an acquisition 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 Condensed 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 provision rate of approximately 36% and a Non-GAAP-based tax rate of approximately 14%; 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 "Income Taxes") 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 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense. We also took into consideration changes in US tax reform legislation that was enacted on December 22, 2017 through the Tax Cuts and Jobs Act. |
(8) | Reconciliation of GAAP-based net income to Non-GAAP-based net income: |
Nine Months Ended March 31, 2018 | ||||||
Per share diluted | ||||||
GAAP-based net income, attributable to OpenText | $ | 180,501 | $ | 0.68 | ||
Add: | ||||||
Amortization | 275,210 | 1.03 | ||||
Share-based compensation | 20,473 | 0.08 | ||||
Special charges (recoveries) | 21,390 | 0.08 | ||||
Other (income) expense, net | (26,911 | ) | (0.10 | ) | ||
GAAP-based provision for (recovery of) income taxes | 100,644 | 0.37 | ||||
Non-GAAP-based provision for income taxes | (79,970 | ) | (0.30 | ) | ||
Non-GAAP-based net income, attributable to OpenText | $ | 491,337 | $ | 1.84 |
Nine Months Ended March 31, 2018 | |||
GAAP-based net income, attributable to OpenText | $ | 180,501 | |
Add: | |||
Provision for (recovery of) income taxes | 100,644 | ||
Interest and other related expense, net | 101,914 | ||
Amortization of acquired technology-based intangible assets | 138,391 | ||
Amortization of acquired customer-based intangible assets | 136,819 | ||
Depreciation | 64,042 | ||
Share-based compensation | 20,473 | ||
Special charges (recoveries) | 21,390 | ||
Other (income) expense, net | (26,911 | ) | |
Adjusted EBITDA | $ | 737,263 |
Nine Months Ended March 31, 2017 | ||||||||||||
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 | $ | 220,667 | $ | (839 | ) | (1) | $ | 219,828 | ||||
Customer support | 87,529 | (766 | ) | (1) | 86,763 | |||||||
Professional service and other | 137,167 | (1,002 | ) | (1) | 136,165 | |||||||
Amortization of acquired technology-based intangible assets | 87,268 | (87,268 | ) | (2) | — | |||||||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 1,084,628 | 66.6% | 89,875 | (3) | 1,174,503 | 72.2% | ||||||
Operating expenses | ||||||||||||
Research and development | 200,379 | (5,372 | ) | (1) | 195,007 | |||||||
Sales and marketing | 315,297 | (7,230 | ) | (1) | 308,067 | |||||||
General and administrative | 122,939 | (7,164 | ) | (1) | 115,775 | |||||||
Amortization of acquired customer-based intangible assets | 108,248 | (108,248 | ) | (2) | — | |||||||
Special charges (recoveries) | 44,157 | (44,157 | ) | (4) | — | |||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) | 246,480 | 15.1% | 262,046 | (5) | 508,526 | 31.2% | ||||||
Other income (expense), net | 4,565 | (4,565 | ) | (6) | — | |||||||
Provision for (recovery of) income taxes | (815,364 | ) | 878,495 | (7) | 63,131 | |||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 979,522 | (621,014 | ) | (8) | 358,508 | |||||||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText | $ | 3.88 | $ | (2.46 | ) | (8) | $ | 1.42 |
(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 relevant to an acquisition 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 Condensed 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 496% 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 "Income Taxes") 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: |
Nine Months Ended March 31, 2017 | ||||||
Per share diluted | ||||||
GAAP-based net income, attributable to OpenText | $ | 979,522 | $ | 3.88 | ||
Add: | ||||||
Amortization | 195,516 | 0.77 | ||||
Share-based compensation | 22,373 | 0.09 | ||||
Special charges (recoveries) | 44,157 | 0.17 | ||||
Other (income) expense, net | (4,565 | ) | (0.02 | ) | ||
GAAP-based provision for (recovery of) income taxes | (815,364 | ) | (3.23 | ) | ||
Non-GAAP-based provision for income taxes | (63,131 | ) | (0.24 | ) | ||
Non-GAAP-based net income, attributable to OpenText | $ | 358,508 | $ | 1.42 |
Nine Months Ended March 31, 2017 | |||
GAAP-based net income, attributable to OpenText | $ | 979,522 | |
Add: | |||
Provision for (recovery of) income taxes | (815,364 | ) | |
Interest and other related expense, net | 86,752 | ||
Amortization of acquired technology-based intangible assets | 87,268 | ||
Amortization of acquired customer-based intangible assets | 108,248 | ||
Depreciation | 47,128 | ||
Share-based compensation | 22,373 | ||
Special charges (recoveries) | 44,157 | ||
Other (income) expense, net | (4,565 | ) | |
Adjusted EBITDA | $ | 555,519 |
(In thousands) | As of March 31, 2018 | Change increase (decrease) | As of June 30, 2017 | |||||||||
Cash and cash equivalents | $ | 605,497 | $ | 162,140 | $ | 443,357 |
Nine Months Ended March 31, | ||||||||||||
(In thousands) | 2018 | Change | 2017 | |||||||||
Cash provided by operating activities | $ | 504,426 | $ | 167,653 | $ | 336,773 | ||||||
Cash used in investing activities | $ | (415,237 | ) | $ | 1,743,282 | $ | (2,158,519 | ) | ||||
Cash provided by (used in) financing activities | $ | 55,248 | $ | (937,294 | ) | $ | 992,542 |
Fiscal years ending June 30, | |||||||||||
CDT | GXS GER | GXS PHP | |||||||||
2018 (three months ended June 30) | $ | 159 | $ | 253 | $ | 25 | |||||
2019 | 706 | 1,042 | 115 | ||||||||
2020 | 760 | 1,050 | 154 | ||||||||
2021 | 858 | 1,095 | 194 | ||||||||
2022 | 945 | 1,106 | 297 | ||||||||
2023 to 2027 | 5,912 | 5,895 | 2,056 | ||||||||
Total | $ | 9,340 | $ | 10,441 | $ | 2,841 |
Payments due between | |||||||||||||||||||
Total | April 1, 2018— June 30, 2018 | July 1, 2018— June 30, 2020 | July 1, 2020— June 30, 2022 | July 1, 2022 and beyond | |||||||||||||||
Long-term debt obligations (1) | $ | 3,424,525 | $ | 186,654 | $ | 389,329 | $ | 953,792 | $ | 1,894,750 | |||||||||
Operating lease obligations (2) | 397,539 | 20,530 | 140,044 | 105,496 | 131,469 | ||||||||||||||
Purchase obligations | 17,867 | 2,622 | 14,439 | 806 | — | ||||||||||||||
$ | 3,839,931 | $ | 209,806 | $ | 543,812 | $ | 1,060,094 | $ | 2,026,219 |
(In thousands) | U.S. Dollar Equivalent at March 31, 2018 | U.S. Dollar Equivalent at June 30, 2017 | ||||||
Euro | $ | 132,898 | $ | 121,621 | ||||
British Pound | 41,055 | 30,425 | ||||||
Canadian Dollar | 15,671 | 29,131 | ||||||
Swiss Franc | 23,540 | 41,925 | ||||||
Other foreign currencies | 110,394 | 87,144 | ||||||
Total cash and cash equivalents denominated in foreign currencies | 323,558 | 310,246 | ||||||
U.S. dollar | 281,939 | 133,111 | ||||||
Total cash and cash equivalents | $ | 605,497 | $ | 443,357 |
Exhibit Number | Description of Exhibit | |
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
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 Vice Chairman, Chief Executive Officer and Chief Technology Officer (Principal Executive Officer) | |
/s/ MADHU RANGANATHAN | |
Madhu Ranganathan 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) |
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 Vice Chairman, 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/ MADHU RANGANATHAN | |
Madhu Ranganathan Executive Vice President and Chief Financial Officer |
By: | /s/ MARK J. BARRENECHEA | |
Mark J. Barrenechea Vice Chairman, Chief Executive Officer and Chief Technology Officer |
By: | /s/ MADHU RANGANATHAN | |
Madhu Ranganathan Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Mar. 31, 2018 |
May 04, 2018 |
|
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 | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | otex | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 267,469,077 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable trade, allowance for doubtful accounts | $ 9,007 | $ 6,319 |
Common shares issued (in shares) | 267,266,442 | 264,059,567 |
Common shares outstanding (in shares) | 267,226,442 | 264,059,567 |
Treasury stock (in shares) | 694,169 | 1,101,612 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Unrealized gain (loss) on cash flow hedges, tax expense (recovery) | $ (338,000) | $ 125,000 | $ 65,000 | $ (254,000) |
(Gain) loss reclassified into net income, tax (expense) recovery | (112,000) | 14,000 | (540,000) | (24,000) |
Actuarial gain (loss), tax expense (recovery) | 413,000 | (64,000) | 177,000 | 420,000 |
Amortization of actuarial (gain) loss into net income, tax (expense) recovery | 45,000 | 59,000 | 130,000 | 178,000 |
Unrealized net gain (loss) on marketable securities, tax effect | 0 | 0 | 0 | 0 |
Release of unrealized gain on marketable securities, tax effect | $ 0 | $ 0 | $ 0 | $ 0 |
Basis of Presentation |
9 Months Ended |
---|---|
Mar. 31, 2018 | |
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 March 31, 2018, were 70%, 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 2018” means our fiscal year beginning on July 1, 2017 and ending June 30, 2018; (ii) the term “Fiscal 2017” means our fiscal year beginning on July 1, 2016 and ended June 30, 2017; (iii) the term “Fiscal 2016” means our fiscal year beginning on July 1, 2015 and ended June 30, 2016; (iv) the term "Fiscal 2015" means our fiscal year beginning on July 1, 2014 and ended June 30, 2015; (v) the term "Fiscal 2014" means our fiscal year beginning on July 1, 2013 and ended June 30, 2014; (vi) the term "Fiscal 2013" means our fiscal year beginning July 1, 2012 and ended June 30, 2013; and (vii) the term "Fiscal 2012" means our fiscal year beginning July 1, 2011 and ended June 30, 2012. 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 Covisint Corporation (Covisint), with effect from July 26, 2017, Guidance Software, Inc. (Guidance), with effect from September 14, 2017, and Hightail, Inc. (Hightail), with effect from February 14, 2018 (see note 18 "Acquisitions"). 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) testing of goodwill for impairment, (iii) the valuation of acquired intangible assets, (iv) the valuation of long-lived assets, (v) the recognition of contingencies, (vi) restructuring accruals, (vii) acquisition accruals and pre-acquisition contingencies, (viii) the realization of investment tax credits, (ix) the valuation of stock options granted and obligations related to share-based payments, including the valuation of our long-term incentive plans, (x) the valuation of pension assets and obligations, and (xi) accounting for income taxes. Beginning in the second quarter of Fiscal 2018, our income tax estimates were impacted by an Act to provide for the reconciliation pursuant to titles II and IV of the concurrent resolution on the budget for fiscal year 2018, informally titled the Tax Cuts and Jobs Act, which was enacted in the United States on December 22, 2017. The Company has recorded a provisional charge and continues to assess the effect of the new law on its consolidated financial statements in accordance with Staff Accounting Bulletin 118 “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (SAB 118). For more details related to this matter, please refer to note 14 "Income Taxes". |
Recent Accounting Pronouncements |
9 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2018 | |||||
Accounting Policies [Abstract] | |||||
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Leases In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02 “Leases (Topic 842)” (ASU 2016-02), which supersedes the guidance in former Accounting Standards Codification (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 have formed a sub-committee consisting of internal members from various departments to assess the effect that the pending adoption of ASU 2016-02 will have on our Condensed Consolidated Balance Sheets. Although the sub-committee has not completed their assessment, we expect the majority of the impact to come from our facility leases, and that most of our operating lease commitments will be recognized as right of use assets and operating lease liabilities, which will increase our total assets and total liabilities, as reported on our Condensed Consolidated Balance Sheets, relative to such amounts prior to adoption. The sub-committee continues to evaluate the impact of the new standard on our Condensed Consolidated Financial Statements. Revenue Recognition In May 2014, the FASB issued ASC 606 "Revenue from Contracts with Customers" (Topic 606). Topic 606 supersedes the revenue recognition requirements in ASC Topic 605, "Revenue Recognition" (Topic 605) and nearly all other existing revenue recognition guidance under U.S. GAAP. The core principal of Topic 606 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 and permits the use of the retrospective or cumulative effect transition method. Topic 606 identifies five steps to be followed to achieve its 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. We will be adopting Topic 606 using the cumulative effect approach when this guidance becomes effective for us, starting in the first quarter of our fiscal year ending June 30, 2019. While we are continuing to assess all potential impacts of Topic 606, we currently believe the key differences relate to our accounting for implementation services on cloud arrangements, accounting for on premise subscription offerings and costs to obtain a contract. Implementation Services on Cloud Arrangements Under Topic 605, fees charged for professional services to implement hosted software within a cloud arrangement are deferred and recognized ratably over the longer of the non-cancellable contract term or the estimated customer life because the activities are not deemed to be a separate element for which stand-alone value exists. Under Topic 606, we expect such professional services revenues to be more variable from period to period, as we will be required to accelerate the recognition of revenues allocated to the implementation services, based on the stand alone selling price that meet the criteria of being distinct and recognize them as the services are provided to the customer. Any implementation services that do not meet the criteria of being distinct will be deferred and amortized over the contract term. Costs relating to distinct implementation services will be expensed as they are incurred. On Premise Subscription Arrangements Under Topic 605, revenue attributable to on premise subscription arrangements is recognized under “Cloud Services and Subscriptions revenue” and is recognized ratably over the term of the arrangement because Vendor Specific Objective Evidence (VSOE) does not exist for the undelivered maintenance and support element of the arrangement, as it is not sold separately. Under Topic 606, the requirement to have VSOE for undelivered elements to enable the separation of the delivered software licenses from the on-going customer support and maintenance services is eliminated. Accordingly, we expect the adoption of Topic 606 will result in a change in our recording of on premise subscription revenues from “Cloud Services and Subscriptions revenues” to “License” and “Customer Support” revenues in our Consolidated Statements of Income. Further, we expect to accelerate the recognition of a portion of the transaction price at the outset of the arrangement (upon delivery) as “License revenue”, using the residual approach for estimating stand-alone selling price. Over the course of the service period, “Customer Support revenues” will be recognized based on the stand-alone selling price for those services. Costs to obtain a contract The accounting for the recognition of costs related to obtaining customer contracts under Topic 606 is not significantly different from our current policy to defer commissions, although there will be certain modifications to reflect the changes in the pattern and timing of recognition of certain arrangements as discussed above. We will be evaluating revenue contracts that were in effect on the adoption date as if they had been accounted for under Topic 606 from contract inception. As a result, certain revenue that would have been recognized in future periods under Topic 605 will now be accounted for and disclosed under Topic 606 as though the revenue had already been recognized in prior periods, resulting in us having to make a cumulative effect adjustment to our retained earnings in the first period of adoption. We are still in the process of reviewing these adjustments, finalizing our assessment and quantifying the impacts of Topic 606 and the methodology of estimating standalone selling price for certain of the separately identified performance obligations under the new revenue recognition standard. Certain contracts are complex, and actual determination of revenue recognition under both existing and new guidance is dependent on contract-specific terms, which may cause variability in the timing and quantum of revenue recognized. We will continue to assess all of the impacts that the application of Topic 606 will have on our Condensed Consolidated Financial Statements, including on our disclosure requirements, and, if material, will provide updated disclosures with regard to the expected impact. ASUs adopted in Fiscal 2018 During Fiscal 2018 we adopted the following ASU, which did not have a material impact to our reported financial position, results of operations or cash flows:
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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 $58.2 million as of March 31, 2018 (June 30, 2017—$46.2 million). |
Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT
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Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
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, 2017:
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Acquired Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUIRED INTANGIBLE ASSETS | ACQUIRED INTANGIBLE ASSETS
The above balances as of March 31, 2018 have been reduced to reflect the impact of intangible assets relating to acquisitions where the gross cost has become fully amortized during the nine months ended March 31, 2018. The impact of this resulted in a reduction of $19.0 million related to Technology assets and $3.0 million related to Customer assets. The weighted average amortization periods for acquired technology and customer intangible assets are approximately six years and eight 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, Noncurrent Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER ASSETS | OTHER ASSETS
Deposits and restricted cash primarily relate to security deposits provided to landlords in accordance with facility lease agreements and cash restricted per the terms of certain contractual-based agreements. 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 is recorded as a component of other income (expense), net in our Condensed Consolidated Statements of Income. During the three and nine months ended March 31, 2018, our share of income (loss) from these investments was $(0.3) million and $(0.5) million, respectively (three and nine months ended March 31, 2017—$0.2 million and $6.2 million, respectively). Marketable securities are classified as available for sale securities and are recorded on our Condensed Consolidated Balance Sheets at fair value with unrealized gains and losses reported as a separate component of Accumulated other comprehensive income. We did not hold any marketable securities as of March 31, 2018. Long-term prepaid expenses and other long-term assets includes advance payments on long-term licenses that are being amortized over the applicable terms of the licenses and other miscellaneous assets. |
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 periods 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 March 31, 2018, the present value of this obligation was $16.4 million (June 30, 2017—$13.4 million), with an undiscounted value of $18.5 million (June 30, 2017—$15.0 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. On December 20, 2016, we issued an additional $250 million in aggregate principal amount by reopening our Senior Notes 2026 at an issue price of 102.75%. The additional notes have identical terms, are fungible with and are a part of a single series with the previously issued $600 million aggregate principal amount of Senior Notes 2026. The outstanding aggregate principal amount of Senior Notes 2026, after taking into consideration the additional issuance, is $850 million. For the three and nine months ended March 31, 2018, we recorded interest expense of $12.5 million and $37.5 million, respectively, relating to Senior Notes 2026 (three and nine months ended March 31, 2017—$12.5 million and $30.7 million, respectively). 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 and together with Senior Notes 2026, Senior Notes) 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 and nine months ended March 31, 2018, we recorded interest expense of $11.2 million and $33.7 million, respectively, relating to Senior Notes 2023 (three and nine months ended March 31, 2017—$11.2 million and $33.7 million, respectively). Term Loan B We entered into a $800 million term loan facility (Term Loan B) and borrowed the full amount on January 16, 2014. Borrowings under Term Loan B are secured by a first charge over substantially all of our assets on a pari passu basis with the Revolver (defined below). Term Loan B has a seven year term and repayments made under Term Loan B are equal to 0.25% of the principal amount in equal quarterly installments for the life of Term Loan B, with the remainder due at maturity. Borrowings under Term Loan B currently bear a floating rate of interest equal to 2.0% plus LIBOR. As of March 31, 2018, the outstanding balance on the Term Loan B bears an interest rate of approximately 3.65%. For the three and nine months ended March 31, 2018, we recorded interest expense of $6.9 million and $19.7 million, respectively, relating to Term Loan B (three and nine months ended March 31, 2017—$6.0 million and $19.0 million, respectively). Revolver We currently have a $450 million committed revolving credit facility (the Revolver) which matures on May 5, 2022. Borrowings under the Revolver are secured by a first charge over substantially all of our assets, on a pari passu basis with Term Loan B. The Revolver has no fixed repayment date prior to the end of the term. Borrowings under the Revolver bear interest per annum at a floating rate of LIBOR plus a fixed margin dependent on our consolidated net leverage ratio ranging from 1.25% to 1.75%. As of March 31, 2018, the outstanding balance on the Revolver bears a weighted average interest rate of approximately 3.55%. During the three and nine months ended March 31, 2018, we drew down nil and $200 million, respectively, from the Revolver partially to finance acquisitions (three and nine months ended March 31, 2017—$225 million, respectively). During the three and nine months ended March 31, 2018, we repaid $100 million, respectively (three and nine months ended March 31, 2017—nil, respectively). As of March 31, 2018 we have an outstanding balance on the Revolver of $275 million. For the three and nine months ended March 31, 2018, we recorded interest expense of $2.7 million and $7.3 million, respectively, relating to amounts drawn on the Revolver (three and nine months ended March 31, 2017—$1.3 million, respectively). Debt Issuance Costs and Premium on Senior Notes Debt issuance costs relate primarily to costs incurred for the purpose of obtaining our credit facilities and issuing our Senior Notes and are being amortized over the respective terms of the Senior Notes and Term Loan B using the effective interest method and the Revolver using the straight-line method. The premium on Senior Notes 2026 represents the excess of the proceeds received over the face value of Senior Notes 2026. This premium is amortized as a reduction to interest expense over the term of Senior Notes 2026 using the effective interest method. |
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Retirement Benefits [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), GXS Philippines, Inc. (GXS PHP) and other plans as of March 31, 2018 and June 30, 2017:
* 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 "Accounts Payable and Accrued Liabilities"). 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 March 31, 2018, there is approximately $0.1 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 2018. GXS Germany Plan As part of our acquisition of GXS Group, Inc. (GXS) in Fiscal 2014, we assumed 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 March 31, 2018, there is approximately $19 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 2018. GXS Philippines Plan As part of our acquisition of GXS in Fiscal 2014, we assumed 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 $32 thousand as of March 31, 2018, 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 March 31, 2018, there is approximately $59 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 2018. 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 March 31, 2018 and June 30, 2017, 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 costs 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 and nine months ended March 31, 2018, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $0.1320 and $0.3960, respectively, per Common Share in the aggregate amount of $35.2 million and $105.0 million, respectively, which we paid during the same period. For the three and nine months ended March 31, 2017, pursuant to the Company’s dividend policy, we paid total non-cumulative dividends of $0.1150 and $0.3450, respectively, per Common Share in the aggregate amount of $30.3 million and $86.0 million, respectively. 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 and nine months ended March 31, 2018, we did not repurchase any of our Common Shares for potential reissuance under our Long-Term Incentive Plans (LTIP) or other plans (three and nine months ended March 31, 2017—123,785 Common Shares, respectively, in the amount of $4.2 million, respectively). See below for more details on our various plans. From time to time we may provide funds to an independent agent to facilitate repurchases of our Common Shares in connection with the settlement of awards under the LTIP or other plans. Reissuance During the three and nine months ended March 31, 2018, we reissued 20,000 and 407,443 Common Shares, respectively, from treasury stock (three and nine months ended March 31, 2017—44,000 and 393,922 Common Shares, respectively), in connection with the settlement of awards. Share-Based Payments Total share-based compensation expense for the periods indicated below is detailed as follows:
Summary of Outstanding Stock Options As of March 31, 2018, an aggregate of 6,846,680 options to purchase Common Shares were outstanding and an additional 11,311,338 options to purchase Common Shares were available for issuance under our stock option plans. Our stock options generally vest over four years and expire between seven and ten years from the date of the grant. Currently we also have options outstanding that vest over five years, as well as options outstanding that vest based on meeting certain market conditions. The exercise price of all our options is set at an amount that is not less than the closing price of our Common Shares on the NASDAQ on the trading day immediately preceding the applicable grant date. A summary of activity under our stock option plans for the nine months ended March 31, 2018 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 March 31, 2018, the total compensation cost related to the unvested stock option awards not yet recognized was approximately $18.5 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 in any of the periods presented. 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 and nine months ended March 31, 2018, cash in the amount of $30.5 million and $50.1 million, respectively, 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 and nine months ended March 31, 2018 from the exercise of options eligible for a tax deduction was $0.6 million and $0.9 million, respectively. For the three and nine months ended March 31, 2017, cash in the amount of $12.2 million and $16.7 million, respectively, 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 and nine months ended March 31, 2017 from the exercise of options eligible for a tax deduction was $1.5 million and $1.9 million, respectively. 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 are referred to in this Quarterly Report on Form 10-Q based upon the year in which the grants are expected to vest. 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. We settled the Fiscal 2017 LTIP by issuing 312,651 Common Shares from treasury stock during the three months ended December 31, 2017, with a cost of $6.7 million. 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. Fiscal 2020 LTIP Grants made in Fiscal 2018 under the LTIP (collectively referred to as Fiscal 2020 LTIP), consisting of PSUs and RSUs, took effect in Fiscal 2018 starting on August 7, 2017. 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 2020 LTIP. We expect to settle the Fiscal 2020 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 March 31, 2018, the total expected compensation cost related to the unvested LTIP awards not yet recognized was $15.2 million, which is expected to be recognized over a weighted average period of 1.9 years. Restricted Share Units (RSUs) During the three and nine months ended March 31, 2018, we granted nil and 4,464 RSUs, respectively, to employees in accordance with employment and other agreements (three and nine months ended March 31, 2017—nil and 7,800 RSUs, respectively). 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 and nine months ended March 31, 2018, we issued 20,000 and 94,792 Common Shares, respectively, from treasury stock, with a cost of $0.4 million and $2.0 million, respectively, in connection with the settlement of these vested RSUs (three and nine months ended March 31, 2017—44,000 and 54,000 Common Shares, respectively, with a cost of $1.0 million and $1.1 million, respectively). Deferred Stock Units (DSUs) During the three and nine months ended March 31, 2018, we granted 3,037 and 83,846 DSUs, respectively, to certain non-employee directors (three and nine months ended March 31, 2017—2,302 and 77,998 DSUs, respectively). The DSUs were issued under our Deferred Share Unit Plan. DSUs granted as compensation for director fees vest immediately, whereas all other DSUs granted vest at our next annual general meeting following the granting of the DSUs. No DSUs are payable by us until the director ceases to be a member of the Board. Employee Share Purchase Plan (ESPP) Our ESPP offers employees a purchase price discount of 15%. During the three and nine months ended March 31, 2018, 201,726 and 540,343 Common Shares, respectively, were eligible for issuance to employees enrolled in the ESPP (three and nine months ended March 31, 2017—129,579 and 349,435 Common Shares, respectively). During the three and nine months ended March 31, 2018, cash in the amount of approximately $5.8 million and $15.9 million, respectively, was received from employees relating to the ESPP (three and nine months ended March 31, 2017—$3.8 million and $10.0 million, respectively). |
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) Includes interest up to maturity and principal payments. We currently have borrowings outstanding under the Revolver ($275 million as of March 31, 2018), which we expect to repay within the next 12 months. Please see note 10 "Long-Term Debt" for more details. (2) Net of $8.6 million of sublease income to be received from properties which we have subleased to third parties. 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 IRS Matter 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 remain ongoing, on July 17, 2015 we received from the IRS an initial 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 March 31, 2018, adjustments under the draft NOPA in its present form and the anticipated additional NOPA could result in an aggregate liability of approximately $605 million, inclusive of U.S. federal and state taxes, penalties and interest. The increase from the initially disclosed estimated aggregate liability is solely due to an estimate of interest that has accrued. 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. CRA Matter As part of its ongoing audit of our Canadian tax returns, the Canada Revenue Agency (CRA) has disputed our transfer pricing methodology used for certain intercompany transactions with our international subsidiaries. The CRA has issued a notice of reassessment for Fiscal 2012 that would, as drafted, increase our taxable income for that year by approximately $90 million (offset by the tax attributes referred to below) and apply a penalty of approximately 10%. We strongly disagree with the CRA position and believe the reassessment of Fiscal 2012 (including penalties) is without merit. We will continue to vigorously contest both the proposed adjustments to our taxable income and the penalty assessment. We have filed a notice of objection and will also seek competent authority consideration under applicable international treaties in respect of this reassessment. As of the date of this Quarterly Report on Form 10-Q, we have not recorded any accruals in respect of this reassessment in our Condensed Consolidated Financial Statements. Even if we are unsuccessful in challenging the CRA’s reassessment to increase our taxable income for Fiscal 2012, we have elective deductions available in Fiscal 2012 that would offset such increased amount so that no additional cash tax would be payable for Fiscal 2012, exclusive of any proposed penalties. Audits by the CRA of our tax returns for fiscal years prior to Fiscal 2012 have been completed with no reassessment of our income tax liability in respect of our international transactions, including the transfer pricing methodology applied to them. The CRA is currently auditing Fiscal 2013, Fiscal 2014 and Fiscal 2015, and has proposed to reassess Fiscal 2013 in a manner consistent with the reassessment of Fiscal 2012. We are in ongoing discussions with the CRA and continue to vigorously contest the CRA's audit position. GXS Brazil Matter As part of our acquisition of GXS, we 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. During the first quarter of Fiscal 2018 the courts ruled in favour of the municipality of São Paulo. The Company decided not to pursue further appeal. On October 1, 2017, the Company reached a settlement with the municipality and paid $1.4 million. 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 $1.8 million accrued for the probable amount of a settlement related to the indirect taxes, interest and penalties. GXS India Matter 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 $1.4 million to cover our anticipated financial exposure in this matter. Please also see Part II, Item 1A "Risk Factors" elsewhere in this Quarterly Report on Form 10-Q. |
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 and nine months ended March 31, 2018 and 2017, we recognized the following amounts as income tax-related interest expense and penalties:
The following amounts have been accrued on account of income tax-related interest expense and penalties:
* These balances have been included within "Long-term income taxes payable" within the Condensed Consolidated Balance Sheets. We believe that it is reasonably possible that the gross unrecognized tax benefits, as of March 31, 2018, could decrease tax expense in the next 12 months by $7.5 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 2009 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, Malaysia, and the United Kingdom. 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 and Canada audits are included in note 13 "Guarantees and Contingencies". 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 "Guarantees and Contingencies". As at March 31, 2018, we have provided $28.3 million (June 30, 2017—$22.1 million) in respect of both additional foreign taxes or deferred income tax liabilities for temporary differences related to the undistributed earnings of certain non-United States subsidiaries, and planned periodic repatriations from certain 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 provision of 25.5% for the three months ended March 31, 2018, from a provision of 37.9% for the three months ended March 31, 2017. Tax expense increased by $6.9 million, primarily due to (i) the impact of changes in US tax legislation in Fiscal 2018 resulting in a provisional expense of $4.7 million (see below), (ii) an increase of $8.2 million on account of the Company having higher income before taxes, including the impact of foreign tax rates, and (iii) an increase of $1.4 million relating to differences in tax filings from provisions, offset by (i) a decrease of $5.7 million resulting from the net impact of reversals and accruals of reserves, and (ii) a decrease of $1.2 million relating to a decrease in amortization of deferred charges. The remainder of the difference was due to normal course movements and non-material items. The effective tax rate increased to a provision of 35.8% for the nine months ended March 31, 2018, compared to a recovery of 496.3% for the nine months ended March 31, 2017. The increase in tax expense of $916.0 million was primarily due to (i) a significant tax benefit of $876.1 million resulting from the Fiscal 2017 internal reorganization as described below which did not reoccur in Fiscal 2018, (ii) the impact of changes in US tax legislation in Fiscal 2018 resulting in a provisional charge of $20.0 million (see below), and (iii) an increase of $25.3 million on account of the Company having higher income before taxes, including the impact of foreign tax rates, offset by (i) a decrease of $0.5 million resulting from the net impact of reversals and accruals of reserves, (ii) a decrease of $1.2 million relating to differences in tax filings from provisions, and (iii) a decrease of $3.3 million relating to a decrease in amortization of deferred charges. The remainder of the difference was 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. 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 recognized in the first quarter of Fiscal 2017. For more information relating to this, please refer to our Annual Report on Form 10-K for the year ended June 30, 2017. On December 22, 2017, the United States enacted tax reform legislation through the Tax Cuts and Jobs Act, which significantly changed the existing US tax laws, including a reduction in the federal corporate tax rate from 35% to 21%, and the transition of US international taxation from a worldwide tax system to a territorial tax system. As a result of the enactment of the legislation, the Company incurred a provisional one-time tax expense of $4.7 million for the three months ended March 31, 2018 and $20.0 million for the nine months ended March 31, 2018, respectively, primarily related to the transition tax on accumulated foreign earnings and the re-measurement of certain deferred tax assets and liabilities. The portion of this anticipated increase to tax expense attributable to the transition tax is payable over a period of up to eight years. The impact of the $20.0 million adjustment resulting from the US legislation on the effective tax rate is an increase of 6.0% for the three months ended March 31, 2018 and an increase of 7.1% for the nine months ended March 31, 2018. The $20.0 million is a provisional amount in respect of rate change, Alternative Minimum Tax (AMT), and foreign earnings in accordance with Staff Accounting Bulletin 118 “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (SAB 118). The finalization of the provisional one-time amount is pending finalization of the re-assessment of the timing of reversals of certain deferred tax assets and liabilities and additional considerations related to undistributed foreign earnings and evaluating whether any portion of our existing AMT credit carryforwards are not expected to be refundable as a result of the repeal of corporate AMT. Additional information such as final Fiscal 2018 income and detailed earnings and profits calculations for foreign subsidiaries may result in changes to the provisional amount during the SAB 118 measurement period. The Company continues to assess the impact of the new law on its consolidated financial statements and anticipates finalizing the determination on or before December 22, 2018 in accordance with SAB 118. |
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 March 31, 2018 and June 30, 2017:
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 and nine months ended March 31, 2018 and 2017, 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 and nine months ended March 31, 2018 and 2017, no indications of impairment were identified and therefore no fair value measurements were required. Marketable Securities Marketable securities are classified as available for sale securities and are recorded within "Other assets" on our Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a separate component of Accumulated other comprehensive income. We did not hold any marketable securities as of March 31, 2018. A summary of our marketable securities outstanding as of March 31, 2018 and June 30, 2017 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 various 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 March 31, 2018, is recorded within "Accounts payable and accrued liabilities”. As of March 31, 2018, the notional amount of forward contracts we held to sell U.S. dollars in exchange for Canadian dollars was $47.3 million (June 30, 2017—$39.0 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 "Fair Value Measurement")
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 (recoveries) include costs and recoveries that relate to certain restructuring initiatives that we have undertaken from time to time under our various restructuring plans, as well as acquisition-related costs and other charges.
Fiscal 2018 Restructuring Plan During Fiscal 2018 and in the context of our acquisitions of Covisint, Guidance and subsequently Hightail (each defined below), we began to implement restructuring activities to streamline our operations (collectively referred to as the Fiscal 2018 Restructuring Plan). The Fiscal 2018 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 March 31, 2018, we expect total costs to be incurred in conjunction with the Fiscal 2018 Restructuring Plan to be approximately $12.0 million, of which $8.9 million has already been recorded within "Special charges (recoveries)" to date. A reconciliation of the beginning and ending liability for the nine months ended March 31, 2018 is shown below.
Fiscal 2017 Restructuring Plan During Fiscal 2017 and in the context of our acquisitions of Recommind, CCM Business and ECD Business (each as defined below), we began to implement restructuring activities to streamline our operations (collectively referred to as the 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 March 31, 2018, we expect total costs to be incurred in conjunction with the Fiscal 2017 Restructuring Plan to be approximately $45.0 million, of which $37.5 million has already been recorded within "Special charges (recoveries)" to date. A reconciliation of the beginning and ending liability for the nine months ended March 31, 2018 is shown below.
Acquisition-related costs Included within "Special charges (recoveries)" for the three and nine months ended March 31, 2018 are costs incurred directly in relation to acquisitions in the amount of $1.2 million and $4.6 million, respectively (three and nine months ended March 31, 2017—$4.6 million and $15.3 million, respectively). Other charges (recoveries) ERP Implementation Costs During Fiscal 2018, we implemented a broad enterprise resource planning (ERP) system. For the three and nine months ended March 31, 2018, we recorded charges of nil and $3.5 million, respectively, relating to the implementation of this project (three and nine months ended March 31, 2017—$2.6 million and $7.3 million, respectively). Other charges (recoveries) For the three months ended March 31, 2018, "Other charges" include $1.7 million relating to system implementation costs and $0.9 million relating to other miscellaneous charges. These charges were partially offset by a recovery of $2.2 million relating to certain pre-acquisition sales and use tax liabilities becoming statute barred. For the nine months ended March 31, 2018, "Other charges" include $1.7 million relating to system implementation costs and $3.0 million relating to miscellaneous other charges. These charges were partially offset by (i) $2.3 million relating to certain pre-acquisition sales and use tax liabilities that were recovered outside of the acquisition's one year measurement period and (ii) $2.2 million relating to certain pre-acquisition sales and use tax liabilities becoming statute barred. For the three months ended March 31, 2017, "Other recoveries" primarily include (i) a net recovery of $2.7 million relating to commitment fees, (ii) $1.6 million relating to a recovery on certain interest on pre-acquisition liabilities becoming statute barred, and (iii) $1.3 million relating to a recovery on certain pre-acquisition sales and use tax liabilities being released upon becoming statute barred. For the nine months ended March 31, 2017, "Other charges" primarily include (i) a net charge of $6.5 million relating to commitment fees and (ii) $1.2 million relating to post-acquisition integration costs necessary to streamline an acquired company into our operations. These charges were partially offset by (i) a recovery of $3.8 million relating to certain pre-acquisition sales and use tax liabilities being released upon becoming statute barred and (ii) $1.4 million relating to a recovery on certain interest on pre-acquisition liabilities becoming statute barred. The remaining amounts relate to miscellaneous other charges. |
Acquisitions |
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ACQUISITIONS | ACQUISITIONS Fiscal 2018 Acquisitions Acquisition of Hightail, Inc. On February 14, 2018, we acquired all of the equity interest in Hightail, a leading cloud service provider for file sharing and creative collaboration, for approximately $20.5 million. In accordance with ASC Topic 805 "Business Combinations" (Topic 805), this acquisition was accounted for as a business combination. We believe this acquisition complements and extends our Enterprise Information Management (EIM) portfolio. The results of operations of this acquisition have been consolidated with those of OpenText beginning February 14, 2018. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of February 14, 2018, are set forth below:
The goodwill of $7.1 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. Included in total identifiable net assets is acquired deferred revenue with a fair value of $5.2 million, which represents our estimate of the fair value of the contractual obligations assumed based on a preliminary valuation. In arriving at this fair value, we reduced the acquired company’s original carrying value by $2.0 million. The fair value of current assets acquired includes accounts receivable with a fair value of $0.7 million. The gross amount receivable was $0.8 million of which $0.1 million of this receivable is expected to be uncollectible. Acquisition-related costs for Hightail included in "Special charges (recoveries)" in the Condensed Consolidated Financial Statements for the three and nine months ended March 31, 2018 was $0.5 million, respectively. The acquisition had no significant impact on revenues and net earnings for the three and nine months ended March 31, 2018 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. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for assets acquired and liabilities assumed, including tax balances. We expect to finalize this determination on or before December 31, 2018. Acquisition of Guidance Software, Inc. On September 14, 2017, we acquired all of the equity interest in Guidance, a leading provider of forensic security solutions, for approximately $240.5 million. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition complements and extends our EIM portfolio. The results of operations of this acquisition have been consolidated with those of OpenText beginning September 14, 2017. The following tables summarize the preliminary consideration paid for Guidance and the amount of the assets acquired and liabilities assumed, as well as the goodwill recorded as of the acquisition date:
* Inclusive of $2.3 million accrued for but unpaid as of March 31, 2018. See "Appraisal Proceedings" below for more information. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of September 14, 2017, are set forth below:
The goodwill of $130.3 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $1.9 million is expected to be deductible for tax purposes. Included in total identifiable net assets is acquired deferred revenue with a fair value of $26.6 million, which represents our estimate of the fair value of the contractual obligations assumed based on a preliminary valuation. In arriving at this fair value, we reduced the acquired company’s original carrying value by $7.6 million. The fair value of current assets acquired includes accounts receivable with a fair value of $10.3 million. The gross amount receivable was $11.8 million of which $1.5 million of this receivable is expected to be uncollectible. An amount of $0.8 million, representing the mark to market gain on the shares we held in Guidance prior to the acquisition, was recorded to "Other income" in our Condensed Consolidated Statements of Income for the nine months ended March 31, 2018. Acquisition-related costs for Guidance included in "Special charges (recoveries)" in the Condensed Consolidated Financial Statements for the three and nine months ended March 31, 2018 were $0.4 million and $2.7 million, respectively. The acquisition had no significant impact on revenues and net earnings for the three and nine months ended March 31, 2018 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. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for assets acquired and liabilities assumed, including tax balances. We expect to finalize this determination on or before September 30, 2018. Appraisal Proceedings Under Section 262 of the Delaware General Corporation Law, shareholders who did not tender their shares in connection with our tender offer were entitled to have their shares appraised by the Delaware Court of Chancery and receive payment of the “fair value” of such shares. On August 31, 2017 we received notice from the record holder of approximately 1,519,569 shares or 5% of the issued and outstanding Guidance shares as of the date of acquisition, demanding an appraisal of the fair value of Guidance shares as they believed the price we paid for Guidance shares was less than its fair value. We accrued $10.8 million in connection with these claims, which is equivalent to paying $7.10 per Guidance share, the amount these Guidance shareholders otherwise would have received had they tendered their shares in our offer. During the second quarter of Fiscal 2018, we paid $8.5 million to the trust account of dissenting shareholders’ attorney, leaving $2.3 million accrued and unpaid for this matter. The amount accrued has been included within "Accounts payable and accrued liabilities" in the Condensed Consolidated Balance Sheets, with no impact to our Condensed Consolidated Statements of Income provided the courts rule within the open measurement period of 12 months from acquisition date. Acquisition of Covisint Corporation On July 26, 2017, we acquired all of the equity interest in Covisint, a leading cloud platform for building Identity, Automotive, and Internet of Things applications, for approximately $102.8 million. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition complements and extends our EIM portfolio. The results of operations of this acquisition have been consolidated with those of OpenText beginning July 26, 2017. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of July 26, 2017, are set forth below:
The goodwill of $26.9 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $26.8 million is expected to be deductible for tax purposes. Included in total identifiable net assets is acquired deferred revenue with a fair value of $12.2 million, which represents our estimate of the fair value of the contractual obligations assumed based on a preliminary valuation. In arriving at this fair value, we reduced the acquired company’s original carrying value by $4.6 million. The fair value of current assets acquired includes accounts receivable with a fair value of $7.8 million. The gross amount receivable was $7.9 million of which $0.1 million of this receivable is expected to be uncollectible. Acquisition-related costs for Covisint included in "Special charges (recoveries)" in the Condensed Consolidated Financial Statements for the three and nine months ended March 31, 2018 were nil and $0.9 million, respectively. The acquisition had no significant impact on revenues and net earnings for the three and nine months ended March 31, 2018 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. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for assets acquired and liabilities assumed, including tax balances. We expect to finalize this determination on or before June 30, 2018. Fiscal 2017 Acquisitions Purchase of an Asset Group Constituting a Business - ECD Business On January 23, 2017, we acquired certain assets and assumed certain liabilities of the enterprise content division of EMC Corporation, a Massachusetts corporation, and certain of its subsidiaries, collectively referred to as Dell-EMC (ECD Business) for approximately $1.62 billion. In accordance with Topic 805, this acquisition was accounted for as a business combination. ECD Business offers OpenText a suite of leading Enterprise Content Management solutions with deep industry focus, including the DocumentumTM, InfoArchiveTM, and LEAPTM product families. We believe this acquisition complements and extends our EIM portfolio. The results of operations of this acquisition were consolidated with those of OpenText beginning January 23, 2017. Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of January 23, 2017, are set forth below:
The goodwill of $823.7 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $378.5 million is expected to be deductible for tax purposes. Included in total identifiable net assets is acquired deferred revenue with a fair value of $163.8 million, which represents our estimate of the fair value of the contractual obligations assumed. In arriving at this fair value, we reduced the acquired company’s original carrying value by $52.0 million. Further, included within total identifiable net assets are also certain contract assets which represent revenue earned by the ECD Business on long-term projects for which billings had not yet occurred as of January 23, 2017. As these long-term projects have now been inherited by OpenText, we are responsible for billing and collecting cash on these projects at the appropriate time, yet we do not and will not recognize revenue for these billings. The fair value assigned to these contract assets as of January 23, 2017 was $8.4 million. 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. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition complements our current software portfolio, and allows us to better serve our customers by offering a wider set of CCM capabilities. The results of operations of this acquisition were consolidated with those of OpenText beginning July 31, 2016. Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of July 31, 2016, are set forth below:
The goodwill of $173.2 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $105.1 million is expected to be deductible for tax purposes. Acquisition of Recommind, Inc. On July 20, 2016, we acquired all of the equity interest in Recommind, Inc. (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 complements our EIM solutions, and through eDiscovery and analytics, provides increased visibility into structured and unstructured data. The results of operations of Recommind, were consolidated with those of OpenText beginning July 20, 2016. Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of July 20, 2016, are set forth below:
The goodwill of $91.4 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. |
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 | 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 "Income Taxes" 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 |
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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 nine months ended March 31, 2018, Mr. Stephen Sadler, a director, earned $0.8 million (nine months ended March 31, 2017—$0.8 million) 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 |
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Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT Cash Dividends As part of our quarterly, non-cumulative cash dividend program, we declared, on May 8, 2018, a dividend of $0.1518 per Common Share. The record date for this dividend is June 8, 2018 and the payment date is June 29, 2018. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of our Board. |
Recent Accounting Pronouncements (Policies) |
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Accounting Policies [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) testing of goodwill for impairment, (iii) the valuation of acquired intangible assets, (iv) the valuation of long-lived assets, (v) the recognition of contingencies, (vi) restructuring accruals, (vii) acquisition accruals and pre-acquisition contingencies, (viii) the realization of investment tax credits, (ix) the valuation of stock options granted and obligations related to share-based payments, including the valuation of our long-term incentive plans, (x) the valuation of pension assets and obligations, and (xi) accounting for income taxes. |
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Leases | In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02 “Leases (Topic 842)” (ASU 2016-02), which supersedes the guidance in former Accounting Standards Codification (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 have formed a sub-committee consisting of internal members from various departments to assess the effect that the pending adoption of ASU 2016-02 will have on our Condensed Consolidated Balance Sheets. Although the sub-committee has not completed their assessment, we expect the majority of the impact to come from our facility leases, and that most of our operating lease commitments will be recognized as right of use assets and operating lease liabilities, which will increase our total assets and total liabilities, as reported on our Condensed Consolidated Balance Sheets, relative to such amounts prior to adoption. The sub-committee continues to evaluate the impact of the new standard on our Condensed Consolidated Financial Statements. |
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Revenue Recognition | In May 2014, the FASB issued ASC 606 "Revenue from Contracts with Customers" (Topic 606). Topic 606 supersedes the revenue recognition requirements in ASC Topic 605, "Revenue Recognition" (Topic 605) and nearly all other existing revenue recognition guidance under U.S. GAAP. The core principal of Topic 606 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 and permits the use of the retrospective or cumulative effect transition method. Topic 606 identifies five steps to be followed to achieve its 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. We will be adopting Topic 606 using the cumulative effect approach when this guidance becomes effective for us, starting in the first quarter of our fiscal year ending June 30, 2019. While we are continuing to assess all potential impacts of Topic 606, we currently believe the key differences relate to our accounting for implementation services on cloud arrangements, accounting for on premise subscription offerings and costs to obtain a contract. Implementation Services on Cloud Arrangements Under Topic 605, fees charged for professional services to implement hosted software within a cloud arrangement are deferred and recognized ratably over the longer of the non-cancellable contract term or the estimated customer life because the activities are not deemed to be a separate element for which stand-alone value exists. Under Topic 606, we expect such professional services revenues to be more variable from period to period, as we will be required to accelerate the recognition of revenues allocated to the implementation services, based on the stand alone selling price that meet the criteria of being distinct and recognize them as the services are provided to the customer. Any implementation services that do not meet the criteria of being distinct will be deferred and amortized over the contract term. Costs relating to distinct implementation services will be expensed as they are incurred. On Premise Subscription Arrangements Under Topic 605, revenue attributable to on premise subscription arrangements is recognized under “Cloud Services and Subscriptions revenue” and is recognized ratably over the term of the arrangement because Vendor Specific Objective Evidence (VSOE) does not exist for the undelivered maintenance and support element of the arrangement, as it is not sold separately. Under Topic 606, the requirement to have VSOE for undelivered elements to enable the separation of the delivered software licenses from the on-going customer support and maintenance services is eliminated. Accordingly, we expect the adoption of Topic 606 will result in a change in our recording of on premise subscription revenues from “Cloud Services and Subscriptions revenues” to “License” and “Customer Support” revenues in our Consolidated Statements of Income. Further, we expect to accelerate the recognition of a portion of the transaction price at the outset of the arrangement (upon delivery) as “License revenue”, using the residual approach for estimating stand-alone selling price. Over the course of the service period, “Customer Support revenues” will be recognized based on the stand-alone selling price for those services. Costs to obtain a contract The accounting for the recognition of costs related to obtaining customer contracts under Topic 606 is not significantly different from our current policy to defer commissions, although there will be certain modifications to reflect the changes in the pattern and timing of recognition of certain arrangements as discussed above. We will be evaluating revenue contracts that were in effect on the adoption date as if they had been accounted for under Topic 606 from contract inception. As a result, certain revenue that would have been recognized in future periods under Topic 605 will now be accounted for and disclosed under Topic 606 as though the revenue had already been recognized in prior periods, resulting in us having to make a cumulative effect adjustment to our retained earnings in the first period of adoption. We are still in the process of reviewing these adjustments, finalizing our assessment and quantifying the impacts of Topic 606 and the methodology of estimating standalone selling price for certain of the separately identified performance obligations under the new revenue recognition standard. Certain contracts are complex, and actual determination of revenue recognition under both existing and new guidance is dependent on contract-specific terms, which may cause variability in the timing and quantum of revenue recognized. We will continue to assess all of the impacts that the application of Topic 606 will have on our Condensed Consolidated Financial Statements, including on our disclosure requirements, and, if material, will provide updated disclosures with regard to the expected impact. |
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ASUs adopted in Fiscal 2018 | During Fiscal 2018 we adopted the following ASU, which did not have a material impact to our reported financial position, results of operations or cash flows:
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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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Components of Property and Equipment by Type |
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Goodwill (Tables) |
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Summary of Changes In Carrying Amount of Goodwill | The following table summarizes the changes in goodwill since June 30, 2017:
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Acquired Intangible Assets (Tables) |
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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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Components of Other Assets |
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Accounts Payable and Accrued Liabilities (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 |
* 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) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [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) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [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), GXS Philippines, Inc. (GXS PHP) and other plans as of March 31, 2018 and June 30, 2017:
* 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 "Accounts Payable and Accrued Liabilities"). |
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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 March 31, 2018 and June 30, 2017, 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) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 nine months ended March 31, 2018 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) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) Includes interest up to maturity and principal payments. We currently have borrowings outstanding under the Revolver ($275 million as of March 31, 2018), which we expect to repay within the next 12 months. Please see note 10 "Long-Term Debt" for more details. (2) Net of $8.6 million of sublease income to be received from properties which we have subleased to third parties. |
Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest and Penalties Related to Liabilities for Income Tax Expense | For the three and nine months ended March 31, 2018 and 2017, 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 | The following amounts have been accrued on account of income tax-related interest expense and penalties:
* These balances have been included within "Long-term income taxes payable" within the Condensed Consolidated Balance Sheets. |
Fair Value Measurement (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 March 31, 2018 and June 30, 2017:
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Fair Value, by Balance Sheet Grouping | A summary of our marketable securities outstanding as of March 31, 2018 and June 30, 2017 is as follows:
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Derivative Instruments and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Derivative Instruments in the Condensed Consolidated Balance Sheets | 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 "Fair Value Measurement")
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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) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve | Special charges (recoveries) include costs and recoveries that relate to certain restructuring initiatives that we have undertaken from time to time under our various restructuring plans, as well as acquisition-related costs and other charges.
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Fiscal 2018 Restructuring Plan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve | A reconciliation of the beginning and ending liability for the nine months ended March 31, 2018 is shown below.
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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 nine months ended March 31, 2018 is shown below.
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Acquisitions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The following tables summarize the preliminary consideration paid for Guidance and the amount of the assets acquired and liabilities assumed, as well as the goodwill recorded as of the acquisition date:
* Inclusive of $2.3 million accrued for but unpaid as of March 31, 2018. See "Appraisal Proceedings" below for more information. |
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Hightail, 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 February 14, 2018, are set forth below:
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Guidance Software 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 September 14, 2017, are set forth below:
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Covisint Corporation | |||||||||||||||||||||||||||||||||||||||||||||
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 26, 2017, are set forth below:
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ECD 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 fair values as of January 23, 2017, are set forth below:
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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 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 fair values as of July 20, 2016, are set forth below:
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Supplemental Cash Flow Disclosures (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosure of Cash Flow Information |
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Earnings Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share |
(1) Please also see note 14 "Income Taxes" for details relating to a one-time tax benefit of $876.1 million recorded during the three months ended September 30, 2016 in connection with an internal reorganization of our subsidiaries. (2) Represents options to purchase Common Shares excluded from the calculation of diluted earnings per share because the exercise price of the stock options was greater than or equal to the average price of the Common Shares during the period. |
Basis of Presentation - Additional Information (Details) |
Mar. 31, 2018 |
---|---|
OT South Africa | |
Noncontrolling Interest [Line Items] | |
Ownership percentage by Open Text | 70.00% |
GXS Korea | |
Noncontrolling Interest [Line Items] | |
Ownership percentage by Open Text | 85.00% |
GXS Singapore | |
Noncontrolling Interest [Line Items] | |
Ownership percentage by Open Text | 81.00% |
Allowance for Doubtful Accounts - Changes In Carrying Amount (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Jun. 30, 2017 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||
Balance as of June 30, 2017 | $ 6,319 | |
Bad debt expense | 6,561 | |
Write-off /adjustments | (3,873) | |
Balance as of March 31, 2018 | 9,007 | |
Unbilled receivables | $ 58,200 | $ 46,200 |
Goodwill - Summary of Changes in Carrying Amount of Goodwill (Details) $ in Thousands |
9 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Balance as of June 30, 2017 | $ 3,416,749 |
Adjustments relating to acquisitions prior to Fiscal 2018 that had open measurement periods (note 18) | (1,458) |
Adjustments on account of foreign exchange | 12,941 |
Balance as of March 31, 2018 | 3,592,598 |
Hightail, Inc | |
Goodwill [Roll Forward] | |
Acquisition (note 18) | 7,127 |
Guidance Software Inc. | |
Goodwill [Roll Forward] | |
Acquisition (note 18) | 130,334 |
Covisint Corporation | |
Goodwill [Roll Forward] | |
Acquisition (note 18) | $ 26,905 |
Acquired Intangible Assets - Calculation Of Acquired Intangibles By Asset Class (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Jun. 30, 2017 |
|
Finite-Lived Intangible Assets, Net [Abstract] | ||
Cost | $ 2,333,736 | $ 2,161,647 |
Accumulated Amortization | (942,323) | (689,105) |
Total | 1,391,413 | 1,472,542 |
Technology assets | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Cost | 985,226 | 930,841 |
Accumulated Amortization | (392,297) | (272,872) |
Total | 592,929 | 657,969 |
Intangible assets fully amortized during the period | $ 19,000 | |
Weighted-average amortization period (in years) for acquired intangible assets | 6 years | |
Customer assets | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Cost | $ 1,348,510 | 1,230,806 |
Accumulated Amortization | (550,026) | (416,233) |
Total | 798,484 | $ 814,573 |
Intangible assets fully amortized during the period | $ 3,000 | |
Weighted-average amortization period (in years) for acquired intangible assets | 8 years |
Acquired Intangible Assets - Calculation Of Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2018 (three months ended June 30) | $ 94,776 | |
2019 | 352,401 | |
2020 | 280,888 | |
2021 | 190,763 | |
2022 | 177,208 | |
2023 and beyond | 295,377 | |
Total | $ 1,391,413 | $ 1,472,542 |
Other Assets (Details) - USD ($) |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Other Assets, Noncurrent Disclosure [Abstract] | ||
Deposits and restricted cash | $ 11,479,000 | $ 15,821,000 |
Deferred implementation costs | 28,916,000 | 28,833,000 |
Investments | 36,776,000 | 27,886,000 |
Marketable securities | 0 | 3,023,000 |
Long-term prepaid expenses and other long-term assets | 22,561,000 | 18,200,000 |
Total other assets | $ 99,732,000 | $ 93,763,000 |
Other Assets - Additional Information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Jun. 30, 2017 |
|
Schedule of Equity Method Investments [Line Items] | |||||
Income (loss) from equity method investments | $ (300,000) | $ 200,000 | $ (503,000) | $ 6,153,000 | |
Marketable securities | $ 0 | $ 0 | $ 3,023,000 | ||
Minimum | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 4.00% | 4.00% | |||
Maximum | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 20.00% | 20.00% |
Deferred Charges and Credits (Details) |
9 Months Ended |
---|---|
Mar. 31, 2018 | |
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 |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||
Accounts payable—trade | $ 39,283 | $ 43,699 |
Accrued salaries and commissions | 103,245 | 121,958 |
Accrued liabilities | 118,628 | 135,512 |
Accrued interest on Senior Notes | 26,021 | 24,787 |
Amounts payable in respect of restructuring and other Special charges | 5,000 | 13,728 |
Asset retirement obligations | 2,988 | 2,436 |
Total | $ 295,165 | $ 342,120 |
Accounts Payable and Accrued Liabilities - Schedule of Long-Term Accrued Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||
Amounts payable in respect of restructuring and other Special charges | $ 2,124 | $ 2,686 |
Other accrued liabilities | 37,164 | 36,702 |
Asset retirement obligations | 13,400 | 10,950 |
Total | $ 52,688 | $ 50,338 |
Accounts Payable and Accrued Liabilities - Narrative (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||
Present value of asset retirement obligation | $ 16.4 | $ 13.4 |
Undiscounted value of asset retirement obligation | $ 18.5 | $ 15.0 |
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 2,691,300 | $ 2,597,120 |
Premium on Senior Notes 2026 | 6,164 | 6,597 |
Debt issuance costs | (29,382) | (33,900) |
Total amount outstanding | 2,668,082 | 2,569,817 |
Less: | ||
Current portion of long-term debt | 282,760 | 182,760 |
Non-current portion of long-term debt | 2,385,322 | 2,387,057 |
Term Loan B | ||
Debt Instrument [Line Items] | ||
Total debt | 766,300 | 772,120 |
Less: | ||
Current portion of long-term debt | 7,760 | 7,760 |
Senior Notes | Senior Notes 2026 | ||
Debt Instrument [Line Items] | ||
Total debt | 850,000 | 850,000 |
Senior Notes | Senior Notes 2023 | ||
Debt Instrument [Line Items] | ||
Total debt | 800,000 | 800,000 |
Line of Credit | Revolver | ||
Debt Instrument [Line Items] | ||
Total debt | 275,000 | 175,000 |
Less: | ||
Current portion of long-term debt | $ 275,000 | $ 175,000 |
Long-Term Debt - Senior Unsecured Fixed Rate Notes (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Jun. 30, 2017 |
Dec. 20, 2016 |
May 31, 2016 |
Jan. 15, 2015 |
|
Debt Instrument [Line Items] | ||||||||
Long-term debt | $ 2,691,300,000 | $ 2,691,300,000 | $ 2,597,120,000 | |||||
Senior Notes | Senior Notes 2026 | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | $ 250,000,000 | $ 600,000,000 | ||||||
Debt instrument stated interest rate | 5.875% | |||||||
Debt premium issue price percentage | 102.75% | |||||||
Long-term debt | 850,000,000 | 850,000,000 | 850,000,000 | |||||
Interest expense | 12,500,000 | $ 12,500,000 | 37,500,000 | $ 30,700,000 | ||||
Senior Notes | Senior Notes 2023 | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument face amount | $ 800,000,000.0 | |||||||
Debt instrument stated interest rate | 5.625% | |||||||
Long-term debt | 800,000,000 | 800,000,000 | $ 800,000,000 | |||||
Interest expense | $ 11,200,000 | $ 11,200,000 | $ 33,700,000 | $ 33,700,000 |
Pension Plans and Other Post Retirement Benefits - Additional Information (Details) - Pension Plan |
9 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
CDT | |
Assumptions: | |
Contributions made by employer to plan | $ 0 |
Amount to be amortized from accumulated other comprehensive income (loss) over the next fiscal year | 100,000 |
GXS Germany | |
Assumptions: | |
Contributions made by employer to plan | 0 |
Amount to be amortized from accumulated other comprehensive income (loss) over the next fiscal year | 19,000 |
GXS Philippines | |
Assumptions: | |
Contributions made by employer to plan | 0 |
Amount to be amortized from accumulated other comprehensive income (loss) over the next fiscal year | 59,000 |
Fair value of plan assets | $ 32,000 |
Pension Plans and Other Post Retirement Benefits - Components of Net Pension Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Jun. 30, 2017 |
|
Assumptions: | |||||
Net pension expense | $ 2,834 | $ 2,953 | |||
Pension Plan | |||||
Assumptions: | |||||
Service cost | $ 463 | $ 408 | 1,393 | 1,477 | $ 1,913 |
Interest cost | 347 | 257 | 1,005 | 790 | 1,059 |
Amortization of actuarial (gains) and losses | 101 | 185 | 282 | 554 | |
Net pension expense | 911 | 850 | 2,680 | 2,821 | |
Pension Plan | CDT | |||||
Assumptions: | |||||
Service cost | 130 | 115 | 379 | 347 | 467 |
Interest cost | 158 | 113 | 459 | 339 | 456 |
Amortization of actuarial (gains) and losses | 141 | 155 | 409 | 465 | |
Net pension expense | 429 | 383 | 1,247 | 1,151 | |
Pension Plan | GXS Germany | |||||
Assumptions: | |||||
Service cost | 123 | 97 | 357 | 292 | 395 |
Interest cost | 127 | 93 | 370 | 279 | 377 |
Amortization of actuarial (gains) and losses | 19 | 42 | 55 | 125 | |
Net pension expense | 269 | 232 | 782 | 696 | |
Pension Plan | GXS Philippines | |||||
Assumptions: | |||||
Service cost | 210 | 196 | 657 | 838 | 1,051 |
Interest cost | 62 | 51 | 176 | 172 | $ 226 |
Amortization of actuarial (gains) and losses | (59) | (12) | (182) | (36) | |
Net pension expense | $ 213 | $ 235 | $ 651 | $ 974 |
Pension Plans and Other Post Retirement Benefits - Anticipated Pension Payments Under Pension Plans (Details) - Pension Plan $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
CDT | |
Assumptions: | |
2018 (three months ended June 30) | $ 159 |
2019 | 706 |
2020 | 760 |
2021 | 858 |
2022 | 945 |
2023 to 2027 | 5,912 |
Total | 9,340 |
GXS Germany | |
Assumptions: | |
2018 (three months ended June 30) | 253 |
2019 | 1,042 |
2020 | 1,050 |
2021 | 1,095 |
2022 | 1,106 |
2023 to 2027 | 5,895 |
Total | 10,441 |
GXS Philippines | |
Assumptions: | |
2018 (three months ended June 30) | 25 |
2019 | 115 |
2020 | 154 |
2021 | 194 |
2022 | 297 |
2023 to 2027 | 2,056 |
Total | $ 2,841 |
Share Capital, Option Plans and Share-Based Payments - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Dividends declared per common share (in dollars per share) | $ 0.132000 | $ 0.115000 | $ 0.396 | $ 0.345000 |
Payments of dividends | $ 35,200 | $ 30,300 | $ 104,996 | $ 85,953 |
Preference shares issued (in shares) | 0 | 0 | ||
Common shares repurchased (in shares) | 0 | 123,785 | ||
Purchase of Treasury Stock | $ 0 | $ 4,245 | ||
Issuance of treasury stock (in shares) | 20,000 | 44,000 | 407,443 | 393,922 |
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 | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Weighted-average fair value of options granted (in dollars per share) | $ 8.14 | $ 7.32 | $ 7.48 | $ 6.86 |
Weighted-average assumptions used: | ||||
Expected volatility | 26.95% | 27.64% | 27.10% | 28.61% |
Risk–free interest rate | 2.44% | 1.70% | 1.83% | 1.32% |
Expected dividend yield | 1.45% | 1.37% | 1.45% | 1.42% |
Expected life (in years) | 4 years 3 months 30 days | 4 years 4 months 2 days | 4 years 5 months 1 day | 4 years 3 months 29 days |
Forfeiture rate (based on historical rates) | 6.00% | 5.00% | 6.00% | 5.00% |
Average exercised share price (in dollars per share) | $ 36.50 | $ 33.48 | $ 34.55 | $ 31.34 |
Share Capital, Option Plans and Share-Based Payments - Long-Term Incentive Plans (Details) - Long Term Incentive Plan $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Mar. 31, 2018
USD ($)
shares
|
Mar. 31, 2018
USD ($)
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Term of plan | 3 years | |
Stock issued (in shares) | shares | 312,651 | |
Stock issued | $ 6.7 | |
Compensation cost related to unvested awards not yet recognized | $ 15.2 | $ 15.2 |
Unvested stock awards compensation cost, weighted average recognition period | 1 year 11 months 1 day |
Income Taxes - Interest and Penalties Related to Liabilities for Income Tax Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Interest expense | $ 18 | $ 1,673 | $ 3,915 | $ 4,456 |
Penalties expense (recoveries) | 453 | 6 | (90) | (318) |
Total | $ 471 | $ 1,679 | $ 3,825 | $ 4,138 |
Income Taxes - Interest Accrued and Penalties Accrued Related to Income Tax Expense (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Interest expense accrued | $ 52,094 | $ 47,402 |
Penalties accrued | $ 2,325 | $ 2,160 |
Income Taxes - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||||
Possible decrease in tax expense in next 12 months | $ 7.5 | $ 7.5 | ||||
Taxes paid on cash distribution | $ 28.3 | $ 28.3 | $ 22.1 | |||
Effective income tax rate | 25.50% | 37.90% | 35.80% | (496.30%) | ||
Increase in income tax expense | $ 6.9 | $ 916.0 | ||||
Impact of changes in US tax legislation | 4.7 | 20.0 | ||||
Increase in income tax expense of federal rate applied to pretax income | 8.2 | 25.3 | ||||
Increase (decrease) in differences in tax filings from provision | 1.4 | (1.2) | ||||
Decrease from reversal of reserves | 5.7 | 0.5 | ||||
Decrease in deferred tax assets valuation allowance, amount | 1.2 | 3.3 | ||||
Income tax benefit from reorganization | $ 876.1 | $ 876.1 | ||||
Adjustment of deferred tax assets and liabilities | $ 4.7 | $ 20.0 | ||||
Impact of changes in US tax legislation, as a percent | 6.00% | 7.10% |
Fair Value Measurement - Schedule of Financial Assets and Liabilities (Details) - USD ($) |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | $ 0 | $ 3,023,000 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 3,023,000 | |
Derivative financial instrument asset (note 16) | 0 | 1,174,000 |
Financial Assets | 0 | 4,197,000 |
Derivative financial instrument liability (note 16) | (618,000) | 0 |
Financial Liabilities | (618,000) | 0 |
Fair Value, Measurements, Recurring | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities | 3,023,000 | |
Derivative financial instrument asset (note 16) | 0 | 1,174,000 |
Financial Assets | 0 | 4,197,000 |
Derivative financial instrument liability (note 16) | (618,000) | 0 |
Financial Liabilities | $ (618,000) | $ 0 |
Fair Value Measurement - Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
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 - Summary of Long-term Investments (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
|
---|---|
Fair Value Disclosures [Abstract] | |
Cost | $ 2,406 |
Gross Unrealized Gains | 617 |
Gross Unrealized (Losses) | 0 |
Estimated Fair Value | $ 3,023 |
Derivative Instruments and Hedging Activities - Fair Value in the Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Jun. 30, 2017 |
|
Foreign currency forward contracts | ||
Derivatives, Fair Value [Line Items] | ||
Notional amount of forward contracts held to sell U.S. dollars in exchange for Canadian dollars | $ 47,300 | $ 39,000 |
Prepaid expenses and other current assets | Cash Flow Hedging | Designated As Hedging Instrument | Foreign currency forward contracts | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value Asset (Liability) | $ 1,174 | |
Accounts Payable and Accrued Liabilities | Cash Flow Hedging | Designated As Hedging Instrument | Foreign currency forward contracts | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value Asset (Liability) | $ (618) | |
Minimum | ||
Derivatives, Fair Value [Line Items] | ||
Contract maturity | 1 month | |
Maximum | ||
Derivatives, Fair Value [Line Items] | ||
Contract maturity | 12 months |
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 | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Derivatives, Fair Value [Line Items] | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivatives (Effective Portion) | $ (1,273) | $ 473 | $ 247 | $ (960) |
Amount of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) | 0 | 0 | 0 | 0 |
Operating Expenses | ||||
Derivatives, Fair Value [Line Items] | ||||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | $ 423 | $ (54) | $ 2,039 | $ 92 |
Special Charges (Recoveries) - Schedule of Special Charges Related to Restructuring Plan (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Acquisition-related costs | $ 1,172 | $ 4,639 | $ 4,625 | $ 15,305 |
Other charges (recoveries) | 390 | (2,873) | 3,651 | 9,980 |
Total | 2,644 | 20,586 | 21,390 | 44,157 |
Fiscal 2018 Restructuring Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Special charges | 553 | 0 | 8,907 | 0 |
Fiscal 2017 Restructuring Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Special charges | 525 | 18,888 | 3,947 | 20,744 |
Restructuring Plans prior to Fiscal 2017 Restructuring Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Special charges | $ 4 | $ (68) | $ 260 | $ (1,872) |
Acquisitions - Acquisition of Hightail, Inc. (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Feb. 14, 2018 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Jun. 30, 2017 |
|
Business Acquisition [Line Items] | ||||||
Goodwill | $ 3,592,598,000 | $ 3,592,598,000 | $ 3,416,749,000 | |||
Acquisition-related costs | 1,172,000 | $ 4,639,000 | 4,625,000 | $ 15,305,000 | ||
Hightail, Inc | ||||||
Business Acquisition [Line Items] | ||||||
Purchase consideration | $ 20,500,000 | |||||
Goodwill | 7,127,000 | |||||
Goodwill expected to be tax deductible | 0 | |||||
Deferred revenue | 5,200,000 | |||||
Deferred revenue adjustment | 2,000,000 | |||||
Acquired receivables, fair value | 700,000 | |||||
Acquired receivables, gross contractual amount | 800,000 | |||||
Acquired receivables, estimated uncollectible | $ 100,000 | |||||
Acquisition-related costs | $ 500,000 | $ 500,000 |
Acquisitions - Acquisition of Hightail, Inc., Preliminary Purchase Price Allocation (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Feb. 14, 2018 |
Jun. 30, 2017 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 3,592,598 | $ 3,416,749 | |
Hightail, Inc | |||
Business Acquisition [Line Items] | |||
Current assets | $ 1,327 | ||
Non-current tangible assets | 1,265 | ||
Liabilities assumed | (6,353) | ||
Total identifiable net assets | 13,339 | ||
Goodwill | 7,127 | ||
Net assets acquired | 20,466 | ||
Hightail, Inc | Customer assets | |||
Business Acquisition [Line Items] | |||
Acquired intangible assets | 12,900 | ||
Hightail, Inc | Technology assets | |||
Business Acquisition [Line Items] | |||
Acquired intangible assets | $ 4,200 |
Acquisitions - Appraisal Proceedings (Details) - Appraisal Proceedings - Guidance Software Inc. - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Aug. 31, 2017 |
|
Business Acquisition [Line Items] | ||
Shares outstanding at acquisition (in shares) | 1,519,569 | |
Percent of shares outstanding | 5.00% | |
Loss contingency accrual | $ 2.3 | $ 10.8 |
Share price (in dollars per share) | $ 7.10 | |
Payments for legal settlements | $ 8.5 |
Acquisitions - Purchase of an Asset Group Constituting a Business - ECD Business (Details) - USD ($) $ in Thousands |
Jan. 23, 2017 |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|---|
Purchase Price Allocation | |||
Goodwill | $ 3,592,598 | $ 3,416,749 | |
ECD Business | |||
Business Acquisition [Line Items] | |||
Purchase consideration | $ 1,620,000 | ||
Purchase Price Allocation | |||
Current assets | 11,339 | ||
Non-current tangible assets | 103,672 | ||
Liabilities assumed | (182,301) | ||
Total identifiable net assets | 798,710 | ||
Goodwill | 823,684 | ||
Net assets acquired | 1,622,394 | ||
Goodwill expected to be tax deductible | 378,500 | ||
Deferred revenue | 163,800 | ||
Deferred revenue adjustment | 52,000 | ||
Contract assets acquired | 8,400 | ||
ECD Business | Customer assets | |||
Purchase Price Allocation | |||
Acquired intangible assets | 407,000 | ||
ECD Business | Technology assets | |||
Purchase Price Allocation | |||
Acquired intangible assets | $ 459,000 |
Acquisitions - Purchase of an Asset Group Constituting a Business - CCM Business (Details) - USD ($) $ in Thousands |
Jul. 31, 2016 |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|---|
Purchase Price Allocation | |||
Goodwill | $ 3,592,598 | $ 3,416,749 | |
CCM Business | |||
Business Acquisition [Line Items] | |||
Purchase consideration | $ 315,000 | ||
Purchase Price Allocation | |||
Current assets | 683 | ||
Non-current deferred tax asset | 11,861 | ||
Non-current tangible assets | 2,348 | ||
Liabilities assumed | (38,090) | ||
Total identifiable net assets | 141,802 | ||
Goodwill | 173,198 | ||
Net assets acquired | 315,000 | ||
Goodwill expected to be tax deductible | 105,100 | ||
CCM Business | Customer assets | |||
Purchase Price Allocation | |||
Acquired intangible assets | 64,000 | ||
CCM Business | Technology assets | |||
Purchase Price Allocation | |||
Acquired intangible assets | $ 101,000 |
Acquisitions - Acquisition of Recommind, Inc. (Details) - USD ($) |
Jul. 20, 2016 |
Mar. 31, 2018 |
Jun. 30, 2017 |
---|---|---|---|
Purchase Price Allocation | |||
Goodwill | $ 3,592,598,000 | $ 3,416,749,000 | |
Recommind Inc | |||
Business Acquisition [Line Items] | |||
Purchase consideration | $ 170,100,000 | ||
Purchase Price Allocation | |||
Current assets | 30,034,000 | ||
Non-current tangible assets | 1,245,000 | ||
Long-term deferred tax liabilities | (1,780,000) | ||
Other liabilities assumed | (27,497,000) | ||
Total identifiable net assets | 78,702,000 | ||
Goodwill | 91,405,000 | ||
Net assets acquired | 170,107,000 | ||
Goodwill expected to be tax deductible | 0 | ||
Acquired receivables, fair value | 28,700,000 | ||
Acquired receivables, gross contractual amount | 29,600,000 | ||
Acquired receivables, estimated uncollectible | 900,000 | ||
Recommind Inc | Customer assets | |||
Purchase Price Allocation | |||
Acquired intangible assets | 51,900,000 | ||
Recommind Inc | Technology assets | |||
Purchase Price Allocation | |||
Acquired intangible assets | $ 24,800,000 |
Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Supplemental Cash Flow Information [Abstract] | ||||
Cash paid during the period for interest | $ 32,489 | $ 29,889 | $ 97,353 | $ 83,474 |
Cash received during the period for interest | 332 | 1,164 | 873 | 2,634 |
Cash paid during the period for income taxes | $ 23,654 | $ 21,146 | $ 52,488 | $ 60,828 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Sep. 30, 2016 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Basic earnings per share | |||||
Net income attributable to OpenText | $ 58,794 | $ 21,616 | $ 180,501 | $ 979,522 | |
Basic earnings per share attributable to OpenText (in dollars per share) | $ 0.22 | $ 0.08 | $ 0.68 | $ 3.91 | |
Diluted earnings per share | |||||
Net income attributable to OpenText | $ 58,794 | $ 21,616 | $ 180,501 | $ 979,522 | |
Diluted earnings per share attributable to OpenText (in dollars per share) | $ 0.22 | $ 0.08 | $ 0.68 | $ 3.88 | |
Weighted-average number of shares outstanding | |||||
Basic (in shares) | 266,572 | 263,329 | 265,619 | 250,538 | |
Effect of dilutive securities (in shares) | 1,192 | 2,111 | 1,335 | 1,931 | |
Diluted (in shares) | 267,764 | 265,440 | 266,954 | 252,469 | |
Excluded as anti-dilutive (in shares) | 2,102 | 1,117 | 2,690 | 1,577 | |
Income tax benefit from reorganization | $ 876,100 | $ 876,100 |
Related Party Transactions (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Director, Stephen Sadler | ||
Related Party Transaction [Line Items] | ||
Consultancy fees for business acquisition-related activities | $ 0.8 | $ 0.8 |
Subsequent Event (Details) - $ / shares |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
May 08, 2018 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Subsequent Event [Line Items] | |||||
Dividends declared per common share (in dollars per share) | $ 0.132000 | $ 0.115000 | $ 0.396 | $ 0.345000 | |
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Dividends declared per common share (in dollars per share) | $ 0.1518 |
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