Part I [Business](index=6&type=section&id=Item%201.%20Business) OpenText delivers Information Management software via five cloud platforms, driven by a "Total Growth" strategy combining organic growth, innovation, and acquisitions - OpenText provides Information Management solutions through **five integrated cloud platforms**: Content Cloud, Business Network Cloud, Experience Cloud, Security and Protection Cloud, and Developer Cloud[28](index=28&type=chunk) - The company's **"Total Growth" strategy** emphasizes organic initiatives, innovation, strategic acquisitions, and increasing recurring revenues and margins[56](index=56&type=chunk)[274](index=274&type=chunk) Revenue Streams | Revenue Stream | Description | | :--- | :--- | | **Cloud Services and Subscriptions** | SaaS, hosted services, and managed service arrangements | | **Customer Support** | Annual support and maintenance contracts providing software upgrades and technical assistance | | **License** | Fees from licensing software products for on-premise deployment | | **Professional Service and Other** | Consulting, implementation, training, and integration services | - OpenText invested a cumulative **$1.1 billion** in R&D over the last three fiscal years, representing **11.9% of cumulative revenue**, and targets **12% to 14%** of revenues annually for R&D[57](index=57&type=chunk)[276](index=276&type=chunk) - As of June 30, 2021, the company employed approximately **14,300 individuals** globally, with **48%** in the Americas, **18%** in EMEA, and **34%** in the Asia Pacific region[100](index=100&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from the COVID-19 pandemic, product development, competition, data security, acquisition integration, and tax audits - The **COVID-19 pandemic** poses **significant risks**, potentially affecting business operations, financial performance, and global economic conditions[122](index=122&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk) - The company faces risks from ongoing tax audits by the **Canada Revenue Agency (CRA)** for fiscal years 2012-2017, with a potential non-cash charge of up to **$470 million** related to the Fiscal 2017 audit[171](index=171&type=chunk)[176](index=176&type=chunk)[466](index=466&type=chunk) - Failure to protect **intellectual property**, claims of infringement, and **potential defects in complex software products** could harm reputation, increase costs, and lead to litigation[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - Acquisition-related risks include difficulties in **integrating acquired businesses**, potential for **weaker internal controls** in acquired companies, and the possibility that acquisitions may **negatively affect operating results**[161](index=161&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - **Data privacy and security** are major risks, with evolving laws like **GDPR and CCPA** increasing compliance costs, potentially leading to **significant liabilities, regulatory action, and reputational damage** from breaches[145](index=145&type=chunk)[179](index=179&type=chunk) [Unresolved Staff Comments](index=35&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - There are no unresolved staff comments[210](index=210&type=chunk) [Properties](index=35&type=section&id=Item%202.%20Properties) OpenText's properties include approximately 0.3 million square feet of owned facilities and 2.4 million square feet of leased facilities globally Company Facilities Overview | Facility Type | Total Square Footage | | :--- | :--- | | Owned | ~0.3 million | | Leased | ~2.4 million | - The company's headquarters in **Waterloo, Ontario**, consists of approximately **232,000 square feet** on land leased from the University of Waterloo[212](index=212&type=chunk) [Legal Proceedings](index=35&type=section&id=Item%203.%20Legal%20Proceedings) The company is subject to various legal claims in the normal course of business but believes the final outcome will not have a materially adverse effect on its financial condition or results of operations - OpenText states that while subject to various legal claims, it does not expect the outcomes to have a **materially adverse effect** on its consolidated financial results[215](index=215&type=chunk) [Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[217](index=217&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=36&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) OpenText common shares trade on NASDAQ and TSX under "OTEX", with the company maintaining a quarterly dividend policy and an active share repurchase plan - The company's common shares trade on both the **NASDAQ** and **TSX** under the ticker symbol **"OTEX"**[219](index=219&type=chunk) - A share repurchase plan was authorized on November 5, 2020, for up to **$350 million** of common shares over a **12-month period**[223](index=223&type=chunk) Share Repurchases (Year Ended June 30, 2021) | Metric | Value | | :--- | :--- | | Common Shares Repurchased | 2,500,000 | | Total Cost | $119.1 million | - The company expects to continue paying **quarterly cash dividends**, subject to Board of Directors' approval and contractual limitations[222](index=222&type=chunk) [Selected Financial Data](index=40&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year summary of OpenText's key consolidated financial data from Fiscal 2017 to 2021, highlighting growth influenced by acquisitions and a significant 2017 tax benefit Selected Financial Data (Fiscal Years 2017-2021) | (In thousands, except per share data) | 2021 | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $3,386,115 | $3,109,736 | $2,868,755 | $2,815,241 | $2,291,057 | | **Net income, attributable to OpenText** | $310,672 | $234,225 | $285,501 | $242,224 | $1,025,659 | | **Net income per share, diluted** | $1.14 | $0.86 | $1.06 | $0.91 | $4.01 | | **Total Assets** | $9,609,336 | $10,234,822 | $7,933,975 | $7,765,029 | $7,480,562 | | **Cash dividends per Common Share** | $0.7770 | $0.6984 | $0.6300 | $0.5478 | $0.4770 | - Numerous acquisitions over the five-year period, including **Carbonite, Liaison, and the ECD Business**, have contributed to growth and affect period-to-period comparability[246](index=246&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In Fiscal 2021, OpenText reported increased revenues and GAAP net income, driven by recurring revenues and its "Total Growth" strategy, while operating cash flow decreased due to a tax settlement Fiscal 2021 Financial Highlights vs. Fiscal 2020 | Metric | Fiscal 2021 | Fiscal 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $3,386.1 M | $3,109.7 M | +8.9% | | Annual Recurring Revenue | $2,741.5 M | $2,433.3 M | +12.7% | | GAAP Net Income | $310.7 M | $234.2 M | +32.7% | | GAAP Diluted EPS | $1.14 | $0.86 | +32.6% | | Adjusted EBITDA | $1,315.0 M | $1,148.1 M | +14.5% | | Operating Cash Flow | $876.1 M | $954.5 M | -8.2% | - Revenue growth was primarily driven by a **21.6% increase** in **Cloud services and subscriptions revenue**, largely due to incremental revenue from **acquisitions**[328](index=328&type=chunk) - Operating cash flow decreased by **$78.4 million**, mainly due to a **$299.6 million** payment related to the **IRS Settlement** and changes in working capital[267](index=267&type=chunk)[405](index=405&type=chunk) - The company settled a long-standing tax dispute with the **U.S. IRS** for Fiscal 2010 and 2012, resulting in a charge of **$300.5 million** and cash payments of **$299.6 million** during Fiscal 2021[460](index=460&type=chunk)[962](index=962&type=chunk) - During Fiscal 2021, the company repaid **$600 million** on its Revolver, repurchased **$119.1 million** of common shares, and paid **$210.7 million** in dividends[409](index=409&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=75&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are interest rate fluctuations on variable-rate debt and foreign currency exchange rate volatility from international operations - The company is exposed to interest rate risk primarily through its **$967.5 million** outstanding on **Term Loan B**, with a **1% increase** in interest rate increasing annual payments by approximately **$9.7 million**[473](index=473&type=chunk)[474](index=474&type=chunk) - OpenText faces **foreign currency risk** from transactions and translation, using **foreign currency forward contracts** to hedge Canadian dollar payroll expenses[477](index=477&type=chunk)[478](index=478&type=chunk) Cash and Cash Equivalents by Currency (June 30, 2021) | Currency | U.S. Dollar Equivalent (in thousands) | | :--- | :--- | | U.S. Dollar | $996,781 | | Foreign Currencies | $610,525 | | **Total** | **$1,607,306** | [Financial Statements and Supplementary Data](index=76&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal years 2019-2021, including balance sheets, income statements, and cash flows, with an unqualified opinion from KPMG LLP Consolidated Statement of Income (Year Ended June 30) | (In thousands) | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Total revenues** | $3,386,115 | $3,109,736 | $2,868,755 | | **Gross profit** | $2,351,649 | $2,105,961 | $1,938,052 | | **Income from operations** | $740,903 | $503,529 | $567,010 | | **Net income attributable to OpenText** | $310,672 | $234,225 | $285,501 | Consolidated Balance Sheet (As of June 30) | (In thousands) | 2021 | 2020 | | :--- | :--- | :--- | | **Total current assets** | $2,202,060 | $2,386,399 | | **Total assets** | $9,609,336 | $10,234,822 | | **Total current liabilities** | $1,361,904 | $1,904,233 | | **Total liabilities** | $5,509,883 | $6,228,113 | | **Total shareholders' equity** | $4,099,453 | $4,006,709 | Consolidated Statement of Cash Flows (Year Ended June 30) | (In thousands) | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | $876,120 | $954,536 | $876,278 | | **Net cash used in investing activities** | $(68,770) | $(1,469,417) | $(464,526) | | **Net cash provided by (used in) financing activities** | $(924,547) | $1,268,779 | $(148,374) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=76&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports that there were no changes in or disagreements with its accountants on accounting and financial disclosure - None reported[483](index=483&type=chunk) [Controls and Procedures](index=76&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting (ICFR) were effective as of June 30, 2021, confirmed by KPMG LLP - Management concluded that disclosure controls and procedures were **effective** as of June 30, 2021[484](index=484&type=chunk) - Management assessed internal control over financial reporting (ICFR) as **effective** as of June 30, 2021, based on the **COSO framework (2013)**[486](index=486&type=chunk) - The independent registered public accounting firm, **KPMG LLP**, issued an **unqualified opinion** on the effectiveness of the company's ICFR[487](index=487&type=chunk)[489](index=489&type=chunk) [Other Information](index=77&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[492](index=492&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=78&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This section details OpenText's directors and executive officers, board committee composition, Audit Committee independence, and board diversity, noting 33% female representation - The report lists the company's directors and executive officers, including **Mark J. Barrenechea** (Vice Chair, CEO, and CTO) and **P. Thomas Jenkins** (Chairman of the Board)[495](index=495&type=chunk)[496](index=496&type=chunk)[512](index=512&type=chunk) - The Audit Committee consists of **four independent directors**, with **Mr. Randy Fowlie** qualifying as the **"audit committee financial expert"**[527](index=527&type=chunk)[528](index=528&type=chunk) - The company has a **Board Diversity Policy**, with **four women** on the Board representing approximately **33%** of the total board and **40%** of independent members[531](index=531&type=chunk)[533](index=533&type=chunk) [Executive Compensation](index=85&type=section&id=Item%2011.%20Executive%20Compensation) The company's pay-for-performance philosophy aligns executive compensation with business strategy, resulting in maximum short-term incentive payouts for NEOs in Fiscal 2021 due to strong performance, with a significant portion of compensation "at risk" - The company's compensation philosophy is based on a strong link to **business strategy, pay for performance, and market relevance**[554](index=554&type=chunk)[555](index=555&type=chunk)[556](index=556&type=chunk) FY2021 Short-Term Incentive Performance | Objective | Target (in millions) | Actual (in millions) | % of Target Achieved | Payout % | | :--- | :--- | :--- | :--- | :--- | | Worldwide Revenues | $3,110 | $3,293 | 106% | 200% | | Worldwide License and Cloud Revenues and MCV | $1,902 | $2,063 | 108% | 200% | | Worldwide Adjusted Operating Income | $1,000 | $1,217 | 122% | 200% | - A significant portion of NEO compensation is **"at risk"**, with long-term incentives comprising **80%** of the CEO's target total compensation and around **60-63%** for other NEOs[571](index=571&type=chunk) - CEO **Mark J. Barrenechea** received a special grant of **performance stock options** vesting based on achieving absolute share price growth targets, ranging from **20%** (threshold) to **60%** (maximum) increase over the exercise price[617](index=617&type=chunk)[618](index=618&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=112&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section discloses beneficial ownership of OpenText common shares as of June 30, 2021, identifying Jarislowsky, Fraser Ltd. as the only 5%+ owner, and summarizes equity compensation plan authorizations - **Jarislowsky, Fraser Ltd.** is the only entity reported to beneficially own more than **5%** of the company's common shares, holding **16,333,691 shares**, representing **6.02%** of outstanding shares[694](index=694&type=chunk) - All executive officers and directors as a group beneficially own **7,228,707 common shares**, representing **2.64%** of the shares outstanding[694](index=694&type=chunk) Securities Authorized for Issuance under Equity Compensation Plans (as of June 30, 2021) | Plan Category | Securities to be issued upon exercise of outstanding options, warrants, and rights | Securities remaining available for future issuance | | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 8,113,574 | 11,251,577 | | Equity compensation plans not approved by security holders | 2,540,343 | — | [Certain Relationships and Related Transactions, and Director Independence](index=114&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) The company has a policy for related party transactions, and the Board determined all directors are independent under NASDAQ rules, except for CEO Mark J. Barrenechea and director Stephen J. Sadler - The Board has determined that all directors are **independent** except for CEO **Mark J. Barrenechea** and director **Stephen J. Sadler**[700](index=700&type=chunk) - Director **Stephen J. Sadler** received **CAD $48.0 thousand** (equivalent to **$37.1 thousand USD**) in consulting fees during Fiscal 2021 for acquisition-related business activities[701](index=701&type=chunk)[702](index=702&type=chunk) [Principal Accountant Fees and Services](index=115&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section details fees paid to KPMG LLP for Fiscal 2021 and 2020, primarily for audit services, with the Audit Committee pre-approving all services Fees Paid to KPMG LLP (in thousands) | Fee Category | Fiscal 2021 | Fiscal 2020 | | :--- | :--- | :--- | | Audit fees | $5,306 | $5,362 | | Audit-related fees | $41 | $257 | | Tax fees | $7 | $52 | | All other fees | $— | $— | | **Total** | **$5,354** | **$5,671** | - The Audit Committee has a policy to **pre-approve all audit and non-audit services** provided by the independent registered public accounting firm[703](index=703&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=116&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index to the Consolidated Financial Statements and lists all exhibits filed as part of the Annual Report on Form 10-K, including key agreements and certifications - This item contains the index to the **Consolidated Financial Statements**, which begin on **page 119** of the report[706](index=706&type=chunk) - A **comprehensive list of exhibits** is provided, including key agreements related to **acquisitions (e.g., Carbonite), debt instruments (e.g., Senior Notes indentures), and executive employment contracts**[708](index=708&type=chunk)[709](index=709&type=chunk)[710](index=710&type=chunk) [Form 10-K Summary](index=172&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that there is no summary for this item - None[1049](index=1049&type=chunk)

[Part I Financial Information](index=3&type=section&id=Part%20I%20Financial%20Information) Details the company's financial statements, management's analysis of operations, market risks, and internal controls [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents the unaudited condensed consolidated financial statements for Open Text Corporation, including balance sheets, income, and cash flow statements [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2021, shows a decrease in total assets to $9.56 billion from $10.23 billion at June 30, 2020, primarily due to a reduction in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (as of March 31, 2021 vs. June 30, 2020) | Balance Sheet Item | March 31, 2021 (in thousands) | June 30, 2020 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1,475,626 | $1,692,850 | | Total current assets | $2,062,176 | $2,386,399 | | Goodwill | $4,688,449 | $4,672,356 | | Acquired intangible assets | $1,291,796 | $1,612,564 | | **Total assets** | **$9,556,621** | **$10,234,822** | | **Liabilities & Equity** | | | | Current portion of long-term debt | $10,000 | $610,000 | | Total current liabilities | $1,339,024 | $1,904,233 | | Long-term debt | $3,580,206 | $3,584,311 | | Total liabilities | $5,524,696 | $6,228,113 | | **Total shareholders' equity** | **$4,031,925** | **$4,006,709** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the third quarter of fiscal 2021, total revenues increased to $832.9 million, and net income attributable to OpenText significantly increased to $91.5 million, while for the nine-month period, revenues grew to $2.49 billion but net income decreased to $129.4 million due to higher income taxes Income Statement Summary (Three Months Ended March 31) | Metric (in thousands, except EPS) | 2021 | 2020 | | :--- | :--- | :--- | | Total revenues | $832,931 | $814,679 | | Gross profit | $571,665 | $532,492 | | Income from operations | $152,396 | $95,077 | | Net income attributable to OpenText | $91,490 | $25,965 | | Earnings per share—diluted | $0.33 | $0.10 | Income Statement Summary (Nine Months Ended March 31) | Metric (in thousands, except EPS) | 2021 | 2020 | | :--- | :--- | :--- | | Total revenues | $2,492,588 | $2,283,124 | | Gross profit | $1,729,835 | $1,540,044 | | Income from operations | $569,222 | $412,330 | | Provision for income taxes | $342,121 | $78,800 | | Net income attributable to OpenText | $129,389 | $207,833 | | Earnings per share—diluted | $0.47 | $0.77 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended March 31, 2021, net cash provided by operating activities decreased to $579.9 million, while net cash used in financing activities was $782.9 million, primarily for debt repayment and dividends Cash Flow Summary (Nine Months Ended March 31) | Cash Flow Activity (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $579,931 | $674,286 | | Net cash used in investing activities | ($38,212) | ($1,448,930) | | Net cash provided by (used in) financing activities | ($782,855) | $1,308,757 | | **Increase (decrease) in cash** | **($218,583)** | **$514,053** | - Financing activities in the nine months to March 31, 2021, included a **$607.5 million** repayment of long-term debt and the Revolver, and **$156.3 million** in dividend payments[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies and specific financial statement line items, including revenue recognition, debt, share-based compensation, tax contingencies, and restructuring activities [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=43&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes the company's financial performance, liquidity, and capital resources, highlighting revenue trends, operating expenses, and the impact of the IRS settlement Q3 FY2021 Key Financial Metrics | Metric | Q3 FY2021 | Change vs. Q3 FY2020 | | :--- | :--- | :--- | | Total Revenue | $832.9M | +2.2% | | Annual Recurring Revenue | $691.8M | +4.4% | | GAAP-based Net Income | $91.5M | +252% | | Non-GAAP-based Net Income | $204.5M | +23.0% | | GAAP-based EPS, diluted | $0.33 | +230% | | Non-GAAP-based EPS, diluted | $0.75 | +23.0% | | Adjusted EBITDA | $297.1M | +14.5% | - The company's strategy focuses on "Total Growth," which combines organic initiatives, innovation, and strategic acquisitions to increase recurring revenues, expand margins, and drive cash flow generation[211](index=211&type=chunk) - The company is closely monitoring the impact of the COVID-19 pandemic, which has led to substantial modifications in employee travel, work locations, and customer interactions. Cost reduction measures implemented in 2020 were largely restored by the second quarter of fiscal 2021[214](index=214&type=chunk)[215](index=215&type=chunk)[218](index=218&type=chunk) [Results of Operations](index=47&type=section&id=Results%20of%20Operations) For Q3 FY2021, total revenues grew 2.2% to $832.9 million, driven by increases in Cloud services and Customer support, while GAAP gross margin improved to 68.6% and income from operations increased by 60% due to lower expenses Revenue by Product Type (Q3 FY2021 vs Q3 FY2020) | Revenue Stream (in thousands) | Q3 2021 | Q3 2020 | % Change | | :--- | :--- | :--- | :--- | | Cloud services and subscriptions | $355,845 | $339,463 | +4.8% | | Customer support | $335,915 | $322,865 | +4.0% | | License | $76,299 | $81,055 | -5.9% | | Professional service and other | $64,872 | $71,296 | -9.0% | | **Total revenues** | **$832,931** | **$814,679** | **+2.2%** | - Cloud services revenue growth was supported by closing **16 deals greater than $1.0 million** in Q3 2021, compared to **5 such deals** in Q3 2020[230](index=230&type=chunk) - Sales and marketing expenses for Q3 2021 decreased by **$7.5 million** year-over-year, primarily due to a **$5.4 million** reduction in travel and communication expenses and a **$4.8 million** decrease in facility costs, reflecting COVID-19 related savings[265](index=265&type=chunk) [Use of Non-GAAP Financial Measures](index=61&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company provides non-GAAP financial measures to supplement its GAAP results, excluding non-operational charges like amortization, share-based compensation, and special charges, with Non-GAAP net income for Q3 FY2021 at $204.5 million - Non-GAAP measures are used by management for internal analysis and are intended to help investors understand underlying operational trends by excluding items like amortization from acquisitions, special charges, and share-based compensation[292](index=292&type=chunk)[293](index=293&type=chunk) Reconciliation of GAAP to Non-GAAP Net Income (Q3 FY2021, in thousands) | Description | Amount | | :--- | :--- | | **GAAP-based net income** | **$91,490** | | Amortization | $107,609 | | Share-based compensation | $12,357 | | Special charges (recoveries) | $2,846 | | Other (income) expense, net | ($8,283) | | Tax adjustments | ($21,333) | | **Non-GAAP-based net income** | **$204,534** | [Liquidity and Capital Resources](index=70&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of March 31, 2021, the company held $1.48 billion in cash, with operating cash flow impacted by a $290 million IRS settlement payment, and maintained a consolidated net leverage ratio of 1.6:1 after significant debt and dividend payments - Cash from operating activities for the nine months ended March 31, 2021 was impacted by a **$290.0 million** payment related to the IRS Settlement[208](index=208&type=chunk)[329](index=329&type=chunk)[188](index=188&type=chunk) - During the second quarter of Fiscal 2021, the company repaid the entire **$600 million** previously drawn on its Revolver facility using cash on hand. As of March 31, 2021, there was no outstanding balance on the Revolver[367](index=367&type=chunk)[71](index=71&type=chunk) - The company declared and paid dividends totaling **$0.5762 per share** (**$156.3 million** in aggregate) during the nine months ended March 31, 2021[338](index=338&type=chunk)[85](index=85&type=chunk) - The company's consolidated net leverage ratio was **1.6:1** as of March 31, 2021, comfortably below the **4:1** covenant requirement for its Term Loan B and Revolver[364](index=364&type=chunk)[68](index=68&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=80&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk on its floating-rate Term Loan B and foreign currency risk from transactions and asset translation, holding $590.2 million in foreign currency cash as of March 31, 2021 - The company's primary market risks are from fluctuations in interest rates on its **$970.0 million** Term Loan B and foreign currency exchange rates[399](index=399&type=chunk)[401](index=401&type=chunk) - A hypothetical **1%** adverse change in the interest rate on the Term Loan B would increase annual interest payments by approximately **$9.7 million**[401](index=401&type=chunk) - The company holds significant cash in foreign currencies, with the U.S. dollar equivalent of **€323.7 million**, **£83.9 million**, and **C$22.8 million** as of March 31, 2021[408](index=408&type=chunk) [Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2021, the company's disclosure controls and procedures were effective[409](index=409&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[410](index=410&type=chunk) [Part II Other Information](index=82&type=section&id=Part%20II%20Other%20Information) Presents additional information not covered in Part I, including risk factors, equity sales, and exhibits [Risk Factors](index=82&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2020, indicating no material changes or new significant risks to report for the quarter - The company refers investors to the risk factors discussed in its Annual Report on Form 10-K for the fiscal year ended June 30, 2020[413](index=413&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=82&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the third quarter of fiscal 2021, the company repurchased 489,934 Common Shares in the open market at an average price of $46.90 per share, held in trust for potential reissuance under employee incentive plans Equity Securities Purchases (Q3 FY2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2021 | — | — | | Feb 2021 | — | — | | Mar 2021 | 489,934 | $46.90 | | **Total** | **489,934** | **$46.90** | - The repurchased shares are held in trust for potential reissuance under the company's Long-Term Incentive Plan (LTIP) or other plans[415](index=415&type=chunk) [Exhibits](index=84&type=section&id=Item%206.%20Exhibits) This section lists the documents filed as exhibits with the Form 10-Q, including amended stock option and employee stock purchase plans, an amendment to the CEO's employment agreement, and certifications by the CEO and CFO - Exhibits filed with the report include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as well as various company plans and agreements[417](index=417&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ______________________ FORM 10-Q ______________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2020. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 0-27544 ______________________________________ OPEN TEXT CORPORATION (Exact name of Registrant ...