UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________________
FORM 10-Q
______________________
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015.2016.
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 as specified in its charter)  
______________________
   
CANADA 98-0154400
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification No.)

275 Frank Tompa Drive, Waterloo, Ontario, Canada N2L 0A1
(Address of principal executive offices)
(519) 888-7111
(Registrant’s telephone number, including area code)
______________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ý    Accelerated filer  ¨    Non-accelerated filer  ¨ (Do not check if smaller reporting company) Smaller reporting company  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
At April 27, 2015,25, 2016, there were 122,213,136121,289,277 outstanding Common Shares of the registrant.

    1


OPEN TEXT CORPORATION
TABLE OF CONTENTS
 Page No
PART I Financial Information: 
Item 1. Financial Statements 
Condensed Consolidated Balance Sheets as of March 31, 20152016 (unaudited) and June 30, 20142015
3
Condensed Consolidated Statements of Income - Three and Nine Months Ended March 31, 20152016 and 20142015 (unaudited)
4
Condensed Consolidated Statements of Comprehensive Income - Three and Nine Months Ended March 31, 20152016 and 20142015 (unaudited)
5
Condensed Consolidated Statements of Cash Flows - Nine Months Ended March 31, 20152016 and 20142015 (unaudited)
6
Unaudited Notes to Condensed Consolidated Financial Statements
(unaudited)
7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
3031
Item 3. Quantitative and Qualitative Disclosures about Market Risk
5960
Item 4. Controls and Procedures
6061
PART II Other Information: 
Item 1A. Risk Factors
61
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
6162
Item 6. Exhibits
62
Signatures
63





    2

OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
March 31, 2015 June 30, 2014March 31, 2016 June 30, 2015
(unaudited)  (unaudited)  
ASSETS      
Cash and cash equivalents$613,177
 $427,890
$877,405
 $699,999
Short-term investments19,029
 —
13,008
 11,166
Accounts receivable trade, net of allowance for doubtful accounts of $6,818 as of March 31, 2015 and $4,727 as of June 30, 2014 (note 3)251,826
 292,929
Accounts receivable trade, net of allowance for doubtful accounts of $7,932 as of March 31, 2016 and $5,987 as of June 30, 2015 (note 3)266,450
 284,131
Income taxes recoverable (note 14)20,543
 24,648
15,577
 21,151
Prepaid expenses and other current assets53,563
 42,053
56,030
 53,191
Deferred tax assets (note 14)35,936
 28,215
27,952
 30,711
Total current assets994,074
 815,735
1,256,422
 1,100,349
Property and equipment (note 4)155,129
 142,261
172,020
 160,419
Goodwill (note 5)2,155,243
 1,963,557
2,169,637
 2,161,592
Acquired intangible assets (note 6)730,673
 725,318
558,571
 679,479
Deferred tax assets (note 14)149,570
 156,712
156,148
 155,411
Other assets (note 7)84,223
 52,041
75,286
 85,576
Deferred charges (note 8)41,043
 52,376
26,575
 37,265
Long-term income taxes recoverable (note 14)8,587
 10,638
8,706
 8,404
Total assets$4,318,542
 $3,918,638
$4,423,365
 $4,388,495
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable and accrued liabilities (note 9)$212,397
 $231,954
$212,886
 $241,370
Current portion of long-term debt (note 10)15,802
 62,582
8,000
 8,000
Deferred revenues364,728
 332,664
368,020
 358,066
Income taxes payable (note 14)4,529
 31,630
20,906
 17,001
Deferred tax liabilities (note 14)2,220
 1,053
734
 997
Total current liabilities599,676
 659,883
610,546
 625,434
Long-term liabilities:      
Accrued liabilities (note 9)30,802
 41,999
31,357
 34,682
Deferred credits (note 8)14,089
 17,529
9,503
 12,943
Pension liability (note 11)64,000
 60,300
58,292
 56,737
Long-term debt (note 10)1,582,000
 1,256,750
1,574,000
 1,580,000
Deferred revenues20,042
 17,248
33,868
 28,223
Long-term income taxes payable (note 14)163,232
 162,131
142,616
 151,484
Deferred tax liabilities (note 14)65,659
 60,631
52,701
 69,185
Total long-term liabilities1,939,824
 1,616,588
1,902,337
 1,933,254
Shareholders’ equity:      
Share capital (note 12)      
122,207,636 and 121,758,432 Common Shares issued and outstanding at March 31, 2015 and June 30, 2014, respectively; Authorized Common Shares: unlimited806,532
 792,834
121,220,097 and 122,293,986 Common Shares issued and outstanding at March 31, 2016 and June 30, 2015, respectively; Authorized Common Shares: unlimited809,708
 808,010
Additional paid-in capital120,246
 112,398
140,406
 126,417
Accumulated other comprehensive income43,720
 39,449
51,248
 51,828
Retained earnings818,666
 716,317
933,791
 863,015
Treasury stock, at cost (407,725 shares at March 31, 2015 and 763,278 at June 30, 2014, respectively)(10,680) (19,132)
Treasury stock, at cost (633,647 shares at March 31, 2016 and 625,725 at June 30, 2015, respectively)(25,268) (19,986)
Total OpenText shareholders' equity1,778,484
 1,641,866
1,909,885
 1,829,284
Non-controlling interests558
 301
597
 523
Total shareholders’ equity1,779,042
 1,642,167
1,910,482
 1,829,807
Total liabilities and shareholders’ equity$4,318,542
 $3,918,638
$4,423,365
 $4,388,495
Guarantees and contingencies (note 13)
Related party transactions (note 21)
Subsequent eventsevent (note 22)
See accompanying Notes to Condensed Consolidated Financial Statements

    3


OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
(unaudited)

 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
 2015 2014 2015 2014 2016 2015 2016 2015
Revenues:                
License $63,958
 $73,083
 198,397
 $209,553
 $64,397
 $63,561
 $197,584
 $197,137
Cloud services
143,822
 128,400
 445,097
 212,178
Cloud services and subscriptions
147,505
 147,513
 444,394
 456,342
Customer support 184,335
 180,290
 547,707
 523,155
 183,636
 184,204
 553,440
 547,576
Professional service and other 55,462
 60,981
 178,008
 185,835
 45,005
 52,299
 145,007
 168,154
Total revenues 447,577
 442,754
 1,369,209
 1,130,721
 440,543
 447,577
 1,340,425
 1,369,209
Cost of revenues:                
License 3,014
 3,527
 9,514
 9,867
 2,480
 2,980
 7,190
 9,388
Cloud services 59,989
 49,464
 174,959
 79,692
Cloud services and subscriptions 61,298
 60,776
 179,132
 178,886
Customer support 24,092
 25,206
 71,252
 71,785
 22,427
 24,084
 64,624
 70,878
Professional service and other 44,330
 49,218
 136,332
 145,898
 37,599
 42,396
 114,038
 129,999
Amortization of acquired technology-based intangible assets (note 6) 22,136
 17,147
 58,548
 51,712
 17,630
 22,136
 56,244
 58,548
Total cost of revenues 153,561
 144,562
 450,605
 358,954
 141,434
 152,372
 421,228
 447,699
Gross profit 294,016
 298,192
 918,604
 771,767
 299,109
 295,205
 919,197
 921,510
Operating expenses:                
Research and development 53,222
 47,199
 144,134
 129,332
 48,160
 53,222
 140,310
 144,134
Sales and marketing 95,787
 93,700
 265,896
 244,403
 84,600
 97,146
 248,420
 269,167
General and administrative 45,722
 39,336
 121,327
 101,037
 37,731
 45,552
 107,067
 120,962
Depreciation 12,809
 10,527
 37,516
 23,883
 13,754
 12,809
 39,998
 37,516
Amortization of acquired customer-based intangible assets (note 6) 28,250
 24,679
 79,498
 54,388
 27,966
 28,250
 83,564
 79,498
Special charges (note 17) 5,622
 15,902
 4,032
 25,901
Special charges (recoveries) (note 17) (1,671) 5,622
 24,754
 4,032
Total operating expenses 241,412
 231,343
 652,403
 578,944
 210,540
 242,601
 644,113
 655,309
Income from operations 52,604
 66,849
 266,201
 192,823
 88,569
 52,604
 275,084
 266,201
Other income (expense), net (9,550) 1,652
 (28,737) 2,838
 2,120
 (9,550) (1,832) (28,737)
Interest and other related expense, net (16,872) (9,734) (36,426) (17,159) (16,228) (16,872) (54,461) (36,426)
Income before income taxes 26,182
 58,767
 201,038
 178,502
 74,461
 26,182
 218,791
 201,038
Provision for (recovery of) income taxes (note 14) (309) 12,971
 35,401
 48,576
 5,353
 (309) 20,629
 35,401
Net income for the period $26,491
 $45,796
 $165,637
 $129,926
 $69,108
 $26,491
 $198,162
 $165,637
Net (income) loss attributable to non-controlling interests 119
 88
 (114) 88
 7
 119
 (75) (114)
Net income attributable to OpenText $26,610
 $45,884
 $165,523
 $130,014
 $69,115
 $26,610
 $198,087
 $165,523
Earnings per share—basic attributable to OpenText (note 20) $0.22
 $0.38
 $1.36
 $1.09
 $0.57
 $0.22
 $1.63
 $1.36
Earnings per share—diluted attributable to OpenText (note 20) $0.22
 $0.38
 $1.35
 $1.08
 $0.57
 $0.22
 $1.62
 $1.35
Weighted average number of Common Shares outstanding—basic 122,158
 120,873
 122,042
 119,048
 121,159
 122,158
 121,514
 122,042
Weighted average number of Common Shares outstanding—diluted 123,054
 122,100
 122,980
 120,031
 121,706
 123,054
 122,044
 122,980
Dividends declared per Common Share $0.1725
 $0.1500
 $0.5175
 $0.4500
 $0.2000
 $0.1725
 $0.6000
 $0.5175
See accompanying Notes to Condensed Consolidated Financial Statements

    4


OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)
(unaudited)


 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
 2015 2014 2015 2014 2016 2015 2016 2015
Net income for the period $26,491
 $45,796
 $165,637
 $129,926
 $69,108
 $26,491
 $198,162
 $165,637
Other comprehensive income—net of tax:                
Net foreign currency translation adjustments 9,280
 (1,087) 17,626
 (733) 988
 9,280
 (40) 17,626
Unrealized gain (loss) on cash flow hedges:                
Unrealized gain (loss) (2,801) (1,604) (7,017) (1,517) 2,115
 (2,801) (2,704) (7,017)
Loss reclassified into net income 2,488
 1,237
 3,485
 2,410
 1,086
 2,488
 2,412
 3,485
Actuarial gain (loss) relating to defined benefit pension plans:                
Actuarial gain (loss) (3,052) (1,808) (10,107) (781)
Actuarial loss (1,848) (3,052) (87) (10,107)
Amortization of actuarial loss into net income 75
 74
 280
 220
 88
 75
 261
 280
Unrealized gain on short-term investments 4
 —
 4
 —
Unrealized net gain (loss) on short-term investments (557) 4
 (422) 4
Unrealized gain on marketable securities (Actuate) —
 —
 1,906
 —
 —
 —
 —
 1,906
Release of unrealized gain on marketable securities (Actuate) (1,906) —
 (1,906) —
 —
 (1,906) —
 (1,906)
Total other comprehensive income (loss), net, for the period 4,088
 (3,188) 4,271
 (401) 1,872
 4,088
 (580) 4,271
Total comprehensive income 30,579
 42,608
 169,908
 129,525
 70,980
 30,579
 197,582
 169,908
Comprehensive income attributable to non-controlling interests 119
 88
 (114) 88
Comprehensive (income) loss attributable to non-controlling interests 7
 119
 (75) (114)
Total comprehensive income attributable to OpenText $30,698
 $42,696
 $169,794
 $129,613
 $70,987
 $30,698
 $197,507
 $169,794

See accompanying Notes to Condensed Consolidated Financial Statements

    5


OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(unaudited)
Nine Months Ended March 31,Nine Months Ended March 31,
2015 20142016 2015
Cash flows from operating activities:      
Net income for the period$165,637
 $129,926
$198,162
 $165,637
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization of intangible assets175,562
 129,983
179,806
 175,562
Share-based compensation expense15,940
 15,707
19,080
 15,940
Excess tax benefits on share-based compensation expense(1,611) (1,675)(257) (1,611)
Pension expense3,602
 1,964
3,459
 3,602
Amortization of debt issuance costs3,410
 2,060
3,470
 3,410
Amortization of deferred charges and credits7,893
 8,640
7,250
 7,893
Loss on sale and write down of property and equipment118
 15
1,108
 118
Deferred taxes(4,037) (4,203)
Release of unrealized gain on marketable securities to income(3,098) —
—
 (3,098)
Write off of unamortized debt issuance costs2,919
 —
—
 2,919
Deferred taxes(15,692) (4,037)
Changes in operating assets and liabilities:      
Accounts receivable76,560
 19,129
22,152
 76,560
Prepaid expenses and other current assets(4,001) (18,625)(2,589) (4,001)
Income taxes1,354
 5,578
3,290
 1,354
Deferred charges and credits—
 9,870
Accounts payable and accrued liabilities(53,747) (32,878)(27,434) (53,747)
Deferred revenue6,705
 20,022
12,564
 6,705
Other assets(1,992) (3,300)2,233
 (1,992)
Net cash provided by operating activities391,214
 282,213
406,602
 391,214
Cash flows from investing activities:      
Additions of property and equipment(60,586) (28,443)(48,897) (60,586)
Proceeds from maturity of short-term investments7,092
 —
9,239
 7,092
Purchase of patents—
 (192)
Purchase of Daegis Inc., net of cash acquired(22,146) —
Purchase of Actuate Corporation, net of cash acquired(291,768) —
(8,153) (291,768)
Purchase of Informative Graphics Corporation, net of cash acquired(35,180) —
(3,464) (35,180)
Purchase of GXS Group, Inc., net of cash acquired—
 (1,077,671)
Purchase of Cordys Holding B.V., net of cash acquired—
 (30,588)
Purchase of ICCM Professional Services Limited, net of cash acquired(2,027) —
Purchase of a division of Spicer Corporation(222) —
—
 (222)
Purchase consideration for prior period acquisitions(590) (665)—
 (590)
Other investing activities(8,915) (2,547)(6,124) (8,915)
Net cash used in investing activities(390,169) (1,140,106)(81,572) (390,169)
Cash flows from financing activities:      
Excess tax benefits on share-based compensation expense1,611
 1,675
257
 1,611
Proceeds from issuance of Common Shares12,827
 19,718
11,828
 12,827
Equity issuance costs—
 (144)
Purchase of Treasury Stock(1,251) (1,275)(10,627) (1,251)
Proceeds from long-term debt800,000
 800,000
Common Shares repurchased(65,509) —
Proceeds from long-term debt and revolver—
 800,000
Repayment of long-term debt(520,485) (32,499)(6,000) (520,485)
Debt issuance costs(18,076) (16,032)—
 (18,076)
Payments of dividends to shareholders(63,174) (53,692)(71,627) (63,174)
Net cash used in financing activities211,452
 717,751
Foreign exchange gain (loss) on cash held in foreign currencies(27,210) 5,768
Increase (decrease) in cash and cash equivalents during the period185,287
 (134,374)
Net cash provided by (used in) financing activities(141,678) 211,452
Foreign exchange loss on cash held in foreign currencies(5,946) (27,210)
Increase in cash and cash equivalents during the period177,406
 185,287
Cash and cash equivalents at beginning of the period427,890
 470,445
699,999
 427,890
Cash and cash equivalents at end of the period$613,177
 $336,071
$877,405
 $613,177
Supplementary cash flow disclosures (note 19)
See accompanying Notes to Condensed Consolidated Financial Statements

    6


OPEN TEXT CORPORATION
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended March 31, 20152016
(Tabular amounts in thousands, except share and per share data)
NOTE 1—BASIS OF PRESENTATION
The accompanying Condensed Consolidated Financial Statements include the accounts of Open Text Corporation and our wholly-owned and majority-owned subsidiaries, collectively referred to as "OpenText" or the "Company". Our majority ownedWe wholly own all of our subsidiaries includewith 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, 2015,2016, were 90%, 85% and 81% owned, respectively, by OpenText.
Throughout this Quarterly Report on Form 10-Q: (i) the term “Fiscal 2016” means our fiscal year beginning on July 1, 2015 and ending June 30, 2016; (ii) the term “Fiscal 2015” means our fiscal year beginning on July 1, 2014 and endingended June 30, 2015; (ii)(iii) the term “Fiscal 2014” means our fiscal year beginning on July 1, 2013 and endingended June 30, 2014; (iii)and (iv) the term “Fiscal 2013” means our fiscal year beginning on July 1, 2012 and endingended June 30, 2013; and (iv) the term “Fiscal 2012” means our fiscal year beginning on July 1, 2011 and ending June 30, 2012.2013.
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 Informative Graphics Corporation (IGC), with effect from January 2, 2015, and Actuate Corporation (Actuate), with effect from January 16, 2015 (see note 18).presented.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements. These estimates, judgments and assumptions are evaluated on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. In particular, significant estimates, judgments and assumptions include those related to: (i) revenue recognition, (ii) allowance for doubtful accounts, (iii) testing of goodwill for impairment, (iv) the valuation of acquired intangible assets, (v) the valuation of long-lived assets, (vi) the recognition of contingencies, (vii) restructuring accruals, (viii) acquisition accruals and pre-acquisition contingencies, (ix) asset retirement obligations, (x) the realization of investment tax credits, (xi) the valuation of stock options granted and obligations related to share-based payments, including the valuation of our long-term incentive plan, (xii) the valuation of financial instruments, (xiii) the valuation of pension assets and obligations, and (xiv) accounting for income taxes.
Reclassifications
Certain prior yearperiod balances have been reclassified to conform to the current year's presentation. Suchperiod presentation including the reclassification related to a change in the method of allocating operating expenses within the Company. As a result of such reclassifications, the following expenses have been reclassified for the three and nine months ended March 31, 2015 as follows:
 Three Months Ended March 31, Nine Months Ended March 31,
 2015 2015
Reclassifications within cost of revenue   
Decrease to cost of revenue - Cloud services and subscriptions$(1,174) $(1,878)
Decrease to cost of revenue - Customer support(8) (374)
Decrease to cost of revenue - Professional services and other(7) (654)
Reclassifications within operating expenses   
Decrease to operating expense - General and administrative$(170) $(365)
Increase to operating expense - Sales and marketing1,359
 3,271
Starting in the fourth quarter of Fiscal 2015, we combined revenues from Cloud services and revenues from subscriptions into one line item named "Cloud services and subscriptions" revenue. In addition, we reclassified certain license revenue, Customer support revenue and Professional services revenue to “Cloud services and subscriptions” revenue to better align the nature of revenues that are now depicted under  “Cloud services and subscriptions” revenue. As a result, revenue and cost of revenues previously reflected in "License", "Customer support" and "Professional services and other" were not considered materialreclassified to

“Cloud services and did not affect our consolidated totalsubscriptions”. These revenues consolidatedand expenses have been reclassified in the Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2015 to conform with the current period presentation as follows:
 Three Months Ended March 31, Nine Months Ended March 31,
 2015 2015
Reclassifications within revenue   
Decrease to License$(397) $(1,260)
Decrease to Customer support(131) (131)
Decrease to Professional services and other(3,163) (9,854)
Increase to Cloud services and subscriptions3,691
 11,245
Reclassifications within cost of revenue   
Decrease to cost of revenue - License$(34) $(126)
Decrease to cost of revenue - Professional services and other(1,927) (5,679)
Increase to cost of revenue - Cloud services and subscriptions1,961
 5,805
There was no change to income from operations, net income or consolidated net income.income per share in any of the periods presented as a result of these reclassifications.
NOTE 2—ACCOUNTING POLICIES UPDATE AND RECENT ACCOUNTING PRONOUNCEMENTSPRONOUNCEMENT
Accounting Policy Updates
Short-Term InvestmentsShare-based Compensation
In accordance withMarch 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, "Compensation-Stock Compensation (Topic 718)." This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for us during the first quarter of our fiscal year ending June 30, 2018, with early adoption permitted. We are currently assessing how the adoption of this standard will impact our Condensed Consolidated Financial Statements.
Leases
In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)” (ASU 2016-02), which supersedes the guidance in former ASC Topic 840 “Leases”. The most significant change will result in the recognition of lease assets for the right to use the underlying asset and lease liabilities for the obligation to make lease payments by lessees, for those leases classified as operating leases under current guidance. The new guidance will also require significant additional disclosures about the amount, timing and uncertainty of cash flows from 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 believe adoption of this standard will have a significant impact on our Condensed Consolidated Balance Sheets. Although we have not completed our assessment, we do not expect the adoption to change the recognition, measurement or presentation of lease expenses within the Condensed Consolidated Statements of Operations and Cash Flows.
Financial Instruments
In January 2016, the FASB issued ASU 2016-01 “Financial Instruments - Overall (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01). This update requires that all equity investments be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). This update also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. Additionally, this update eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. ASU 2016-01 is effective for our fiscal year ending June 30, 2019. We are currently evaluating the impact of the pending adoption of ASU 2016-01 on our Condensed Consolidated Financial Statements.

Income Taxes - Balance Sheet Classification of Deferred Taxes
In November 2015, the FASB issued ASU 2015-17 “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” (ASU 2015-17). This update eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, under ASU 2015-17, entities will be required to classify all deferred tax assets and liabilities as noncurrent. ASU 2015-17 is effective for our fiscal year ending June 30, 2018. We are still evaluating whether to early adopt this guidance. We expect adoption will cause significant balance sheet reclassifications.
Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments
In September 2015, the FASB issued ASU 2015-16 “Simplifying the Accounting for Measurement-Period Adjustments” (ASU 2015-16). This update amended Accounting Standards Codification (ASC) Topic 320 "Investments - Debt and Equity Securities" (Topic 320) related805 “Business Combinations” to simplify the presentation of adjustments to the initial purchase price allocation identified during the measurement period of a business combination. ASU 2015-16 requires that the acquirer record, in the reporting period in which the adjustment amounts are determined, the effect on earnings of changes in depreciation, amortization or their income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. An entity must present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 eliminates the requirement to retrospectively account for certain investmentsadjustments made to provisional amounts recognized in debt and equity securities, and baseda business combination. During the third quarter of Fiscal 2016 we early adopted ASU 2015-16. The early adoption of ASU 2015-16 did not have an impact on our intentions regarding these instruments, we classify our marketable securities as availableCondensed Consolidated Financial Statements for sale and account for these investments at fair value. Marketable securities consist primarily of high quality debt securities with original maturities over 90 days, and may include corporate notes, United States government agency notes and municipal notes.
Recent Accounting Pronouncementsthis period.
Presentation of Debt Issuance Costs

    7

In April 2015, the FASB issued Accounting Standards Update (ASU)ASU No. 2015-03 "Simplifying the Presentation of Debt Issuance Costs" (ASU 2015-03). This update amended the ASC Subtopic 835-30, "Interest - Imputation of Interest" to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. ASU 2015-03 is effective for our fiscal year ending June 30, 2017, with early adoption permitted. We believe the pendingThe adoption of ASU 2015-03 willis not expected to have a material impact on our consolidated financial statements.
Disclosure of Going Concern Uncertainties:
In August 2014, the FASB issued ASU No. 2014-15 "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern" (ASU 2014-15). ASU 2014-15 provides guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. ASU 2014-15 is effective for our fiscal year ending June 30, 2017, with early adoption permitted. We do not believe the pending adoption of ASU 2014-15 will have a material impact on our consolidated financial statements.Condensed Consolidated Financial Statements.
Revenue Recognition
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers: Topic 606” (ASU 2014-09). This update supersedes the revenue recognition requirements in ASC Topic 605, "Revenue Recognition" and nearly all other existing revenue recognition guidance under U.S. GAAP. The core principal of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 identifies five steps to be followed to achieve this core principal, which includesinclude (i) identifying contract(s) with customers, (ii) identifying performance obligations in the contract,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. On April 1,In August 2015, the FASB voted to defer the effective date of ASU 2014-09 for one year. ASU 2014-09 isThe new guidance will now be effective for us in the first quarter of our fiscal year ending June 30, 2019. Early adoption, prior to the original effective date, is not permitted. When applying ASU 2014-09 we can either apply the amendments: (i) retrospectively to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09 or (ii) retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined within ASU 2014-09. In March 2016, the FASB issued ASU 2016-08 “Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net)” (ASU 2016-08), which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard. ASU 2016-08 clarifies how an entity should identify the unit of accounting (i.e. the specified good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. In April 2016, the FASB has issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments however did not change the core principle of the guidance in Topic 606. We are currently evaluating the impact ofeffect that the pending adoption of ASU 2014-09the above mentioned ASUs will have on our consolidatedCondensed Consolidated Financial Statements and related disclosures. Although it is expected to have a significant impact on our revenue recognition policies and disclosures, we have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial statements.reporting.

NOTE 3—ALLOWANCE FOR DOUBTFUL ACCOUNTS
Balance as of June 30, 2014$4,727
Balance as of June 30, 2015$5,987
Bad debt expense4,685
4,498
Write-off /adjustments(2,594)(2,553)
Balance as of March 31, 2015$6,818
Balance as of March 31, 2016$7,932
Included in accounts receivable are unbilled receivables in the amount of $25.0$28.4 million as of March 31, 20152016 (June 30, 2014—2015—$41.726.7 million).

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NOTE 4—PROPERTY AND EQUIPMENT
As of March 31, 2015As of March 31, 2016
Cost 
Accumulated
Depreciation
 NetCost 
Accumulated
Depreciation
 Net
Furniture and fixtures$17,468
 $(10,655) $6,813
$18,894
 $(12,205) $6,689
Office equipment1,540
 (826) 714
819
 (215) 604
Computer hardware106,558
 (67,192) 39,366
124,322
 (86,049) 38,273
Computer software31,996
 (15,664) 16,332
44,029
 (23,146) 20,883
Capitalized software development costs34,797
 (5,478) 29,319
50,253
 (14,099) 36,154
Leasehold improvements50,084
 (28,110) 21,974
63,174
 (33,709) 29,465
Land and buildings47,481
 (6,870) 40,611
48,173
 (8,221) 39,952
Total$289,924
 $(134,795) $155,129
$349,664
 $(177,644) $172,020
 

As of June 30, 2014As of June 30, 2015
Cost 
Accumulated
Depreciation
 NetCost 
Accumulated
Depreciation
 Net
Furniture and fixtures$16,089
 $(8,856) $7,233
$17,571
 $(11,334) $6,237
Office equipment1,573
 (869) 704
1,532
 (879) 653
Computer hardware90,469
 (55,433) 35,036
110,076
 (72,479) 37,597
Computer software28,556
 (10,656) 17,900
37,981
 (17,525) 20,456
Capitalized software development costs19,965
 (1,542) 18,423
38,576
 (7,353) 31,223
Leasehold improvements45,934
 (24,251) 21,683
53,391
 (29,458) 23,933
Land and buildings47,149
 (5,867) 41,282
47,525
 (7,205) 40,320
Total$249,735
 $(107,474) $142,261
$306,652
 $(146,233) $160,419
NOTE 5—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, 2014:2015:
Balance as of June 30, 2014$1,963,557
Acquisition of GXS Group, Inc. (note 18)(23,475)
Acquisition of Informative Graphics Corporation (note 18)24,295
Acquisition of Actuate Corporation (note 18)190,644
Adjustments relating to prior acquisitions222
Balance as of March 31, 2015$2,155,243
Balance as of June 30, 2015$2,161,592
Acquisition of Daegis Inc. (note 18)8,045
Balance as of March 31, 2016$2,169,637


NOTE 6—ACQUIRED INTANGIBLE ASSETS

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As of March 31, 2015As of March 31, 2016
Cost Accumulated Amortization NetCost Accumulated Amortization Net
Technology Assets$768,714
 $(528,398) $240,316
$306,973
 $(137,855) $169,118
Customer Assets929,060
 (438,703) 490,357
707,806
 (318,353) 389,453
Total$1,697,774
 $(967,101) $730,673
$1,014,779
 $(456,208) $558,571
          
As of June 30, 2014As of June 30, 2015
Cost Accumulated Amortization NetCost Accumulated Amortization Net
Technology Assets$699,206
 $(473,043) $226,163
$428,724
 $(210,862) $217,862
Customer Assets874,257
 (375,102) 499,155
716,525
 (254,908) 461,617
Total$1,573,463
 $(848,145) $725,318
$1,145,249
 $(465,770) $679,479
The above balances as of March 31, 2016 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, 2016. The impact of this resulted in a reduction of $129.3 million related to Technology Assets and $20.1 million related to Customer Assets.
The weighted average amortization periods for acquired technology and customer intangible assets are approximately five years and six years, respectively.
The following table shows the estimated future amortization expense for the fiscal years indicated below. This calculation assumes no future adjustments to acquired intangible assets:
Fiscal years ending
June 30,
Fiscal years ending
June 30,
2015 (three months ended June 30)$51,197
2016181,453
2016 (three months ending June 30)$43,670
2017164,266
167,614
2018151,573
154,917
2019 and beyond182,184
2019127,513
202058,210
2021 and beyond6,647
Total$730,673
$558,571
 
NOTE 7—OTHER ASSETS
As of March 31, 2015 As of June 30, 2014As of March 31, 2016 As of June 30, 2015
Debt issuance costs$31,580
 $19,834
$27,160
 $30,630
Deposits and restricted cash12,335
 14,251
12,158
 12,137
Deferred implementation costs9,911
 5,409
15,726
 13,736
Cost basis investments9,724
 7,276
14,833
 11,386
Marketable securities11,182
 —
—
 9,108
Long-term prepaid expenses and other long-term assets9,491
 5,271
5,409
 8,579
Total$84,223
 $52,041
$75,286
 $85,576
Debt issuance costs relate primarily to costs incurred for the purpose of obtaining our credit facilities and the Senior Notes (as defined in note 10 below), and are being amortized over the respective terms of the debt agreements. During the three and nine months ended March 31, 2015 we wrote off $2.9 million, respectively, of unamortized debt issuance costs associated with the repayment of Term Loan AB, the Revolver, and Senior Notes (see note 10).
Deposits and restricted cash relate to security deposits provided to landlords in accordance with facility lease agreements and cash restricted per the terms of 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.

Cost basis investments relate to investments for which the Company holds less than a 20% interest, is a limited partner and does not exert significant influence over operational or investment decisions.
Marketable securities are classified as available for sale securities and are recorded on our Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a separate component of Accumulated Other Comprehensive Income. As of March 31, 2016, all of our marketable securities are recorded as short-term investments.
Cost basis investments relate to investments for which the Company holds less than a 20% interest, is a limited partner and does not exert significant influence over operational or investment decisions.

    10

Long-term prepaid expenses and other long-term assets primarily relate to advance payments on long-term licenses that are being amortized over the applicable terms of the licenses.
NOTE 8—DEFERRED CHARGES AND CREDITS
Deferred charges and credits relate to cash taxes payable and the elimination of deferred tax balances relating to legal entity consolidations completed as part of internal reorganizations of our international subsidiaries. Deferred charges and credits are amortized to income tax expense over a period of 6 to 15 years.
NOTE 9—ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Current liabilities
Accounts payable and accrued liabilities are comprised of the following:
 
As of March 31, 2015 As of June 30, 2014As of March 31, 2016 As of June 30, 2015
Accounts payable—trade$18,003
 $16,025
Accounts payable—trade*$43,643
 $15,558
Accrued salaries and commissions68,550
 80,991
66,393
 83,888
Accrued liabilities106,651
 121,558
82,104
 107,870
Accrued interest on the Senior Notes9,375
 —
Amounts payable in respect of restructuring and other Special charges (note 17)8,438
 11,694
Accrued interest on Senior Notes9,375
 20,625
Amounts payable in respect of restructuring and other Special charges9,025
 12,065
Asset retirement obligations1,380
 1,686
2,346
 1,364
Total$212,397
 $231,954
$212,886
 $241,370
*Accounts payable - trade has increased primarily as a result of an active working capital management program.
Long-term accrued liabilities 
As of March 31, 2015 As of June 30, 2014As of March 31, 2016 As of June 30, 2015
Amounts payable in respect of restructuring and other Special charges (note 17)$1,115
 $4,531
Amounts payable in respect of restructuring and other Special charges$4,310
 $2,034
Other accrued liabilities*22,397
 29,331
20,228
 24,826
Asset retirement obligations7,290
 8,137
6,819
 7,822
Total$30,802
 $41,999
$31,357
 $34,682
* 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. We have accounted for such obligations in accordance with ASC Topic 410 “Asset Retirement and Environmental Obligations” (Topic 410). As of March 31, 2015,2016, the present value of this obligation was $8.7$9.2 million (June 30, 2014—2015—$9.89.2 million), with an undiscounted value of $9.2$9.8 million (June 30, 2014—2015—$10.49.8 million).

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NOTE 10—LONG-TERM DEBT
Long-term debt
Long-term debt is comprised of the following:
As of March 31, 2015 As of June 30, 2014As of March 31, 2016 As of June 30, 2015
Total debt      
Senior Notes$800,000
 $—
$800,000
 $800,000
Term Loan A—
 513,750
Term Loan B790,000
 796,000
782,000
 788,000
Mortgage7,802
 9,582
1,597,802
 1,319,332
1,582,000
 1,588,000
Less:      
Current portion of long-term debt      
Term Loan A—
 45,000
Term Loan B8,000
 8,000
8,000
 8,000
Mortgage7,802
 9,582
15,802
 62,582


 

Non-current portion of long-term debt$1,582,000
 $1,256,750
$1,574,000
 $1,580,000
Senior Unsecured Fixed Rate Notes
On January 15, 2015, we issued $800.0$800 million in aggregate principal amount of our 5.625% Senior Notes due 2023 (the Senior(Senior Notes) in a private placementan unregistered offering to initial purchasers in connection with offeringsqualified institutional buyers pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. Theamended (Securities Act), and to certain persons in offshore transactions pursuant to Regulation S under the Securities Act. Senior Notes bear interest at a rate of 5.625% per annum, and are payable semi-annually in arrears on January 15 and July 15, commencing on July 15, 2015. The Senior Notes will mature on January 15, 2023, unless earlier redeemed, in accordance with their terms, or repurchased.
For the three and nine months endedMarch 31, 20152016, we recorded interest expense of $9.4$11.2 million and $33.7 million, respectively, relating to the Senior Notes.
Term Loan A and Revolver
Prior to January 15, 2015, one of our credit facilities consisted of a $600 million term loan facility (Term Loan A) and a $300 million committed revolving credit facility (the Revolver and, together with Term Loan A, defined as the 2011 Credit Agreement).
On January 15, 2015, concurrently with the closing of the offering of the Senior Notes we used a portion of the net proceeds from the offering of the Senior Notes to repay in full, the outstanding balance of Term Loan A.
Term Loan A had a five year term and repayments made under Term Loan A were equal to 1.25% of the original principal amount at each quarter for the first 2 years, approximately 1.88% for years 3 and 4 and 2.5% for year 5. Term Loan A bore interest at a floating rate of LIBOR plus a fixed amount, depending on our consolidated leverage ratio. Prior to the repayment of Term Loan A, the fixed amount was 2.5%.
For the three(three and nine months endedMarch 31, 2015, we recorded interest expense of $0.62015—$9.4 million, and $7.7 million, respectively, relating to Term Loan A (three and nine months endedMarch 31, 2014—$3.2 million and $10.1 million,for both periods respectively).
On January 15, 2015, concurrently with the closing of the offering of the Senior Notes and effective upon the repayment in full of Term Loan A with a portion of the net proceeds of the offering, the 2011 Credit Agreement was amended and restated as described in the second amendment to the 2011 Credit Agreement to, among other things, remove the provisions related to Term Loan A and modify certain provisions related to the incurrence of debt and liens and the making of acquisitions, investments and restricted payments, replace the covenants to maintain a “consolidated leverage” ratio of no more than 3:1 and a “consolidated interest coverage” ratio of 3:1 or more with a covenant to maintain a “consolidated net leverage” ratio of no more than 4:1, and make other changes, in each case, generally to conform with Term Loan B, as further described below.
Borrowings under the Revolver are secured by a first charge over substantially all of our assets, and as of January 16, 2014, on a pari passu basis with Term Loan B (as defined below). As part of the second amendment to the 2011 Credit Agreement, the commitments available under the Revolver was increased to $300 million from $100 million. The Revolver

    12

will mature on December 22, 2019 with no fixed repayment date prior to the end of the term. As of March 31, 2015, we have not drawn any amounts on the Revolver.
Term Loan B
In connection with the acquisition of GXS Group, Inc. (GXS), on January 16, 2014, we entered into a credit facility, which provides for a $800 million term loan facility (Term Loan B).
Borrowings under Term Loan B are secured by a first charge over substantially all of our assets on a pari passu basis with the Revolver.Revolver (defined below). We entered into Term Loan B and borrowed the full amount on January 16, 2014.
Term Loan B has a seven year term and repayments made under Term Loan B are equal to 0.25% of the original principal amount in equal quarterly installments for the life of Term Loan B, with the remainder due at maturity. Borrowings under Term Loan B currently bear a floating rate of interest at a rate per annum equal to 2.5% plus the higher of LIBOR or 0.75%.
For the three and nine months endedMarch 31, 2015,2016, we recorded interest expense of $6.4 million and $19.6$19.5 million, respectively, relating to Term Loan B (three(three and nine months endedMarch 31, 2014—2015—$5.36.4 million and $19.6 million, respectively).
MortgageRevolver
We currently have an "open" mortgage with a Canadian bank where we can pay all or a portion of$300 million committed revolving credit facility (the Revolver). Borrowings under the mortgage on or before August 1, 2015. The original principal amount of the mortgage was Canadian $15.0 million and interest accrues monthly at a variable rate of Canadian prime plus 0.50%. Principal and interestRevolver are payable in monthly installments of approximately Canadian $0.1 million with a final lump sum principal payment due on maturity. The mortgage is secured by a lienfirst charge over substantially all of our assets, and on our headquarters in Waterloo, Ontario, Canada. We first entered into this mortgage ina pari passu basis with Term Loan B. The Revolver will mature on December 2005.
22, 2019 with no fixed repayment date prior to the end of the term. As of March 31, 2015,2016, we have not drawn any amounts on the carrying value of the mortgage was approximately $7.8 million (June 30, 2014—$9.6 million).
As of March 31, 2015, the carrying value of the Waterloo building that secures the mortgage was $15.5 million (June 30, 2014—$15.6 million).
For the three and nine months endedMarch 31, 2015, we recorded interest expense of approximately $0.1 million and $0.3 million, respectively, relating to the mortgage (three and nine months endedMarch 31, 2014—$0.1 million and $0.3 million, respectively).Revolver.

NOTE 11—PENSION PLANS AND OTHER POST RETIREMENT BENEFITS
The following table provides details of our defined benefit pension plans and long-term employee benefit obligations for Open Text Document Technologies GmbH (CDT), GXS GmbH (GXS GER) and GXS Philippines, Inc. (GXS PHP) as of March 31, 20152016 and June 30, 20142015:
As of March 31, 2015As of March 31, 2016
Total benefit
obligation
 
Current portion of
benefit obligation*
 
Non-current portion of
benefit obligation
Total benefit
obligation
 
Current portion of
benefit obligation*
 
Non-current portion of
benefit obligation
CDT defined benefit plan$29,851
 $547
 $29,304
$28,433
 $615
 $27,818
GXS Germany defined benefit plan26,485
 767
 25,718
23,140
 784
 22,356
GXS Philippines defined benefit plan6,446
 25
 6,421
6,318
 33
 6,285
Other plans2,660
 103
 2,557
2,995
 1,162
 1,833
Total$65,442
 $1,442
 $64,000
$60,886
 $2,594
 $58,292
 
As of June 30, 2014As of June 30, 2015
Total benefit
obligation
 
Current portion of
benefit obligation*
 
Non-current portion of
benefit obligation
Total benefit
obligation
 
Current portion of
benefit obligation*
 
Non-current portion of
benefit obligation
CDT defined benefit plan$29,344
 $634
 $28,710
$26,091
 $575
 $25,516
GXS Germany defined benefit plan24,182
 917
 23,265
22,420
 774
 21,646
GXS Philippines defined benefit plan5,276
 —
 5,276
7,025
 26
 6,999
Other plans3,148
 99
 3,049
2,751
 175
 2,576
Total$61,950
 $1,650
 $60,300
$58,287
 $1,550
 $56,737
*
The current portion of the benefit obligation has been included within "Accounts payable and accrued liabilities" in the Condensed Consolidated Balance Sheets
*The current portion of the benefit obligation has been included within "Accrued salaries and commissions", all within "Accounts payable and accrued liabilities" in the Condensed Consolidated Balance Sheets (see Note 9).

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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, 2015,2016, 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 nextremainder of the fiscal year.
GXS Germany Plan
As part of our acquisition of GXS, we acquired an unfunded defined benefit pension plan covering certain German employees which provides for old age, disability and survivors' benefits. The GXS GER plan has been closed to new participants since 2006. Benefits under the GXS GER plan are generally based on a participant’s remuneration, date of hire, years of eligible service and age at retirement. The net periodic cost of this pension plan is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs. No contributions have been made since the inception of the plan. If actuarialActuarial gains or losses are in excess of 10% of the projected benefit obligation such gains or losses will beare being amortized and recognized as a component of net periodic benefit costs over the average remaining service period of the plan’s active employees. All information presented below forAs of March 31, 2016, there is approximately $5.7 thousand in accumulated other comprehensive income related to the GXS GER plan that is presented forexpected to be recognized as a component of net periodic benefit costs over the period indicated, starting on January 16, 2014, when such plan was assumed by us withremainder of the acquisition of GXS.fiscal year.
GXS Philippines Plan
As part of our acquisition of GXS, we acquired a primarily unfunded defined benefit pension plan covering substantially all of the GXS Philippines employees which provides for retirement, disability and survivors' benefits. Benefits under the GXS PHP plan are generally based on a participant’s remuneration, years of eligible service and age at retirement. The net periodic

cost of this pension plan is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs. Aside from an initial contribution which hadhas a fair value of approximately $36.0 thousand as of March 31, 20152016, no additional contributions have been made since the inception of the plan. If actuarial gains or losses are in excess of 10% of the projected benefit obligation, such gains or losses will be amortized and recognized as a component of net periodic benefit costs over the average remaining service period of the plan’s active employees. All information presented below for the GXS PHP plan is presented for the period indicated, starting on January 16, 2014, when such plan was assumed by us with the acquisition of GXS.
The following are the details of the change in the benefit obligation for each of the above mentioned pension plans for the periods indicated: 
As of March 31, 2015 As of June 30, 2014As of March 31, 2016 As of June 30, 2015
CDT GXS GER GXS PHP Total CDT GXS GER GXS PHP TotalCDT GXS GER GXS PHP Total CDT GXS GER GXS PHP Total
Benefit obligation—beginning of period$29,344
 $24,182
 $5,276
 $58,802
 $23,871
 $23,637
*$5,182
*$52,690
$26,091
 $22,420
 $7,025
 $55,536
 $29,344
 $24,182
 $5,276
 $58,802
Service cost344
 257
 1,113
 1,714
 458
 173
 724
 1,355
317
 274
 1,244
 1,835
 452
 360
 1,518
 2,330
Interest cost560
 497
 208
 1,265
 877
 408
 125
 1,410
458
 405
 240
 1,103
 735
 625
 289
 1,649
Benefits paid(378) (604) (47) (1,029) (522) (461) (66) (1,049)(413) (577) (86) (1,076) (495) (793) (78) (1,366)
Actuarial (gain) loss6,508
 7,611
 27
 14,146
 3,595
 452
 (818) 3,229
1,988
 597
 (1,912) 673
 1,676
 2,701
 201
 4,578
Foreign exchange (gain) loss(6,527) (5,458) (131) (12,116) 1,065
 (27) 129
 1,167
(8) 21
 (193) (180) (5,621) (4,655) (181) (10,457)
Benefit obligation—end of period29,851
 26,485
 6,446
 62,782
 29,344
 24,182
 5,276
 58,802
28,433
 23,140
 6,318
 57,891
 26,091
 22,420
 7,025
 55,536
Less: Current portion(547) (767) (25) (1,339) (634) (917) —
 (1,551)(615) (784) (33) (1,432) (575) (774) (26) (1,375)
Non-current portion of benefit obligation$29,304
 $25,718
 $6,421
 $61,443
 $28,710
 $23,265
 $5,276
 $57,251
$27,818
 $22,356
 $6,285
 $56,459
 $25,516
 $21,646
 $6,999
 $54,161
* Beginning benefit obligation as of January 16, 2014.

    14


The following are details of net pension expense relating to the following pension plans:
 Three Months Ended March 31, Three Months Ended March 31,
 2015 2014 2016 2015
 CDT GXS GER GXS PHP Total CDT GXS GER GXS PHP Total CDT GXS GER GXS PHP Total CDT GXS GER GXS PHP Total
Pension expense:Pension expense:              Pension expense:              
Service cost $104
 $100
 $416
 $620
 $116
 $87
 $358
 $561
 $106
 $86
 $393
 $585
 $104
 $100
 $416
 $620
Interest cost 170
 125
 73
 368
 222
 206
 62
 490
 153
 140
 78
 371
 170
 125
 73
 368
Amortization of actuarial gains and losses 93
 —
 —
 93
 70
 —
 —
 70
 107
 6
 —
 113
 93
 —
 —
 93
Net pension expense $367
 $225
 $489
 $1,081
 $408
 $293
 $420
 $1,121
 $366
 $232
 $471
 $1,069
 $367
 $225
 $489
 $1,081
 Nine Months Ended March 31, Nine Months Ended March 31,
 2015 2014 2016 2015
 CDT GXS GER GXS PHP Total CDT GXS GER GXS PHP Total CDT GXS GER GXS PHP Total CDT GXS GER GXS PHP Total
Pension expense:                Pension expense:              
Service cost $344
 $257
 $1,113
 $1,714
 $344
 $87
 $358
 $789
 $317
 $274
 $1,244
 $1,835
 $344
 $257
 $1,113
 $1,714
Interest cost 560
 497
 208
 1,265
 658
 206
 62
 926
 458
 405
 240
 1,103
 560
 497
 208
 1,265
Amortization of actuarial gains and losses 307
 —
 —
 307
 208
 —
 —
 208
 319
 17
 —
 336
 307
 —
 —
 307
Net pension expense $1,211
 $754
 $1,321
 $3,286
 $1,210
 $293
 $420
 $1,923
 $1,094
 $696
 $1,484
 $3,274
 $1,211
 $754
 $1,321
 $3,286


In determining the fair value of the pension plan benefit obligations as of March 31, 20152016 and June 30, 20142015, respectively, we used the following weighted-average key assumptions:
As of March 31, 2015 As of June 30, 2014As of March 31, 2016 As of June 30, 2015
CDT GXS GER GXS PHP CDT GXS GER GXS PHPCDT GXS GER GXS PHP CDT GXS GER GXS PHP
Assumptions:  
Salary increases2.50% 2.00% 7.00% 2.50% 2.00% 7.00%2.00% 2.00% 6.20% 2.00% 2.00% 7.00%
Pension increases2.00% 2.00% 2.15% 2.00% 2.00% 6.00%1.75% 2.00% 4.00% 1.75% 2.00% 3.50%
Discount rate1.43% 1.55% 5.00% 2.90% 3.00% 5.15%1.94% 2.13% 4.75% 2.36% 2.54% 4.75%
Normal retirement ageN/A 65-67 60 N/A 65-67 60N/A 65-67 60 N/A 65-67 60
Employee fluctuation rate:  
to age 301.00% N/A N/A 1.00% N/A N/A1.00% N/A N/A 1.00% N/A N/A
to age 350.50% N/A N/A 0.50% N/A N/A0.50% N/A N/A 0.50% N/A N/A
to age 40—% N/A N/A —% N/A N/A—% N/A N/A —% N/A N/A
to age 450.50% N/A N/A 0.50% N/A N/A0.50% N/A N/A 0.50% N/A N/A
to age 500.50% N/A N/A 0.50% N/A N/A0.50% N/A N/A 0.50% N/A N/A
from age 511.00% N/A N/A 1.00% N/A N/A1.00% N/A N/A 1.00% N/A N/A

    15

Anticipated pension payments under the pension plans for the fiscal years indicated below are as follows:

Fiscal years ending June 30,Fiscal years ending June 30,

CDT
GXS GER
GXS PHPCDT
GXS GER
GXS PHP
2015 (three months ended June 30)$137

$189

$6
2016557

780

27
2016 (three months ending June 30)$144

$193

$7
2017596

841

36
629

787

30
2018641

909

47
672

876

39
2019717

947

75
753

936

65
2020 to 20245,324

4,875

1,298
2020820

988

101
2021 to 20255,034

5,368

1,262
Total$7,972

$8,541

$1,489
$8,052

$9,148

$1,504
Other Plans
Other plans include defined benefit pension plans that are offered by certain of our foreign subsidiaries. Many of these plans were assumed through our acquisitions or are required by local regulatory requirements. These other plans are primarily unfunded, with the aggregate projected benefit obligation included in our pension liability. The net periodic cost of these plans are determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs.
NOTE 12—SHARE CAPITAL, OPTION PLANS AND SHARE-BASED PAYMENTS
Cash Dividends
For the three and nine months endedMarch 31, 20152016, pursuant to the Company’s dividend policy, we declared total non-cumulative dividends of $0.1725$0.2000 and $0.5175,$0.6000, respectively, per Common Share, in the aggregate amount of $21.1$24.1 million and $63.2$71.6 million, respectively, which we paid during the same period.
For the three and nine months ended March 31, 2014,2015, pursuant to the Company’s dividend policy, we paid total non-cumulative dividends of $0.15$0.1725 and $0.45,$0.5175, respectively, per Common Share, in the aggregate amount of $18.2$21.1 million and $53.7$63.2 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 endedMarch 31, 20152016, we repurchased 22,222did not repurchase any of our Common Shares respectively, in the amount of $1.3 million, respectively, for potential reissuance under our Long Term Incentive Plans (LTIP) or otherwise.
other plans. During the nine months ended March 31, 2016, we repurchased 225,000 Common Shares, in the amount of $10.6 million, for potential reissuance under our LTIP or other plans.
During the three and nine months ended March 31, 2014,2015, we repurchased 25,760 of our22,222 Common Shares, respectively, in the amount of $1.3 million, respectively, for potential reissuance under our LTIPsLTIP or otherwise.other plans. See below for more details on our various plans.
Reissuance
During the three and nine months endedMarch 31, 2015,2016, we reissued 22,22210,000 and 377,775217,078 Common Shares, respectively, from treasury stock (three(three and nine months ended March 31, 2014— 2015—22,222 and 410,564377,775 Common Shares, respectively), in connection with the settlement of our LTIPsLTIP and other awards. For more details on this, see "Long Term Incentive Plans" below.
Share Repurchase Plan
On July 28, 2015, our board of directors (the Board) authorized the repurchase of up to $200 million of Common Shares (Share Repurchase Plan). Shares may be repurchased from time to time in the open market, private purchases through forward, derivative, accelerated repurchase or automatic repurchase transactions or otherwise.
During the three months ended March 31, 2016, we did not repurchase any of our Common Shares under the Share Repurchase Plan (three months ended March 31, 2015—nil).
During the nine months ended March 31, 2016, we repurchased and cancelled 1,476,248 Common Shares for approximately $65.5 million under our Share Repurchase Plan (nine months ended March 31, 2015—nil). Of the $65.5 million repurchased, $55.7 million was recorded to retained earnings to reflect the difference between the market price of Common Shares repurchased and its book value.
As of March 31, 2016, approximately $134.5 million remained available for the repurchase of Common Shares under the Share Repurchase Plan.
Share-Based Payments
Total share-based compensation expense for the periods indicated below is detailed as follows: 

    16

Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
2015 2014 2015 2014 2016 2015 2016 2015
Stock options$3,461
 $2,437
 $8,875
 $5,447
 $3,025
 $3,461
 $9,785
 $8,875
Performance Share Units (issued under LTIP)600
 945
 1,745
 3,989
 610
 600
 1,957
 1,745
Restricted Share Units (issued under LTIP)1,287
 371
 3,391
 1,490
 1,150
 1,287
 3,754
 3,391
Restricted Share Units (fully vested)—
 —
 —
 3,300
Restricted Share Units (other)320
 77
 564
 419
 330
 320
 1,041
 564
Deferred Share Units (directors)894
 588
 1,365
 1,062
 533
 894
 2,225
 1,365
Employee Share Purchase Plan 318
 —
 318
 —
Total share-based compensation expense$6,562
 $4,418
 $15,940
 $15,707
 $5,966
 $6,562
 $19,080
 $15,940
Summary of Outstanding Stock Options
As of March 31, 20152016, an aggregate of 4,214,440 options to purchase an aggregate of 4,625,555 Common Shares were outstanding and 2,856,328an additional 2,856,391 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, 20152016 is as follows:
Options 
Weighted-
Average Exercise
Price
 
Weighted-
Average
Remaining
Contractual Term
(years)
 
Aggregate Intrinsic  Value
($’000s)
Options 
Weighted-
Average Exercise
Price
 
Weighted-
Average
Remaining
Contractual Term
(years)
 
Aggregate Intrinsic  Value
($’000s)
Outstanding at June 30, 20144,273,226
 $36.35
  
Outstanding at June 30, 20154,375,365
 $42.26
  
Granted1,240,910
 54.57
  585,140
 46.13
  
Exercised(389,753) 27.40
  (324,702) 25.57
  
Forfeited or expired(498,828) 38.86
  (421,363) 48.87
  
Outstanding at March 31, 20154,625,555
 $41.72
 5.22 $53,975
Exercisable at March 31, 20151,263,959
 $31.58
 3.83 $26,931
Outstanding at March 31, 20164,214,440
 $43.42
 4.67 $38,565
Exercisable at March 31, 20161,605,470
 $37.13
 3.61 $24,015

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.

    17

For the periods indicated, the weighted-average fair value of options and weighted-average assumptions were as follows:
  Three Months Ended March 31, Nine Months Ended March 31,
  2015 2014 2015 2014
Weighted–average fair value of options granted $13.35
 $12.60
 $13.59
 $11.53
Weighted-average assumptions used:        
Expected volatility 32% 32% 32% 32%
Risk–free interest rate 1.14% 1.40% 1.43% 1.33%
Expected dividend yield 1.27% 1.20% 1.20% 1.30%
Expected life (in years) 4.33
 4.36
 4.33
 4.36
Forfeiture rate (based on historical rates) 5% 5% 5% 5%
Average exercise share price $54.17
 $50.08
 $54.57
 $46.43
Derived service period (in years)* 2.07
 N/A 2.07
 N/A
*Options valued using Monte Carlo Valuation Method
 Three Months Ended March 31, Nine Months Ended March 31,
 2016 2015 2016 2015
Weighted–average fair value of options granted$10.81
 $13.35
 $11.06
 $13.59
Weighted-average assumptions used:       
Expected volatility31.53% 31.68% 32.23% 31.94%
Risk–free interest rate1.08% 1.14% 1.34% 1.43%
Expected dividend yield1.70% 1.27% 1.66% 1.20%
Expected life (in years)4.33
 4.33
 4.33
 4.33
Forfeiture rate (based on historical rates)5% 5% 5% 5%
Average exercise share price$47.01
 $54.17
 $46.13
 $54.57
As of March 31, 20152016, the total compensation cost related to the unvested stock option awards not yet recognized was approximately $37.1$27.1 million, which will be recognized over a weighted-average period of approximately 2.62.3 years.
No cash was used by us to settle equity instruments granted under share-based compensation arrangements.
We have not capitalized any share-based compensation costs as part of the cost of an asset in any of the periods presented.
For the three and nine months endedMarch 31, 20152016, cash in the amount of $2.0 million and $8.3 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, 2016 from the exercise of options eligible for a tax deduction was $0.4 million and $0.6 million, respectively.
For the three and nine months ended March 31, 2015, cash in the amount of $3.1 million and $10.7 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 endedMarch 31, 2015 from the exercise of options eligible for a tax deduction was $0.1 million and $0.9 million, respectively.
For the three and nine months ended March 31, 2014, cash in the amount of $13.5 million and $17.7 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, 2014 from the exercise of options eligible for a tax deduction was $0.8 million and $1.4 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 satisfaction of certain financial and/or operational performance criteria (the Performance Conditions) that are determined at the time of the grant. Target RSUs become vested when an eligible employee remains employed throughout the vesting period. LTIP grants that have recently vested, or have yet to vest, are described below. LTIP grants will be referred to in this Quarterly Report on Form 10-Q based upon the year in which the grants are expected to vest and be settled.vest.
Grants made in Fiscal 2012 under the2015 LTIP (collectively referred to as Fiscal 2014 LTIP) took effect in Fiscal 2012 starting on February 3, 2012. Grants made under the Fiscal 2014 LTIP consisted of PSUs and the Performance Conditions for vesting relating to grants were based solely on market conditions. We met these performance conditions and settled Fiscal 2014 LTIP by issuing 355,553 Common Shares from our treasury stock in the three months ended December 31, 2014, with a cost of approximately $8.5 million.
Grants made in Fiscal 2013 under the LTIP (collectively referred to as Fiscal 2015 LTIP), took effect in Fiscal 2013 starting on November 2, 2012 for the RSUs and December 3, 2012 for the PSUs. The Performance Conditions for vesting of the PSUs are based solely upon market conditions. RSUs granted are employee service-based awards and vest over the life of the Fiscal 2015 LTIP. We expect to settlesettled the Fiscal 2015 LTIP awards in stock.by issuing 202,078 Common Shares from our treasury stock during the three months ended December 31, 2015, with a cost of $5.0 million.
Fiscal 2016 LTIP
Grants made in Fiscal 2014 under the LTIP (collectively referred to as Fiscal 2016 LTIP) consisting of PSUs and RSUs, took effect in Fiscal 2014 starting on November 1, 2013. The Performance Conditions for vesting of the PSUs are based solely upon market conditions. RSUs granted are employee service-based awards and vest over the life of the Fiscal 2016 LTIP. We expect to settle the Fiscal 2016 LTIP awards in stock.
Fiscal 2017 LTIP
Grants made in Fiscal 2015 under the LTIP (collectively referred to as Fiscal 2017 LTIP), consisting of PSUs and RSUs, took effect in Fiscal 2015 starting on September 4, 2014. The Performance Conditions for vesting of the PSUs are based solely

    18

upon market conditions. The RSUs are employee service-based awards and vest over the life of the Fiscal 2017 LTIP. We expect to settle the Fiscal 2017 LTIP awards in stock.
Fiscal 2018 LTIP
Grants made in Fiscal 2016 under the LTIP (collectively referred to as Fiscal 2018 LTIP), consisting of PSUs and RSUs, took effect in Fiscal 2016 starting on August 23, 2015. The Performance Conditions for vesting of the PSUs are based solely upon market conditions. The RSUs are employee service-based awards and vest over the life of the Fiscal 2018 LTIP. We expect to settle the Fiscal 2018 LTIP awards in stock.
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, 20152016, the total expected compensation cost related to the unvested LTIP awards not yet recognized was $13.4$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 endedMarch 31, 2015,2016, we granted 30,000 and 45,00025,000 RSUs respectively, to certain employees in accordance with their employment agreements.agreements (three and nine months ended March 31, 2015—30,000 and 45,000, respectively). The RSUs will vest equally 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, 2016, we issued 10,000 and 15,000 Common Shares, respectively, from our treasury stock, with a cost of $0.2 million and $0.3 million, respectively, in connection with the settlement of vested RSUs (three and nine months ended March 31, 2015—22,222, with a cost of $1.3 million, for both periods respectively).
Deferred Stock Units (DSUs)
During the three and nine months endedMarch 31, 2015,2016, we granted 37,1991,287 and 37,59754,660 DSUs, respectively, to certain non-employee directors (three(three and nine months ended March 31, 2014—13,3362015—37,199 and 42,298, respectively, on a post stock-split basis)37,597, respectively). The DSUs were issued under our Deferred Share Unit Plan. DSUs granted as compensation for directors fees vest immediately, whereas all other DSUs granted vest at our next annual general meeting following the granting of the DSUs. No DSUs are payable by us until the director ceases to be a member of the Board.

Employee Share Purchase Plan (ESPP)
We recently implemented a number of amendments to our ESPP, including increasing the purchase price discount from 5% to 15% and permitting Common Shares to be purchased on the open market by the trustee of a trust, or by an agent or broker designated by an administrator, and transferred to eligible employees under the ESPP, as an alternative to the issuance of Common Shares from treasury (the Amendments). The Amendments apply to purchase periods commencing on or after January 1, 2016 unless otherwise determined by the Board or the compensation committee of the Board.
In accordance with the Amendments, during the three months ended March 31, 2016, we have determined that 40,900 Common Shares are eligible for issuance to employees enrolled in the ESPP, after factoring a purchase price discount of 15%. Any Common Shares that have been issued under the ESPP prior to the purchase period commencing on January 1, 2016 were issued at a purchase price discount of 5%.
During the three and nine months endedMarch 31, 2015,2016, cash in the amount of approximately $0.7$1.8 million and $2.2$3.5 million, respectively, was received from employees that will be usedrelating to purchase Common Shares in future periodsthe ESPP (three and nine months ended March 31, 2014—2015—$0.80.7 million and $2.1$2.2 million, respectively).
NOTE 13—GUARANTEES AND CONTINGENCIES
We have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows: 
 Payments due between
 Total April 1, 2015—
June 30, 2015		 July 1, 2015—
June 30, 2017		 July 1, 2017—
June 30, 2019		 July 1, 2019
and beyond
Long-term debt obligations*$2,104,616
 $8,707
 $165,195
 $156,417
 $1,774,297
Operating lease obligations**212,250
 13,057
 83,577
 57,310
 58,306
Purchase obligations18,415
 3,173
 14,421
 821
 —
 $2,335,281
 $24,937
 $263,193
 $214,548
 $1,832,603
 Payments due between
 Total April 1, 2016—
June 30, 2016		 July 1, 2016—
June 30, 2018		 July 1, 2018—
June 30, 2020		 July 1, 2020
and beyond
Long-term debt obligations$2,017,741
 $8,424
 $156,944
 $155,957
 $1,696,416
Operating lease obligations*188,797
 11,136
 74,506
 51,022
 52,133
Purchase obligations9,921
 2,732
 6,661
 528
 —
 $2,216,459
 $22,292
 $238,111
 $207,507
 $1,748,549
*Long-term debt obligations include our Senior Notes issued on January 15, 2015. For more details relating to the Senior Notes and repayment of our Term Loan A, see note 10.
**Net of $3.2$6.9 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.
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

    19

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 aggregatedestimated losses werewas 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
EasyLink Services International Corporation (EasyLink) and itsAs we have previously disclosed, the United States subsidiaries were assessedInternal Revenue Service (IRS) is examining certain of our tax returns for our fiscal year ended June 30, 2010 (Fiscal 2010) through our fiscal year ended June 30, 2012 (Fiscal 2012), and in connection with those examinations is reviewing our internal reorganization in Fiscal 2010 to consolidate certain intellectual property ownership in Luxembourg and Canada and our integration of certain acquisitions into the resulting structure. We also

previously disclosed that the examinations may lead to proposed adjustments to our taxes that may be material, individually or in the aggregate, and that we have not recorded any material accruals for any such potential adjustments in our Condensed Consolidated Financial Statements.
As part of these examinations, (which are ongoing), on July 17, 2015 we received from the IRS a Notice of Proposed Adjustment (NOPA) in draft form proposing a one-time approximately $280 million increase to our U.S. federal taxes arising from the reorganization in Fiscal 2010 and proposing penalties equal to 20% of the additional taxes, plus interest at the applicable statutory rate (which will continue to accrue until the matter is resolved and may be substantial). A NOPA is an IRS position and does not impose an obligation to pay tax. The draft NOPA may be changed before the final NOPA is issued, including because the IRS reserved the right in the draft NOPA to increase the adjustment. Based on our 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 New York State Departmentamount reflected in the NOPA when received). Depending upon the outcome of Taxationthese matters, additional state income taxes plus penalties and Finance forinterest may be due. We currently estimate that, as of March 31, 2016, adjustments under the potential applicabilitydraft NOPA in its present form and the anticipated additional NOPA could result in an aggregate liability of telecommunications exciseapproximately $550 million, inclusive of U.S. federal and franchisestate taxes, penalties and interest.
We strongly disagree with the IRS’ position and intend to its New York State revenues for certain pre-acquisition EasyLink revenue.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 March 31, 2015the 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 settlement was reached with the New York State Departmentmaterial adverse effect on our financial position and results of Taxation and Finance for $2.8 million, which was paid during the three months ended March 31, 2015.operations.
As part of our acquisition of GXS, we have inherited a tax dispute in Brazil between the Company’s subsidiary, GXS Tecnologia da Informação (Brasil) Ltda. (GXS Brazil), and the municipality of São Paulo, in connection with GXS Brazil’s judicial appeal of a tax claim in the amount of $2.2 million as of March 31, 2015.2016. We currently have in place a bank guarantee in the amount of $3.0$3.4 million in recognition of this dispute. However, we believe that the position of the São Paulo tax authorities is not consistent with the relevant facts and based on information available on the case and other similar matters provided by local counsel, we believe that we can defend our position and that no tax is owed. Although we believe that the facts support our position, the ultimate outcome of this matter could result in a loss of up to the claim amount discussed above, plus future interest or penalties that may accrue.
Historically, prior to our acquisition of GXS, GXS would charge certain costs to its subsidiaries, including GXS Brazil, primarily based on historical transfer pricing studies that were intended to reflect the costs incurred by subsidiaries in relation to services provided by the parent company to the subject subsidiary. GXS recorded taxes on amounts billed, that were considered to be due based on the intercompany charges. GXS subsequently re-evaluated its intercompany charges to GXS Brazil and related taxes and, upon taking into consideration the current environment and judicial proceedings in Brazil, concluded that it was probable that certain indirect taxes would be assessable and payable based upon the accrual of such intercompany charges and has approximately $6.2$4.5 million accrued for the probable amount of a settlement related to the indirect taxes, interest and penalties.
Our Indian subsidiary, GXS India Technology Centre Private Limited (GXS India), is subject to potential assessments by Indian tax authorities in the city of Bangalore. GXS India has received assessment orders from the Indian tax authorities alleging that the transfer price applied to intercompany transactions was not appropriate. Based on advice from our tax advisors, we believe that the facts that the Indian tax authorities are using to support their assessment are incorrect. We have filed appeals and anticipate an eventual settlement with the Indian tax authorities. We have accrued $1.4$1.5 million to cover our anticipated financial exposure in this matter.
The United States Internal Revenue Service (IRS) is examining certain of our tax returns for Fiscal 2010 through 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. These examinations may lead to proposed adjustments to our taxes, which may be material, individually or in the aggregate. As of the date of this Quarterly Report on Form 10-Q, no adjustments have been proposed by the IRS, and we have not recorded any material accruals for any such potential adjustments in our Condensed Consolidated Financial Statements.
Please also see "Risk Factors" included in our Annual Report on Form 10-K for our fiscal year ended June 30, 2014.Fiscal 2015.
NOTE 14—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.

    20

For the three and nine months ended March 31, 20152016 and 2014,2015, we recognized the following amounts as income tax-related interest expense and penalties:
 Three Months Ended March 31, Nine Months Ended March 31,Three Months Ended March 31, Nine Months Ended March 31,
 2015 2014 2015 20142016 2015 2016 2015
Interest expense 1,587
 2,030
 $5,098
 $6,262
$949
 $1,587
 $3,921
 $5,098
Penalties expense (recoveries) (90) 7
 (385) 167
7
 (90) (2,719) (385)
Total $1,497
 $2,037
 $4,713
 $6,429
$956
 $1,497
 $1,202
 $4,713
As of March 31, 20152016 and June 30, 2014,2015, the following amounts have been accrued on account of income tax-related interest expense and penalties:
As of March 31, 2015 As of June 30, 2014As of March 31, 2016 As of June 30, 2015
Interest expense accrued *$30,098
 $26,235
$31,791
 $28,827
Penalties accrued *$6,488
 $7,858
$1,687
 $5,040
*
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, 20152016, could decrease tax expense in the next 12 months by $35.9$3.8 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. For Canada, the United States, Luxembourg and Germany, theThe earliest fiscal years open for examination are 2006,2008 for both Canada and Germany, 2010 for the United States, and 2011 and 2008, respectively.for Luxembourg.
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, Spain, Germany, India, Japanthe Netherlands and the Netherlands.Japan. On a quarterly basis we assess the status of these examinations and the potential for adverse outcomes to determine the adequacy of the provision for income and other taxes. Statements regarding the United States audits are included in note 13.
The timing of the resolution of income tax audits is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next 12 months we will receive additional assessments by various tax authorities or possibly reach resolution of income tax audits in one or more jurisdictions. These assessments or settlements may or may not result in changes to our contingencies related to positions on tax filings. The actual amount of any change could vary significantly depending on the ultimate timing and nature of any settlements. We cannot currently provide an estimate of the range of possible outcomes. For more information relating to certain tax audits, please refer to note 13.
As at March 31, 20152016, we have provided $8.9$13.6 million (June 30, 2014—2015—$7.612.1 million) in respect of both additional foreign withholding taxes or deferred income tax liabilities for temporary differences related to the undistributed earnings of certain non-United States subsidiaries, and planned periodic repatriations from certain United States and Luxembourg 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 GAAP tax rate (which is the provision for taxes expressed as a percentage of net income before taxes) decreasedincreased to a recovery, representing 1.2%an expense of income7.2% for the three months ended March 31, 2015,2016, compared to a chargerecovery of 22.1%1.2% for the three months ended March 31, 2014, resulting in a reduction of2015. The increase to tax expense in the amount of $13.3 million. This decrease$5.7 million is primarily the result of (i) lowerhigher net income, having an impact of $10.8$12.8 million, partially offset by (i) variances in income among jurisdiction resulting in an increased benefit of foreign rates in the amount of $4.4 million and (ii) a decrease in the impactamount of adjustments on filing tax returnsfilings in excess of amounts booked in the amount of $1.5 million, and (iii) a decrease in the impact of permanent differences in the amount of $1.3 million, offset by an increase in the net change in valuation allowance in the amount of $1.5$3.4 million. The remainder of the differences are due to normal course movements and non-material items.
The effective GAAP tax rate (which isdecreased to 9.4% for the provision for taxes expressed as a percentage of income before taxes) decreasednine months ended March 31, 2016, compared to 17.6% for the nine months ended March 31, 2015, from 27.2% for the nine months ended March 31, 2014, resulting in a reduction of2015. The decrease to tax expense in the amount of $13.2 million. This decrease$14.8 million is primarily due to a decrease in the impactresult of non-deductible amortization expense in the amount of $4.8 million, a decrease in the net change in valuation allowance in

    21

the amount of $1.3 million, a decrease in the net expense of unrecognized tax benefits with related interest and penalties in the amount of $2.4 million, and a decrease in the impact of adjustments on filing of tax returns in the amount of $3.8$14.5 million. The remainder of the differences are due to normal course movements and non-material items.

NOTE 15—FAIR VALUE MEASUREMENTSMEASUREMENT
ASC Topic 820 “Fair Value Measurements and Disclosures”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: 
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.

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, 20152016 and June 30, 2014:2015:
March 31, 2015 June 30, 2014March 31, 2016 June 30, 2015
  Fair Market Measurements using:   Fair Market Measurements using:  Fair Market Measurements using:   Fair Market Measurements using:
March 31, 2015 
Quoted prices
in active
markets for
identical
assets/
(liabilities)
 
Significant
other
observable
inputs
 
Significant
unobservable
inputs
 June 30, 2014 
Quoted prices
in active
markets for
identical
assets/
(liabilities)
 
Significant
other
observable
inputs
 
Significant
unobservable
inputs
March 31, 2016 
Quoted prices
in active
markets for
identical
assets/
(liabilities)
 
Significant
other
observable
inputs
 
Significant
unobservable
inputs
 June 30, 2015 
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)(Level 1) (Level 2) (Level 3) (Level 1) (Level 2) (Level 3)
Financial Assets:                
Commercial paper*$5,999
 n/a $5,999
 n/a —
 n/a $—
 n/a
Corporate bonds*24,212
 n/a 24,212
 n/a —
 n/a —
 n/a
Short-term investments*$13,008
 n/a $13,008
 n/a $20,274
 n/a $20,274
 n/a
Derivative financial instrument asset (note 16)—
 n/a —
 n/a 756
 n/a 756
 n/a—
 n/a —
 n/a 273
 n/a 273
 n/a
$30,211
 n/a $30,211
 n/a $756
 n/a $756
 n/a$13,008
 n/a $13,008
 n/a $20,547
 n/a $20,547
 n/a
                
Financial Liabilities:Financial Liabilities:       Financial Liabilities:       
Derivative financial instrument liability (note 16)$(4,050) n/a $(4,050) n/a $—
 n/a $—
 n/a$(125) n/a $(125) n/a $—
 n/a $—
 n/a
$(4,050) n/a $(4,050) n/a $—
 n/a $—
 n/a$(125) n/a $(125) n/a $—
 n/a $—
 n/a

    22

*These assets in the table above are classified as Level 2 as certain specific assets included within may not have quoted prices that are readily accessible in an active market or we may have relied on alternative pricing methods that do not rely exclusively on quoted prices to determine the fair value of the investments.
Our valuation techniques used to measure the fair values of the derivative instruments, the counterparty to which has high credit ratings, were derived from pricing models including discounted cash flow techniques, with all significant inputs derived

from or corroborated by observable market data, as no quoted market prices exist for these instruments. Our discounted cash flow techniques use observable market inputs, such as, where applicable, foreign currency spot and forward rates.
Our cash and cash equivalents, along with our accounts receivable and accounts payable and accrued liabilities balances, are measured and recognized in our Condensed Consolidated Financial Statements at an amount that approximates their fair value (a Level 2 measurement) due to their short maturities.
A summary of our marketable securities as of March 31, 2015 is as follows:
 Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value
Commercial paper$5,999
 $—
 $—
 $5,999
Corporate bonds24,208
 4
 —
 24,212
Total$30,207
 $4
 $—
 $30,211
The long-term portion of the marketable securities are included within "Other Assets" in the Condensed Consolidated Balance Sheets.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
We measure certain assets at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. During the three and nine months ended March 31, 20152016 and 2014,2015, no indications of impairment were identified and therefore no fair value measurements were required.
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, 20152016 and 2014,2015, we did not have any transfers between Level 1, Level 2 or Level 3.
Marketable SecuritiesShort-term Investments
Marketable SecuritiesShort-term investments are classified as available for sale securities and are recorded on our Condensed Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a separate component of Accumulated Other Comprehensive Income.
A summary of our short-term investments outstanding as of March 31, 2016 and June 30, 2015 is as follows:
 As of March 31, 2016 As of June 30, 2015
 Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value
Short-term investments$13,442
 $5
 $(439) $13,008
 $20,286
 $2
 $(14) $20,274
NOTE 16—DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Foreign Currency Forward Contracts
We are engaged in hedging programs with Canadian charteredrelationship 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, 20152016, is recorded within “Accounts payable and accrued liabilities”.
As of March 31, 20152016, the notional amount of forward contracts we held to sell U.S. dollars in exchange for Canadian dollars was $82.0$44.8 million (June 30, 20142015—$99.676.4 million).

    23

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)
 As of March 31, 2015 As of June 30, 2014 As of March 31, 2016 As of June 30, 2015
DerivativesBalance Sheet LocationFair Value
Asset (Liability)		 Fair Value
Asset (Liability)		Balance Sheet LocationFair Value
Asset (Liability)		 Fair Value
Asset (Liability)
Foreign currency forward contracts designated as cash flow hedgesPrepaid expenses and other current assets (Accounts payable and accrued liabilities)$(4,050) $756
Prepaid expenses and other current assets
(Accounts payable and accrued liabilities)
$(125) $273
 Effects of Derivative Instruments on Income and Other Comprehensive Income (OCI)
Three and Nine Months Ended March 31, 2016Three and Nine Months Ended March 31, 2016
Derivatives in Cash Flow
Hedging Relationship
Amount of Gain or (Loss)
Recognized in OCI on
Derivatives 
(Effective
Portion)
Location of
Gain or (Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion)
 Amount of Gain or
(Loss) Reclassified from
Accumulated OCI into
Income (Effective
Portion)		 
Location of
Gain or (Loss)
Recognized
in Income on
Derivatives
(Ineffective
Portion and
Amount
Excluded from
Effectiveness
Testing)
 Amount of Gain or (Loss) Recognized in
Income on Derivatives
(Ineffective Portion
and Amount Excluded
from Effectiveness
Testing)
Three Months Ended March 31, 2016 Nine Months Ended March 31, 2016 Three Months Ended March 31, 2016 Nine Months Ended March 31, 2016 Three Months Ended March 31, 2016 Nine Months Ended March 31, 2016
Foreign currency forward contracts$2,877
 $(3,679)Operating
expenses		 $(1,477) $(3,281) N/A $—
 $—
           
Three and Nine Months Ended March 31, 2015
Derivatives in Cash Flow
Hedging Relationship
Amount of Gain or (Loss)
Recognized in OCI on
Derivatives 
(Effective
Portion)
 
Location of
Gain or (Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion)
 
Amount of Gain or
(Loss) Reclassified from
Accumulated OCI into
Income (Effective
Portion)
 
Location of
Gain or
(Loss)
Recognized
in Income on
Derivatives
(Ineffective
Portion and
Amount
Excluded
from
Effectiveness
Testing)
 
Amount of Gain or
(Loss) Recognized in
Income on Derivatives
(Ineffective Portion
and Amount Excluded
from Effectiveness
Testing)
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, 2015 Nine Months Ended March 31, 2015 Three Months Ended March 31, 2015 Nine Months Ended March 31, 2015 Three Months Ended March 31, 2015 Nine Months Ended March 31, 2015Three Months Ended March 31, 2015 Nine Months Ended March 31, 2015  Three Months Ended March 31, 2015 Nine Months Ended March 31, 2015 Three Months Ended March 31, 2015 Nine Months Ended March 31, 2015
Foreign currency forward contracts$(3,811) $(9,548) Operating
expenses		 $(3,385) $(4,742) N/A —
 —$(3,811) $(9,548)Operating
expenses		 $(3,385) $(4,742) N/A $—
 $—
          
Three and Nine Months Ended March 31, 2014
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, 2014 Nine Months Ended March 31, 2014 Three Months Ended March 31, 2014 Nine Months Ended March 31, 2014 Three Months Ended March 31, 2014 Nine Months Ended March 31, 2014
Foreign currency forward contracts$(2,182) $(2,064) Operating
expenses		 $(1,683) $(3,278) N/A —
 —


    24


NOTE 17—SPECIAL CHARGES (RECOVERIES)
Special charges include costs that relate to certain restructuring initiatives that we have undertaken from time to time under our various restructuring plans, as well as acquisition-related costs and other similarmiscellaneous charges. 
 Three Months Ended March 31, Nine Months Ended March 31,Three Months Ended March 31, Nine Months Ended March 31,
 2015 2014 2015 20142016 2015 2016 2015
OpenText/Actuate Restructuring Plan $2,071
 $—
 $2,071
 $—
Fiscal 2015 Restructuring Plan751
 2,071
 21,780
 2,071
OpenText/GXS Restructuring Plan 455
 11,538
 4,647
 11,538
28
 455
 (2,006) 4,647
Restructuring Plans prior to OpenText/GXS Restructuring Plan (1,275) 1,385
 (1,600) 8,002
—
 (1,275) 4
 (1,600)
Acquisition-related costs 1,506
 3,491
 4,284
 9,229
855
 1,506
 2,015
 4,284
Other charges (recoveries) 2,865
 (512) (5,370) (2,868)(3,305) 2,865
 2,961
 (5,370)
Total $5,622
 $15,902
 $4,032

$25,901
$(1,671) $5,622
 $24,754
 $4,032
OpenText/ActuateFiscal 2015 Restructuring Plan
In the third quarter of Fiscal 2015 and in the context of the acquisition of Actuate Corporation (Actuate), we began to implement restructuring activities to streamline our operations (OpenText/Actuate Restructuring Plan). We subsequently announced, on May 20, 2015 that we were initiating a restructuring program in conjunction with organizational changes to support our cloud strategy and drive further operational efficiencies. These charges are combined with the OpenText/Actuate Restructuring Plan (collectively referred to as the Fiscal 2015 Restructuring Plan) and are presented below. The Fiscal 2015 Restructuring Plan charges relate to workforce reductions and facility consolidations. These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.
As of March 31, 2015,2016, we expect total costs to be incurred in conjunction with the OpenText/ActuateFiscal 2015 Restructuring Plan to be approximately $7.0$32.0 to $10.0$35.0 million, of which $2.1$30.1 million has already been recorded within Special charges to date. We expect the OpenText/ActuateFiscal 2015 Restructuring Plan to be substantially completed by the end of our fiscal year ended June 30,Fiscal 2016.
A reconciliation of the beginning and ending liability for the nine months ended March 31, 20152016 is shown below. 
OpenText/Actuate Restructuring Plan
Workforce
reduction
 Facility costs Total
Balance as of June 30, 2014$—
 $—
 $—
Fiscal 2015 Restructuring Plan
Workforce
reduction
 Facility costs Total
Balance as of June 30, 2015$3,842
 $2,126
 $5,968
Accruals and adjustments1,886
 185
 2,071
16,971
 4,809
 21,780
Cash payments(813) (2) (815)(15,129) (1,829) (16,958)
Foreign exchange(25) —
 (25)(666) 368
 (298)
Balance as of March 31, 2015$1,048
 $183
 $1,231
Balance as of March 31, 2016$5,018
 $5,474
 $10,492
OpenText/GXS Restructuring Plan
In the third quarter of Fiscal 2014 and in the context of the acquisition of GXS, we began to implement restructuring activities to streamline our operations (OpenText/GXS Restructuring Plan). These charges relate to workforce reductions, facility consolidations and facility consolidations.other miscellaneous direct costs. These charges require management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.
Since the inception of the plan $24.0$25.3 million has been recorded within Special charges. We do not expect to incur any further significant charges related to this plan.

A reconciliation of the beginning and ending liability for the nine months ended March 31, 2015 is2016 are shown below. 
OpenText/GXS Restructuring Plan
Workforce
reduction
 Facility costs Total
Workforce
reduction
 Facility costs Total
Balance as of June 30, 2014$5,051
 $6,028
 $11,079
Balance as of June 30, 2015$2,846
 $4,436
 $7,282
Accruals and adjustments5,244
 (597) 4,647
(458) (1,547) (2,005)
Cash payments(5,437) (2,153) (7,590)(494) (1,541) (2,035)
Foreign exchange(703) (266) (969)(208) (566) (774)
Balance as of March 31, 2015$4,155
 $3,012
 $7,167
Balance as of March 31, 2016$1,686
 $782
 $2,468

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Acquisition-related costs
Included within Special charges"Special charges" for the three and nine months endedMarch 31, 20152016 are costs incurred directly in relation to acquisitions in the amount of $1.4$0.7 million and $3.9$1.9 million, respectively (three and nine months ended March 31, 2014—2015—$3.11.4 million and $8.1$3.9 million, respectively). Additionally, weWe incurred $0.1 million costs relating to financial advisory, legal, valuation and audit services and other miscellaneous costs necessary to integrate acquired companies into our organization forduring the three and nine months ended March 31, 2015 in the amount of $0.1 million and $0.4 million, respectively2016 (three and nine months ended March 31, 2014—2015—$0.40.1 million and $1.1$0.4 million, respectively).
Other charges (recoveries)
ERP Implementation Costs
We are currently involved in a one-time project to implement a broad enterprise resource planning (ERP) system. The project is expected to be completed within our fiscal year ended June 30, 2017.
For the three and nine months ended March 31, 2016, we incurred costs of $1.1 million and $5.9 million, respectively, relating to this project.
Other costs
For the three months ended March 31, 2015,2016, "Other charges"costs" primarily includes (i) a charge of $0.6 million relating to post-acquisition integration costs necessary to streamline an acquired company into our operations and to reorganize certain legal entities and (ii) $0.2 million relating to assets disposed in connection with a restructured facility. These charges were offset by (i) a recovery of $4.7 million relating to certain pre-acquisition sales and use tax liabilities being released upon settlement and (ii) the release of $0.6 million relating to interest on certain pre-acquisition liabilities becoming statute barred.
For the nine months ended March 31, 2016, "Other costs" primarily includes (i) a charge of $1.5 million relating to post-acquisition integration costs necessary to streamline an acquired company into our operations and to reorganize certain legal entities, (ii) $1.1 million relating to the assets disposed in connection with a restructured facility and (iii) $0.4 million of other miscellaneous charges. These charges were offset by (i) a recovery of $5.2 million relating to certain pre-acquisition sales and use tax liabilities being released upon settlement or becoming statute barred and (ii) a recovery of $0.7 million relating to interest being released on certain pre-acquisition liabilities becoming statute barred.
Included within "Other costs" for the three months ended March 31, 2015 is (i) a charge of $2.9 million relating to the write-off of unamortized debt issuance costs associated with the repayment of Termour previously existing $600 million term loan facility (Term Loan A (see note 10)A) and (ii) a charge of $2.1 million relating to post-business combination compensation obligations, associated with the acquisition of Actuate. These charges were offset by a recovery of $2.8 million relating to certain pre-acquisition sales and use tax liabilities being released upon settlement.
ForIncluded within "Other recoveries" for the nine months ended March 31, 2015 "Other recoveries" primarily includesis (i) a recovery of $8.8 million relating to certain pre-acquisition tax liabilities being released based upon settlement, (ii) a recovery of $2.4 million relating to certain pre-acquisition sales and use tax liabilities becoming statute barred and (iii) a recovery of $1.3 million relating to interest released on certain pre-acquisition liabilities. These recoveries were offset by charges of $2.9 million relating to the write-off of unamortized debt issuance costs associated with the repayment of Term Loan A and $2.1 million relating to post-business combination compensation obligations associated with the acquisition of Actuate.
Included within "Other charges"
NOTE 18—ACQUISITIONS
Fiscal 2016 Acquisitions
Acquisition of Daegis Inc.
On November 23, 2015, we acquired Daegis Inc. (Daegis), a global information governance, data migration solutions and development company, based in Irvine, Texas, United States. Total consideration for Daegis was $23.3 million ($22.1 million - net of cash acquired). In accordance with Topic 805 "Business Combinations" (Topic 805), this acquisition was accounted for as a business combination. We believe this acquisition enables OpenText to strengthen our current information governance capabilities.
The finalization of the purchase price allocation is pending the finalization of the fair value for taxation-related balances and for potential unrecorded liabilities.
Acquisition-related costs for Daegis included in Special charges in the Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2014 is a net recovery of $0.52016 were $0.1 million and $4.3$1.1 million, respectively, relating to a reductionrespectively.
The results of certain pre-acquisition tax liabilities, including related interest. In addition tooperations of Daegis have been consolidated with those of OpenText beginning November 23, 2015.
The acquisition had no significant impact on revenues and net earnings for the recovery, included for thethree and nine months ended March 31, 2014 is2016. There was also no significant impact on the Company's revenues and net income on a charge of $1.4 million relating to a settlement agreement reached in connection with the acquisition of IXOS Software AG in February 2004.pro forma basis for all periods presented.
NOTE 18—ACQUISITIONSFiscal 2015 Acquisitions
Acquisition of Actuate Corporation
On January 16, 2015, we acquired Actuate, Corporation (Actuate), based in San Francisco, California, United States. Actuate was a leader in personalized analytics and insights and we believe the acquisition complements our OpenText ContentEIM Suite. In accordance with Topic 805, "Business Combinations" (Topic 805), this acquisition was accounted for as a business combination.
The results of operations of Actuate have beenwere consolidated with those of OpenText beginning January 16, 2015.
The following tables summarize the preliminary consideration paid for Actuate and the amount of the assets acquired and liabilities assumed, as well as the goodwill recorded as of the acquisition date: 
Cash consideration*$322,417
Actuate shares already owned by OpenText through open market purchases (at fair value)9,539
Preliminary purchase consideration$331,956
Acquisition-related costs (included in Special charges in the Condensed Consolidated Statements of Income) for the three months ended March 31, 2015$1,164
Acquisition-related costs (included in Special charges in the Condensed Consolidated Statements of Income) for the nine months ended March 31, 2015$3,252
*Inclusive of $8.2 million accrued for but unpaid as of March 31, 2015.
Preliminary
Cash consideration$322,417
Fair value, at date of acquisition, on shares of Actuate already owned through open market purchases9,539
Purchase consideration$331,956
Purchase Price Allocation 
The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of January 16, 2015, are set forth below:

    26

Current assets (inclusive of cash acquired of $22,463)$78,307
Non-current tangible assets18,273
Intangible customer assets62,600
Intangible technology assets60,000
Liabilities assumed(77,868)
Total identifiable net assets141,312
Goodwill190,644
Net assets acquired$331,956
The finalization of the above purchase price allocation is pending the determination of the finalization of the fair value for taxation-related balances and for potential unrecorded liabilities. We expect to finalize this determination on or before December 31, 2015.
Current assets (inclusive of cash acquired of $22,463)$78,150
Non-current tangible assets13,540
Intangible customer assets62,600
Intangible technology assets60,000
Liabilities assumed(79,686)
Total identifiable net assets134,604
Goodwill197,352
Net assets acquired$331,956
No portion of the goodwill recorded upon the acquisition of Actuate is expected to be deductible for tax purposes.
The fair value of current assets acquired includes accounts receivable with a fair value of $23.4 million. The gross amount receivable was $23.6 million of which $0.2 million of this receivable was expected to be uncollectible.
We recognized a gain of $3.1 million as a result of remeasuring to fair value our investment in Actuate held before the date of acquisition. The gain iswas included in "Other income" in our Condensed Consolidated Financial Statements.Statements during the year ended June 30, 2015.

The amountAcquisition of Actuate’s revenues and net income included in our Condensed Consolidated Statements of Income for the three months ended March 31, 2015 is set forth below:
  
January 16, 2015—
March 31, 2015
Revenues $14,534
Net loss * 
 $(7,555)
* Net loss includes one-time fees of approximately $4.0 million on account of special charges, and $5.8 million of amortization charges relating to intangible assets.
The unaudited pro forma revenues and net income of the combined entity for the three and nine months ended March 31, 2015 and 2014, respectively, had the acquisition been consummated as of July 1, 2013, are set forth below:
  Three Months Ended March 31, Nine Months Ended March 31,
  2015 2014 2015 2014
Supplemental Unaudited Pro forma Information        
Total revenues $450,432
 $466,840
 $1,424,824
 $1,219,504
Net income (1) (2)
 $14,862
 $37,946
 $141,285
 $115,528
(1) Included in pro forma net income for the three months ended March 31, 2015 are approximately $10.6 million of one-time expenses incurred by Actuate on account of the acquisition. These one-time expenses include i) approximately $3.4 million in employee change in control payments, ii) approximately $3.9 million of post-business combination compensation obligations associated with the acquisition, and iii) approximately $3.3 million of transaction fees triggered by the closing of the acquisition. In addition to the one-time expenses discussed above, included in pro forma net income for the nine months ended March 31, 2015 is another $2.2 million of transaction fees triggered by the closing of the acquisition.
(2) Included in pro forma net income for the three and nine months ended March 31, 2015 are estimated amortization charges relating to the allocated values of intangible assets.
The unaudited pro forma financial information in the table above is presented for information purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented or the results that may be realized in the future.
Informative Graphics Corporation
On January 2, 2015, we acquired Informative Graphics Corporation (IGC), based in Scottsdale, Arizona, United States. IGC was a leading developer of viewing, annotation, redaction and publishing commercial software. Total consideration for IGC was $40.4$40.0 million ($39.138.7 million - net of cash acquired), of which $36.5 million was paid in cash, and $3.9 million is currently held back and unpaid in accordance with the purchase agreement.. In accordance with Topic 805, this acquisition was

    27

accounted for as a business combination. We believe this acquisition will enableenables OpenText to engineer solutions that further increase a user's experience within our OpenText content suite.
The finalization of the purchase price allocation is pending the determination of the finalization of the fair value for taxation-related balances and for potential unrecorded liabilities. We expect to finalize this determination on or before December 31, 2015.
Acquisition related costs for IGC included in Special charges in the Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2015 were $0.3 million, respectively.EIM Suite.
The results of operations of IGC have beenwere consolidated with those of OpenText beginning January 2, 2015.
The acquisition had no significant impact on revenues and net earnings for the three and nine months ended March 31, 2015. There was also no significant impact on the Company's revenues and net income on a pro forma basis for all periods presented.
NOTE 19—SUPPLEMENTAL CASH FLOW DISCLOSURES
 Three Months Ended March 31, Nine Months Ended March 31,Three Months Ended March 31, Nine Months Ended March 31,
 2015 2014 2015 20142016 2015 2016 2015
Cash paid during the period for interest $7,291
 $8,828
 $27,897
*$16,328
$29,176
(1) 
$7,291
 $65,412
(1) 
$27,897
Cash received during the period for interest $740
 $284
 $3,365
 $2,066
$2,870
(2) 
$740
 $3,412
 $3,365
Cash paid during the period for income taxes $7,868
 $13,644
 $20,811
 $29,359
$5,049
 $7,868
 $21,515
 $20,811
*(1) We entered into Term Loan Bissued Senior Notes on January 16, 2014 (see note 10). For the three and nine months ended March 31, 2015, this amount includes $6.4 million and $19.6 million, respectively, of interest related to this new credit facility.
15, 2015. Interest owing on the Senior Notes is payable semi-annually, startingwith the first payment of $22.5 million made on July 15, 2015 (see note 10).
(2) Included in this amount is investment income of approximately $2.1 million, received as part of income distributions made by companies accounted for as cost basis investments.
NOTE 20—EARNINGS PER SHARE
Basic earnings per share are computed by dividing net income, attributable to OpenText, by the weighted average number of Common Shares outstanding during the period. Diluted earnings per share are computed by dividing net income, attributable to OpenText, by the shares used in the calculation of basic earnings per share plus the dilutive effect of Common Share equivalents, such as stock options, using the treasury stock method. Common Share equivalents are excluded from the computation of diluted earnings per share if their effect is anti-dilutive. 
 Three Months Ended March 31, Nine Months Ended March 31,Three Months Ended March 31, Nine Months Ended March 31,
 2015 2014 2015 20142016 2015 2016 2015
Basic earnings per share               
Net income attributable to OpenText $26,610
 $45,884
 $165,523
 $130,014
$69,115
 $26,610
 $198,087
 $165,523
Basic earnings per share attributable to OpenText $0.22
 $0.38
 $1.36
 $1.09
$0.57
 $0.22
 $1.63
 $1.36
Diluted earnings per share               
Net income attributable to OpenText $26,610
 $45,884
 $165,523
 $130,014
$69,115
 $26,610
 $198,087
 $165,523
Diluted earnings per share attributable to OpenText $0.22
 $0.38
 $1.35
 $1.08
$0.57
 $0.22
 $1.62
 $1.35
Weighted-average number of shares outstanding               
Basic 122,158
 120,873
 122,042
 119,048
121,159
 122,158
 121,514
 122,042
Effect of dilutive securities 896
 1,227
 938
 983
547
 896
 530
 938
Diluted 123,054
 122,100
 122,980
 120,031
121,706
 123,054
 122,044
 122,980
Excluded as anti-dilutive* 2,525
 1,056
 2,430
 547
2,707
 2,525
 2,747
 2,430
* 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.

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NOTE 21—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 ourthe Board and the transaction be approved by a majority of the independent members of the Board. The Board 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 determining whether to approve a related party transaction, the Board 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, 2015,2016, Mr. Stephen Sadler, a director, earned $0.5$0.2 million (nine months ended (March 31, 2014—2015—$0.60.5 million) in consulting fees from OpenText primarily for services rendered relating to the acquisitions of Actuate and IGC.assistance with acquisition-related business activities. Mr. Sadler abstained from voting on all transactions from which he would potentially derive consulting fees.
NOTE 22—SUBSEQUENT EVENTSEVENT
Cash Dividends
As part of our quarterly, non-cumulative cash dividend program, we declared, on April 27, 2015,26, 2016, a dividend of $0.20$0.23 per Common Share. The record date for this dividend is May 29, 201527, 2016 and the payment date is June 19, 2015.17, 2016. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of our Board of Directors.
Acquisition of Certain Customer Experience Software Assets from HP Inc.
On April 18, 2016, we signed a definitive agreement to acquire certain customer experience software and services assets from HP Inc. for approximately $170 million. We expect that the acquisition will complement our current software portfolio, particularly our Customer Experience Management and Cloud offerings. The transaction is expected to close in the fourth quarter of Fiscal 2016 and is subject to customary regulatory approvals and closing conditions.
Acquisition of ANXeBusiness Corp.
On April 19, 2016, we signed a definitive agreement to acquire all of the outstanding shares of ANXeBusiness Corp. (ANX), a leading provider of cloud-based information exchange services to the Automotive and Healthcare industries, for approximately $104 million. We believe this acquisition will strengthen our industry presence and reach in the Automotive and Healthcare industries through strong customer relationships and targeted business partner collaboration solutions. The transaction is expected to close in the fourth quarter of Fiscal 2016 and is subject to customary closing conditions.


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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q, including this Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A), contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the U.S. Securities Act of 1933, as amended (the Securities Act), and is subject to the safe harbours created by those sections. All statements other than statements of historical facts are statements that could be deemed forward-looking statements.
When used in this report, the words “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “could”, “would”, "might", "will" and other similar language, as they relate to Open Text Corporation (“OpenText” or the “Company”), are intended to identify forward-looking statements under applicable securities laws. Specific forward-looking statements in this report include, but are not limited to: (i) statements about our focus in the fiscal year beginning July 1, 20142015 and ending June 30, 20152016 (Fiscal 2015)2016) on growth in earnings and cash flows; (ii) creating value through investments in broader Enterprise Information Management (EIM) capabilities; (iii) our future business plans and business planning process; (iv) statements relating to business trends; (v) statements relating to distribution; (vi) the Company’s presence in the cloud and in growth markets; (vii) product and solution developments, enhancements and releases and the timing thereof; (viii) the Company’s financial conditions, results of operations and earnings; (ix) the basis for any future growth and for our financial performance; (x) declaration of quarterly dividends; (xi) the changing regulatory environment and its impact on our business; (xii) potential loss of recurring revenues; (xiii) research and development and related expenditures; (xiv) our building, development and consolidation of our network infrastructure; (xv) competition and changes in the competitive landscape; (xvi) our management and protection of intellectual property and other proprietary rights; (xvii) foreign sales and exchange rate fluctuations; (xviii) cyclical or seasonal aspects of our business; (xix) capital expenditures; (xx) potential legal and/or regulatory proceedings; (xxi) statements about the impact of "Open Text Release 16" and (xxi)(xxii) other matters.
In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management’s perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. The forward-looking statements contained in this report are based on certain assumptions including the following: (i) countries continuing to implement and enforce existing and additional customs and security regulations relating to the provision of electronic information for imports and exports; (ii) our continued operation of a secure and reliable business network; (iii) the stability of general economic and market conditions, currency exchange rates, and interest rates; (iv) equity and debt markets continuing to provide us with access to capital; (v) our continued ability to identify and source attractive and executable business combination opportunities; and (vi) our continued compliance with third party intellectual property rights. Management’s estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (ii) the possibility that the Company may be unable to meet its future reporting requirements under the Exchange Act, and the rules promulgated thereunder; (iii) the risks associated with bringing new products and services to market; (iv) fluctuations in currency exchange rates; (v) delays in the purchasing decisions of the Company’s customers; (vi) the competition the Company faces in its industry and/or marketplace; (vii) the final determination of litigation, tax audits (including tax examinations in the United States or elsewhere) and other legal proceedings; (viii) potential exposure to greater than anticipated tax liabilities or expenses;expenses, including with respect to changes in Canadian, U.S. or international tax regimes; (ix) the possibility of technical, logistical or planning issues in connection with the deployment of the Company’s products or services; (x) the continuous commitment of the Company’s customers; (xi) demand for the Company’s products and services; (xii) increase in exposure to international business risks as we continue to increase our international operations; (xiii) inability to raise capital at all or on not unfavorable terms in the future; and (xiv) downward pressure on our share price and dilutive effect of future sales or issuances of equity securities. Other factors that may affect forward-looking statements include, but are not limited to: (i) the future performance, financial and otherwise, of the Company; (ii) the ability of the Company to bring new products and services to market and to increase sales; (iii) the strength of the Company’s product development pipeline; (iv) failure to secure and protect patents, trademarks and other proprietary rights; (v) infringement of third-party proprietary rights triggering indemnification obligations and resulting in significant expenses or restrictions on our ability to provide our products or services; (vi) failure to comply with privacy laws and regulations that are extensive, open to various interpretations and complex to implement; (vii) the Company’s growth and profitability prospects; (viii) the estimated size and growth prospects of the EIM market; (ix) the Company’s competitive position in the EIM market and its ability to take advantage of future opportunities in this market; (x) the benefits of

the Company’s products and services to be realized by customers; (xi) the demand for the Company’s products and services and

    30

the extent of deployment of the Company’s products and services in the EIM marketplace; (xii) the Company’s financial condition and capital requirements; (xiii) system or network failures or information security breaches in connection with our services and products;the Company's offerings; and (xiv) failure to attract and retain key personnel to develop and effectively manage ourthe Company's business.
For additional information with respect to risks and other factors which could occur, see the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q including Part I, Item 1A “Risk Factors” therein and in thistherein; Quarterly ReportReports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The following MD&A is intended to help readers understand our results of operations and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying Notes to our Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q.
All dollar and percentage comparisons made herein generally refer to the three and nine months ended March 31, 20152016 compared with the three and nine months endedMarch 31, 2014,2015, unless otherwise noted.
Where we say “we”, “us”, “our”, “OpenText” or “the Company”, we mean Open Text Corporation or Open Text Corporation and its subsidiaries, as applicable.
EXECUTIVE OVERVIEW
We operate in the Enterprise Information Management (EIM) market. We are an independent company providing a comprehensive suite of software products and services that assist organizations in finding, utilizing, and sharing business information from any device in ways which are intuitive, efficient and productive. Our technologies and business solutions address one of the biggest problems encountered by enterprises today: the explosive growth of information volume and formats. Our software and services allow organizations to manage the information that flows into, out of, and throughout the enterprise as part of daily operations. Our solutions help to increase customer satisfaction, improve collaboration with partners, address the legal and business requirements associated with information governance, and aim to ensure that information remains secure and private, as demanded in today's highly regulated climate.
Our products and services provide the benefits of organizing and managing business content,maximizing the value of enterprise information while leveraging it to operate more efficiently and effectively.minimizing its risks. Our solutions incorporate social and mobile technologies and are delivered for on-premises deployment as well as through cloud and managed hosted services models to provide the flexibility and cost efficiencies demanded by the market. In addition, we provide solutions that facilitate the exchange of transactions that occur between supply chain participants, such as manufacturers, retailers, distributors and financial institutions, and are central to a company’s ability to effectively collaborate with its partners.
Our initial public offering was on the NASDAQ in 1996 and we were subsequently listed on the Toronto Stock Exchange in 1998. We are a multinational company and as of March 31, 2015,2016, employed approximately 8,7008,300 people worldwide.
We operate in a market known as Enterprise Information Management (EIM). This is a comprehensive market category that includes a rich set of capabilities that allow organizations to manage content by optimizing the value of business information while reducing the costs associated with capturing, storing, and managing information. At its core, EIM is about helping organizations get the most out of information. Our EIM offerings include Enterprise Content Management (ECM), Business Process Management (BPM), Customer Experience Management (CEM), Information Exchange (IX), and Discovery.
Quarterly Summary:Summary
During the quarter we saw the following activity:
Total revenue was $447.6$440.5 million, up 1.1%down 1.6% over the same period in the prior fiscal year.year; up 1.7% after factoring the impact of $14.6 million of foreign exchange.
Total recurring revenue was $376.1 million, down 2.0% over the same period in the prior fiscal year; up 1.0% after factoring the impact of $11.6 million of foreign exchange.
Cloud services and subscriptions revenue was $147.5 million, stable as compared to the same period in the prior fiscal year; up 2.5% after factoring the impact of $3.7 million of foreign exchange.
License revenue was $64.0$64.4 million, down 12.5%up 1.3% over the same period in the prior fiscal year; up 6.0% after factoring the impact of $3.0 million of foreign exchange.
GAAP-based EPS, diluted, was $0.57 compared to $0.22 in the same period in the prior fiscal year.
Non-GAAP-based EPS, diluted, was $0.80 compared to $0.66 in the same period in the prior fiscal year.
GAAP-based EPS, diluted,gross margin was $0.2267.9% compared to $0.3866.0% in the same period of the prior fiscal year.
Non-GAAP-based EPS, diluted, was $0.66 compared to $0.84 in the same period of the prior fiscal year.
GAAP-based gross margin was 65.7% compared to 67.3% in the same period of the prior fiscal year.
GAAP-based operating margin was 11.8%20.1% compared to 15.1%11.8% in the same period ofin the prior fiscal year.
Non-GAAP-based operating margin was 25.7%31.4% compared to 29.1%25.7% in the same period ofin the prior fiscal year.
Operating cash flow was $143.1$189.9 million, up 1.2%32.7% from the same period in the prior fiscal year.

Cash and cash equivalents was $613.2$877.4 million as of March 31, 2015,2016, compared to $427.9$700.0 million as of June 30, 2014.2015.

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See "Use of Non-GAAP Financial Measures" below for a reconciliation of non-GAAP-based measures to GAAP-based measures.
See "Acquisitions" below for the impact of acquisitions on the period-to-period comparability of results.
Acquisitions
Our competitive position in the marketplace requires us to maintain a complex and evolving array of technologies, products, services and capabilities. In light of the continually evolving marketplace in which we operate, we regularly evaluate various acquisition opportunities within the EIM market.
Acquisition of Actuate CorporationCertain Customer Experience Software Assets from HP Inc.
On January 16, 2015,April 18, 2016, we acquired Actuate Corporation (Actuate), based in San Francisco, California, United States,signed a definitive agreement to acquire certain customer experience software and services assets from HP Inc. for $332.0 million, comprised of approximately $322.4 million in cash and shares we purchased of Actuate in the open market with a fair value of approximately $9.5 million as of the date of acquisition. Actuate is a leader in personalized analytics and insights and we believe$170 million. We expect that the acquisition will complement our current software portfolio, particularly our Customer Experience Management and Cloud offerings. The transaction is expected to close in the fourth quarter of Fiscal 2016 and is subject to customary regulatory approvals and closing conditions.
Acquisition of ANXeBusiness Corp.
On April 19, 2016, we signed a definitive agreement to acquire all of the outstanding shares of ANXeBusiness Corp. (ANX), a leading provider of cloud-based information exchange services to the Automotive and Healthcare industries, for approximately $104 million. We believe this acquisition will strengthen our industry presence and reach in the Automotive and Healthcare industries through strong customer relationships and targeted business partner collaboration solutions. The transaction is expected to close in the fourth quarter of Fiscal 2016 and is subject to customary closing conditions.
Acquisition of Daegis Inc.
On November 23, 2015, we acquired Daegis Inc. (Daegis), a global information governance, data migration solutions and development company, based in Irvine, Texas, United States. Total consideration for Daegis was $23.3 million ($22.1 million - net of cash acquired). We believe this acquisition enables OpenText Content Suite.to strengthen our current information governance capabilities. The results of operations of ActuateDaegis have been consolidated with those of OpenText during the third quarter of Fiscal 2015, beginning on January 16,November 23, 2015.
Acquisition of Informative Graphics Corporation
On January 2, 2015, we acquired Informative Graphics Corporation (IGC), based in Scottsdale, Arizona, United States, for approximately $40.4 million. IGC is a leading developer of viewing, annotation, redaction and publishing commercial software. We believe this acquisition will enable OpenText to engineer solutions that further increase a user's experience within our OpenText Content Suite. The financial results of operations of IGC have been consolidated with Open Text's financial results during the third quarter of Fiscal 2015, beginning on January 2, 2015.
We believe our acquisitions support our long-term strategic direction, strengthen our competitive position, expand our customer base, provide greater scale to accelerate innovation, grow our earnings and increase shareholder value. We expect to continue to strategically acquire companies, products, services and technologies to augment our existing business. Our acquisitions, particularly significant ones, such as GXS Group, Inc. (GXS), acquired in January 2014,can affect the period-to-period comparability of our results. See note 18 "Acquisitions" and note 22 "Subsequent Events" to our Condensed Consolidated Financial Statements for more details.
Outlook for remainder of Fiscal 20152016
We believe we have a strong position in the EIM market. Our goalWe look to grow our Cloud-based EIM strategy through acquisitions, innovation and with new ways to purchase our solutions, such as our subscription pricing and managed service offerings. While we continue to offer on-premises solutions, we realize the EIM market is broad and we are agnostic to strengthenwhether a customer prefers an on-premises solution, cloud solution, or combination of both (hybrid). We believe giving the customer choice and flexibility with their payment option will help us to strive to obtain long-term customer value. In addition to reviewing our position in EIMearnings and cash flows, we measure long-term value by buildinglooking at our "recurring revenue", which we define as revenue from Cloud services and subscriptions, Customer support and Professional service and other. In the third quarter of Fiscal 2016, recurring revenue was $376.1 million, down 2.0% compared to the third quarter of Fiscal 2015, but up 1.0% after considering the negative impact of $11.6 million of foreign exchange. Recurring revenues represented 85.4% of our total revenues.
We believe customers are looking for more choice and flexibility on how they consume technology. We are committed to delivering our leadership in ECM, BPM, CEM,products and IX and expanding our position in Discovery.services to customers via multiple delivery models, including a hybrid delivery model.
Additionally, Customer support revenues, which are generally a recurring source of income for us, and make up a significant portion of our revenue mix. Our management reviews our Customer support renewal rates on a quarterly basis and we use these rates as a method of monitoring our customer service performance. For the three months ended March 31, 20152016, our Customer support

renewal rate was approximately 90%, consistent with the Customer support renewal rate was 90%. Withduring the three months ended March 31, 2015.
We see an opportunity to help our customers become “digital businesses” and with our acquisition of GXS, our cloud services revenue has grown and we expect cloud services revenue to continue to be a recurring and growing stream of revenue in the future. Our focusActuate Corporation (Actuate) in Fiscal 2015, has increasingly been on "recurring revenue",we believe we have acquired a strong platform to integrate personalized analytics and insights onto our OpenText EIM suites of products, which we define as revenue from cloud services, customer supportbelieve will further our vision to enable a “digital first world” and professional service and other.strengthen our position among leaders in EIM.
We also believe our diversified geographic profile helps strengthen our position and helps to reduce the impact of a downturn in the economy that may occur in any one specific region.
Release 16
In Fiscal 2015,April, 2016 we recently unveiledintroduced "OpenText Release 16" (Release 16), which is an integrated digital information platform, used to help organizations take advantage of digital disruption and create a strategybetter way to actively deploywork within their enterprise. We believe Release 16 will drive our software throughgo-to-market plan for coming years. This release is the most functionally and integration-complete EIM platform that we have ever released and we believe it will offer customers a subscription model, whereby we combinecoordinated digital transformation, that yields the benefits of ascale and single-vendor interaction. We have made significant investments to our cloud solutioninfrastructure over the past couple of years, and now with the security and control of an on-premises deployment enabling organizations to manage, exchange, and socialize enterprise information in an easy and scalable cloud. This would includeRelease 16 virtually all our existing managed cloud servicesproducts are available in the form of subscriptions and B2B managed services and also our "public cloud" services."OpenText Cloud".

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CRITICAL ACCOUNTING POLICIES AND 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.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 materially from those estimates. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:
(i)Revenue recognition,
(ii)Capitalized software,
(iii)Goodwill,
(iv)Acquired intangibles,
(v)Restructuring charges,
(vi)Business combinations,
(vii)Foreign currency, and
(viii)Income taxes.     
During the first nine months of Fiscal 2015,2016, there were no significant changes to our critical accounting policies and estimates. For a detailed discussion of our critical accounting policies and estimates, please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended June 30, 2014.2015.

RESULTS OF OPERATIONS
The following tables provide a detailed analysis of our results of operations and financial condition. For each of the periods indicated below, we present our revenues by product, revenues by major geography, cost of revenues by product, total gross margin, total operating margin, gross margin by product, and their corresponding percentage of total revenue. In addition, we provide Non-GAAP measures for the periods discussed in order to provide additional information to investors that we believe will be useful as this presentation is in line with how our management assesses our Company's performance. See "Use of Non-GAAP Financial Measures" below for a reconciliation of Non-GAAP-based measures to GAAP-based measures.

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Summary of Results of Operations
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
Total Revenues by Product Type:                        
License $63,958
 $(9,125) $73,083
 $198,397
 $(11,156) $209,553
 $64,397
 $836
 $63,561
 $197,584
 $447
 $197,137
Cloud services 143,822
 15,422
 128,400
 445,097
 232,919
 212,178
Cloud services and subscriptions 147,505
 (8) 147,513
 444,394
 (11,948) 456,342
Customer support 184,335
 4,045
 180,290
 547,707
 24,552
 523,155
 183,636
 (568) 184,204
 553,440
 5,864
 547,576
Professional service and other 55,462
 (5,519) 60,981
 178,008
 (7,827) 185,835
 45,005
 (7,294) 52,299
 145,007
 (23,147) 168,154
Total revenues 447,577
 4,823
 442,754
 1,369,209
 238,488
 1,130,721
 440,543
 (7,034) 447,577
 1,340,425
 (28,784) 1,369,209
Total Cost of Revenues 153,561
 8,999
 144,562
 450,605
 91,651
 358,954
 141,434
 (10,938) 152,372
 421,228
 (26,471) 447,699
Total GAAP-based Gross Profit 294,016
 (4,176) 298,192
 918,604
 146,837
 771,767
 299,109
 3,904
 295,205
 919,197
 (2,313) 921,510
Total GAAP-based Gross Margin % 65.7%   67.3% 67.1%   68.3% 67.9%   66.0% 68.6%   67.3%
Total GAAP-based Operating Expenses 241,412
 10,069
 231,343
 652,403
 73,459
 578,944
 210,540
 (32,061) 242,601
 644,113
 (11,196) 655,309
Total GAAP-based Income from Operations $52,604
 $(14,245) $66,849
 $266,201
 $73,378
 $192,823
 $88,569
 $35,965
 $52,604
 $275,084
 $8,883
 $266,201
                        
% Revenues by Product Type:                        
License 14.3%   16.5% 14.5%   18.5% 14.6%   14.2% 14.7%   14.4%
Cloud services 32.1%   29.0% 32.5%   18.8%
Cloud services and subscriptions 33.5%   32.9% 33.2%   33.3%
Customer support 41.2%   40.7% 40.0%   46.3% 41.7%   41.2% 41.3%   40.0%
Professional service and other 12.4%   13.8% 13.0%   16.4% 10.2%   11.7% 10.8%   12.3%
                        
Total Cost of Revenues by Product Type:                        
License $3,014
 $(513) $3,527
 $9,514
 $(353) 9,867
 $2,480
 $(500) $2,980
 $7,190
 $(2,198) $9,388
Cloud services 59,989
 10,525
 49,464
 174,959
 95,267
 79,692
Cloud services and subscriptions 61,298
 522
 60,776
 179,132
 246
 178,886
Customer support 24,092
 (1,114) 25,206
 71,252
 (533) 71,785
 22,427
 (1,657) 24,084
 64,624
 (6,254) 70,878
Professional service and other 44,330
 (4,888) 49,218
 136,332
 (9,566) 145,898
 37,599
 (4,797) 42,396
 114,038
 (15,961) 129,999
Amortization of acquired technology-based intangible assets 22,136
 4,989
 17,147
 58,548
 6,836
 51,712
 17,630
 (4,506) 22,136
 56,244
 (2,304) 58,548
Total cost of revenues $153,561
 $8,999
 $144,562
 $450,605
 $91,651
 $358,954
 $141,434
 $(10,938) $152,372
 $421,228
 $(26,471) $447,699
                        
% GAAP-based Gross Margin by Product Type:                        
License 95.3%   95.2% 95.2%   95.3% 96.1%   95.3% 96.4%   95.2%
Cloud services 58.3%   61.5% 60.7%   62.4%
Cloud services and subscriptions 58.4%   58.8% 59.7%   60.8%
Customer support 86.9%   86.0% 87.0%   86.3% 87.8%   86.9% 88.3%   87.1%
Professional service and other 20.1%   19.3% 23.4%   21.5% 16.5%   18.9% 21.4%   22.7%
                        
Total Revenues by Geography:                        
Americas (1) $257,458
 $18,419
 $239,039
 $758,042
 $158,603
 $599,439
 $255,969
 $(1,489) $257,458
 $766,337
 $8,295
 $758,042
EMEA (2) 148,149
 (10,030) 158,179
 477,404
 57,618
 419,786
 144,560
 (3,589) 148,149
 452,917
 (24,487) 477,404
Asia Pacific (3) 41,970
 (3,566) 45,536
 133,763
 22,267
 111,496
 40,014
 (1,956) 41,970
 121,171
 (12,592) 133,763
Total revenues $447,577
 $4,823
 $442,754
 $1,369,209
 $238,488
 $1,130,721
 $440,543
 $(7,034) $447,577
 $1,340,425
 $(28,784) $1,369,209
                        
% Revenues by Geography:                        
Americas (1) 57.5%   54.0% 55.4%   53.0% 58.1%   57.5% 57.2%   55.4%
EMEA (2) 33.1%   35.7% 34.9%   37.1% 32.8%   33.1% 33.8%   34.9%
Asia Pacific (3) 9.4%   10.3% 9.7%   9.9% 9.1%   9.4% 9.0%   9.7%

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 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015   2014 2015   2014 2016   2015 2016   2015
GAAP-based gross margin 65.7%   67.3% 67.1% 68.3% 67.9%   66.0% 68.6%   67.3%
GAAP-based operating margin 11.8% 15.1% 19.4% 17.1% 20.1% 11.8% 20.5% 19.4%
GAAP-based EPS, diluted $0.22
 $0.38
 $1.35
 $1.08
 $0.57
 $0.22
 $1.62
 $1.35
Non-GAAP-based gross margin (4) 70.8% 71.3% 71.5% 73.0% 72.0% 71.1% 72.9% 71.7%
Non-GAAP-based operating margin (4) 25.7% 29.1% 31.0% 30.1% 31.4% 25.7% 34.2% 31.0%
Non-GAAP-based EPS, diluted (4) $0.66
 $0.84
 $2.59
 $2.32
 $0.80
 $0.66
 $2.65
 $2.59
(1)Americas consists of countries in North, Central and South America.
(2)EMEA primarily consists of countries in Europe, Africathe Middle East and the United Arab Emirates.Africa.
(3)Asia Pacific primarily consists of the countries Japan, Australia, Hong Kong,China, Korea, Philippines, Singapore and New Zealand.
(4)See "Use of Non-GAAP Financial Measures" (discussed later in the MD&A) for a reconciliation of Non-GAAP-based measures to GAAP-based measures.
Revenues, Cost of Revenues and Gross Margin by Product Type
1)    License Revenues:
License revenues consist of fees earned from the licensing of software products to customers. Our license revenues are impacted by the strength of general economic and industry conditions, the competitive strength of our software products, and our acquisitions. Cost of license revenues consists primarily of royalties payable to third parties.
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
License Revenues:                        
Americas $31,506
 $2,125
 $29,381
 $86,652
 $(6,143) $92,795
 $29,455
 $(1,754) $31,209
 $91,766
 $5,952
 $85,814
EMEA 25,556
 (8,098) 33,654
 88,188
 (3,894) 92,082
 29,432
 3,976
 25,456
 87,176
 (590) 87,766
Asia Pacific 6,896
 (3,152) 10,048
 23,557
 (1,119) 24,676
 5,510
 (1,386) 6,896
 18,642
 (4,915) 23,557
Total License Revenues 63,958
 (9,125) 73,083
 198,397
 (11,156) 209,553
 64,397
 836
 63,561
 197,584
 447
 197,137
Cost of License Revenues 3,014
 (513) 3,527
 9,514
 (353) 9,867
 2,480
 (500) 2,980
 7,190
 (2,198) 9,388
GAAP-based License Gross Profit $60,944
 $(8,612) $69,556
 $188,883
 $(10,803) $199,686
 $61,917
 $1,336
 $60,581
 $190,394
 $2,645
 $187,749
GAAP-based License Gross Margin % 95.3%   95.2% 95.2%   95.3% 96.1%   95.3% 96.4%   95.2%
                        
% License Revenues by Geography:
                        
Americas 49.3%   40.2% 43.7%   44.3% 45.7%   49.1% 46.4%   43.5%
EMEA 40.0%   46.0% 44.5%   43.9% 45.7%   40.1% 44.1%   44.5%
Asia Pacific 10.7%   13.8% 11.8%   11.8% 8.6%   10.8% 9.5%   12.0%
License revenues decreasedincreased by $9.1$0.8 million during the three months ended March 31, 20152016 as compared to the same period in the prior fiscal year, of which approximately $6.3 million was due tois inclusive of the negative impact of foreign exchange.exchange of approximately $3.0 million. Geographically, the overall decreaseincrease was attributable to an increase in EMEA of $4.0 million, partially offset by a decrease in EMEAAmericas of $8.1$1.8 million, and a decrease in Asia Pacific of $3.2 million, offset by an increase in Americas of $2.1$1.4 million. The number of license deals greater than $1.0$0.5 million that closed during the third quarter of Fiscal 20152016 was 315 deals, of which 10 deals were greater than $1.0 million and is inclusive of a patent infringement settlement, compared to 616 deals greater than $0.5 million in the same period in Fiscal 2014.2015, of which 3 deals were greater than $1.0 million.
License revenues decreasedincreased by $11.2$0.4 million during the nine months ended March 31, 20152016 as compared to the same period in the prior fiscal year, of which approximately $9.1 million was due tois inclusive of the negative impact of foreign exchange.exchange of approximately $15.6 million. Geographically, the overall decreaseincrease was attributable to a decreasean increase in Americas of $6.1$6.0 million, a decrease in EMEA of $3.9 million, andpartially offset by a decrease in Asia Pacific of $1.1$4.9 million, and a decrease in EMEA of $0.6 million. The number of license deals greater than $1.0$0.5 million that closed during the first nine months of Fiscal 2015 as2016 was 56 deals, of which 24 deals were greater than $1.0 million and is

inclusive of a patent infringement settlement, compared to 50 deals greater than $0.5 million in the same period in the prior fiscal year wasFiscal 2015, of which 15 deals in Fiscal 2015, inclusive of a settlement of patent infringement claims against Alfresco Software, Ltd., compared to 17 deals in Fiscal 2014.were greater than $1.0 million.
Cost of license revenues were relatively stabledecreased during the three and nine months ended March 31, 2015, with2016 by $0.5 million and $2.2 million, respectively, primarily as a result of lower third party technology costs. As a result, the gross margin percentage remaining aton license revenues increased to approximately 96% from approximately 95%. for both periods.

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2)    Cloud Services:Services and Subscriptions:
Cloud services and subscription revenues consist of (i) software as a service offerings (ii) managed service arrangements thatand  (iii) subscription revenues relating to on premise offerings. These offerings allow our customers to make use of OpenText software, services and content over Internet enabled networks supported by OpenText data centers. These web applications allow customers to transmit a variety of content between various mediums and to securely manage enterprise information without the commitment of investing in related hardware infrastructure. Revenues are generated on several transactional usage-based models, are typically billed monthly in arrears, and can therefore fluctuate from period to period. Certain service fees are occasionally charged to customize hosted software for some customers and are either amortized over the estimated customer life, in the case of setup fees, or recognized in the period they are provided.
In addition, we offer business-to-business (B2B) integration solutions, such as messaging services, and managed services. Messaging services allow for the automated and reliable exchange of electronic transaction information, such as purchase orders, invoices, shipment notices and other business documents, among businesses worldwide. Managed services provide an end-to-end fully outsourced B2B integration solution to our customers, including program implementation, operational management, and customer support. These services enable customers to effectively manage the flow of electronic transaction information with their trading partners and reduce the complexity of disparate standards and communication protocols. Revenues are primarily generated through transaction processing. Transaction processing fees are recurring in nature and are recognized on a per transaction basis in the period in which the related transactions are processed. Revenues from contracts with monthly, quarterly or annual minimum transaction levels are recognized based on the greater of the actual transactions or the specified contract minimum amounts during the relevant period. Customers who are not committed to multi-year contracts generally are under contracts for transaction processing solutions that automatically renew every month or year, depending on the terms of the specific contracts.
Cost of cloudCloud services and subscriptions revenues is comprised primarily of third party network usage fees, maintenance of in-house data hardware centers, technical support personnel-related costs, amortization of customer set up and implementation costs, and some third party royalty costs.
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
Cloud Services:            
Cloud Services and Subscriptions:            
Americas $95,607
 $10,129
 $85,478
 $289,098
 $147,892
 $141,206
 $99,004
 $887
 $98,117
 $290,954
 $(5,188) $296,142
EMEA 32,094
 5,300
 26,794
 103,343
 64,146
 39,197
 32,240
 (1,019) 33,259
 104,985
 (2,478) 107,463
Asia Pacific 16,121
 (7) 16,128
 52,656
 20,881
 31,775
 16,261
 124
 16,137
 48,455
 (4,282) 52,737
Total Cloud Services Revenues 143,822
 15,422
 128,400
 445,097
 232,919
 212,178
Cost of Cloud Services Revenues 59,989
 10,525
 49,464
 174,959
 95,267
 79,692
GAAP-based Cloud Services Gross Profit $83,833
 $4,897
 $78,936
 $270,138
 $137,652
 $132,486
GAAP-based Cloud Services Gross Margin % 58.3%   61.5% 60.7%   62.4%
Total Cloud Services and Subscriptions Revenues 147,505
 (8) 147,513
 444,394
 (11,948) 456,342
Cost of Cloud Services and Subscriptions Revenues 61,298
 522
 60,776
 179,132
 246
 178,886
GAAP-based Cloud Services and Subscriptions Gross Profit $86,207
 $(530) $86,737
 $265,262
 $(12,194) $277,456
GAAP-based Cloud Services and Subscriptions Gross Margin % 58.4%   58.8% 59.7%   60.8%
                        
% Cloud Services Revenues by Geography:            
% Cloud Services and Subscriptions Revenues by Geography:            
Americas 66.5%   66.6% 65.0%   66.6% 67.1%   66.5% 65.5%   64.9%
EMEA 22.3%   20.9% 23.2%   18.5% 21.9%   22.6% 23.6%   23.5%
Asia Pacific 11.2%   12.5% 11.8%   14.9% 11.0%   10.9% 10.9%   11.6%
Cloud services and subscriptions revenues increased by $15.4 millionremained stable during the three months ended March 31, 20152016 as compared to the same period in the prior fiscal year. However, included in Cloud services and subscriptions revenues is a negative impact of foreign exchange of approximately $3.7 million. Geographically, the overall change was attributable to a decrease in EMEA of $1.0 million, offset by an increase in Americas of $0.9 million and an increase in Asia Pacific of $0.1 million. The number of

Cloud services deals greater than $1.0 million that closed during the third quarter of Fiscal 2016 was 8 deals, compared to 7 deals in the same period in Fiscal 2015.
Cloud services and subscriptions revenues decreased by $11.9 million during the nine months ended March 31, 2016 as compared to the same period in the prior fiscal year, which is inclusive of the negative impact of foreign exchange of approximately $6.1$19.2 million. Geographically, the overall increasedecrease was attributable to an increasea decrease in Americas of $10.1$5.2 million, a decrease in Asia Pacific of $4.3 million and an increasea decrease in EMEA of $5.3$2.5 million. The number of Cloud services deals greater than $1.0 million that closed during the third quarterfirst nine months of Fiscal 20152016 was 7 deals.21 deals, compared to 20 deals in the same period in Fiscal 2015.
Cost of cloudCloud services and subscriptions revenues increased by $10.5$0.5 million during the three months ended March 31, 20152016 as compared to the same period in the prior fiscal year, primarily due to higher revenue attainment, increased bad debt expense, the timingan increase in labour-related costs of certain other expenses, and the stub period from our acquisition of GXS,approximately $2.1 million, partially offset by a reduction in sales tax liabilities.third party network usage fees of approximately $1.7 million. As a result, the gross margin percentage on cloudCloud services revenueand subscriptions revenues decreased slightly to approximately 58% from approximately 61%59%.
Cost of Cloud services and subscriptions revenues increased by $232.9$0.2 million during the nine months ended March 31, 20152016 as compared to the same period in the prior fiscal year. This was primarilyyear, due to the acquisition of GXS, offset by the negative impact of foreign exchange of approximately $8.4 million. Geographically, the overall increase was attributable to an increase in Americaslabour-related costs of

    36

$147.9 million, an increase in EMEA of $64.1 approximately $6.2 million and an increase in Asia Pacificsales tax liabilities of $20.9approximately $0.6 million resulting from the impact of certain adjustments that occurred primarily in Fiscal 2015. These increases were partially offset by a reduction in third party network usage fees of approximately $6.6 million. The number of Cloud services deals greater than $1.0 million that closed during the nine months ended March 31, 2015 was 20.
Cost of cloud services revenues increased by $95.3 million during the nine months ended March 31, 2015, primarily due to higher revenue attainment, increased bad debt expense, and the stub period from our acquisition of GXS. As a result,Overall, the gross margin percentage on cloudCloud services revenueand subscriptions revenues decreased slightly to approximately 61%60% from approximately 62%61%.
3)    Customer Support Revenues:
Customer support revenues consist of revenues from our customer support and maintenance agreements. These agreements allow our customers to receive technical support, enhancements and upgrades to new versions of our software products when and if available. Customer support revenues are generated from support and maintenance relating to current year sales of software products and from the renewal of existing maintenance agreements for software licenses sold in prior periods. Therefore, changes in customerCustomer support revenues do not always correlate directly to the changes in license revenues from period to period. The terms of support and maintenance agreements are typically twelve months, with customer renewal options. Cost of customerCustomer support revenues is comprised primarily of technical support personnel and related costs, as well as third party royalty costs.
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
Customer Support Revenues:                        
Americas $104,556
 $8,811
 $95,745
 $297,830
 $21,085
 $276,745
 $106,158
 $1,733
 $104,425
 $316,699
 $19,000
 $297,699
EMEA 65,491
 (5,040) 70,531
 206,423
 (297) 206,720
 62,798
 (2,693) 65,491
 194,447
 (11,976) 206,423
Asia Pacific 14,288
 274
 14,014
 43,454
 3,764
 39,690
 14,680
 392
 14,288
 42,294
 (1,160) 43,454
Total Customer Support Revenues 184,335
 4,045
 180,290
 547,707
 24,552
 523,155
 183,636
 (568) 184,204
 553,440
 5,864
 547,576
Cost of Customer Support Revenues 24,092
 (1,114) 25,206
 71,252
 (533) 71,785
 22,427
 (1,657) 24,084
 64,624
 (6,254) 70,878
GAAP-based Customer Support Gross Profit $160,243
 $5,159
 $155,084
 $476,455
 $25,085
 $451,370
 $161,209
 $1,089
 $160,120
 $488,816
 $12,118
 $476,698
GAAP-based Customer Support Gross Margin % 86.9%   86.0% 87.0%   86.3% 87.8%   86.9% 88.3%   87.1%
                        
% Customer Support Revenues by Geography:                        
Americas 56.7%   53.1% 54.4%   52.9% 57.8%   56.7% 57.2%   54.4%
EMEA 35.5%   39.1% 37.7%   39.5% 34.2%   35.6% 35.1%   37.7%
Asia Pacific 7.8%   7.8% 7.9%   7.6% 8.0%   7.7% 7.7%   7.9%
Customer support revenues increaseddecreased by $4.0$0.6 million during the three months ended March 31, 2015,2016, as compared to the same period in the prior fiscal year, which is inclusive of the negative impact of foreign exchange of approximately $13.9$5.6 million. Geographically, the overall increasedecrease was attributable to a decrease in EMEA of $2.7 million, partially offset by an increase in Americas of $8.8$1.7 million and an increase in Asia Pacific of $0.3 million, offset by a decrease in EMEA of $5.0$0.4 million.
Customer support revenues increased by $24.6$5.9 million during the nine months ended March 31, 2015,2016, as compared to the same period in the prior fiscal year, which is inclusive of the negative impact of foreign exchange of approximately $18.2 $32.7

million. Geographically, the overall increase was attributable to an increase in Americas of $21.1$19.0 million, and an increase in Asia Pacific of $3.8 million,partially     offset by a decrease in EMEA of $0.3$12.0 million and a decrease in Asia Pacific of $1.2 million.
Cost of customerCustomer support revenues were relatively stabledecreased by $1.7 million during the three months ended March 31, 2016, primarily due to a reduction in labour-related costs of approximately $1.5 million and a reduction in the installed base of third party products of approximately $0.1 million. As a result, the gross margin percentage on Customer support revenues increased slightly to approximately 88% from approximately 87%.
Cost of Customer support revenues decreased by $6.3 million during the nine months ended March 31, 2015, with2016, primarily due to a reduction in labour-related costs of approximately $4.1 million and a reduction in the installed base of third party products of approximately $2.2 million. As a result, the gross margin percentage on customerCustomer support revenues remaining atincreased slightly to approximately 88% from approximately 87%.
4)    Professional Service and Other Revenues:
Professional service and other revenues consist of revenues from consulting contracts and contracts to provide implementation, training and integration services (professional services). “Other”Other revenues consist of hardware revenues. These revenues are grouped within the “Professional service and other” category because they are relatively immaterial to our service revenues. Professional services are typically performed after the purchase of new software licenses. Cost of professional service and other revenues consists primarily of the costs of providing integration, configuration and training with respect to our various software products. The most significant components of these costs are personnel-related expenses, travel costs and third party subcontracting.

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 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
Professional Service and Other Revenues:                        
Americas $25,789
 $(2,646) $28,435
 $84,462
 $(4,230) $88,692
 $21,352
 $(2,355) $23,707
 $66,918
 $(11,469) $78,387
EMEA 25,008
 (2,192) 27,200
 79,450
 (2,338) 81,788
 20,090
 (3,853) 23,943
 66,309
 (9,443) 75,752
Asia Pacific 4,665
 (681) 5,346
 14,096
 (1,259) 15,355
 3,563
 (1,086) 4,649
 11,780
 (2,235) 14,015
Total Professional Service and Other Revenues 55,462
 (5,519) 60,981
 178,008
 (7,827) 185,835
 45,005
 (7,294) 52,299
 145,007
 (23,147) 168,154
Cost of Professional Service and Other Revenues 44,330
 (4,888) 49,218
 136,332
 (9,566) 145,898
 37,599
 (4,797) 42,396
 114,038
 (15,961) 129,999
GAAP-based Professional Service and Other Gross Profit $11,132
 $(631) $11,763
 $41,676
 $1,739
 $39,937
 $7,406
 $(2,497) $9,903
 $30,969
 $(7,186) $38,155
GAAP-based Professional Service and Other Gross Margin % 20.1%   19.3% 23.4%   21.5% 16.5%   18.9% 21.4%   22.7%
                        
% Professional Service and Other Revenues by Geography:                        
Americas 46.5%   46.6% 47.4%   47.7% 47.4%   45.3% 46.1%   46.6%
EMEA 45.1%   44.6% 44.6%   44.0% 44.6%   45.8% 45.7%   45.0%
Asia Pacific 8.4%   8.8% 7.9%   8.3% 8.0%   8.9% 8.2%   8.4%
Professional service and other revenues decreased by $5.5$7.3 million during the three months ended March 31, 2015,2016, as compared to the same period in the prior fiscal year, of which approximately $4.6$2.3 million was due to the negative impact of foreign exchange. Geographically, the overall decrease was attributable to a decrease in EMEA of $3.9 million, a decrease in Americas of $2.4 million and a decrease in Asia Pacific of $1.1 million.
Professional service and other revenues decreased by $23.1 million during the nine months ended March 31, 2016, as compared to the same period in the prior fiscal year, of which approximately $12.2 million was due to the negative impact of foreign exchange. Geographically, the overall decrease was attributable to a decrease in Americas of $2.6$11.5 million, a decrease in EMEA of $2.2$9.4 million and a decrease in Asia Pacific of $0.7$2.2 million.
Cost of professionalProfessional service and other revenues decreased by $4.9$4.8 million during the three months ended March 31, 2015. This was2016, primarily due to lower labour related expenses associated with lower revenue attainment andas a result of a reduction in labour-related costs of approximately $4.5 million and lower revenue attainment. The gross margin percentage on professional service and other revenues decreased to approximately 16% from approximately 19%.
Cost of Professional service and other revenues decreased by $16.0 million during the use of subcontractors. Asnine months ended March 31, 2016, primarily as a result of a reduction in labour-related costs of approximately $15.3 million and lower revenue attainment.

Overall, the gross margin percentage on professional service and other revenues has increased slightlydecreased to approximately 20%21% from approximately 19%.
Professional service and other revenues decreased by $7.8 million during the nine months ended March 31, 2015, as compared to the same period in the prior fiscal year, of which approximately $6.4 million was due to the negative impact of foreign exchange. Geographically, the overall decrease was attributable to a decrease in Americas of $4.2 million, a decrease in EMEA of $2.3 million, and a decrease in Asia Pacific of $1.3 million.
Cost of professional service and other revenues decreased by $9.6 million during the nine months ended March 31, 2015. This was primarily due to a reduction in labour related expenses associated with lower revenue attainment and other efficiencies gained from the realignment of our Professional Services business. As a result the gross margin percentage on professional service and other revenues has increased to approximately 23% from approximately 21%.
Amortization of Acquired Technology-based Intangible Assets
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
Amortization of acquired technology-based intangible assets $22,136
 $4,989
 $17,147
 $58,548
 $6,836
 $51,712
 $17,630
 $(4,506) $22,136
 $56,244
 $(2,304) $58,548
During the three and nine months ended March 31, 2015,2016, amortization of acquired technology-based intangible assets increaseddecreased by $5.0$4.5 million and $2.3 million, respectively, as compared to the same periodperiods in the prior fiscal year. This is due to the intangible assets pertaining to our acquisitions of Global 360 Holding Corp. (Global 360), StreamServe Inc. (StreamServe), Metastorm Inc. (Metastorm), Operitel Corporation (Operitel), weComm Limited (weComm), Spicer Corporation, eMotion LLC and System Solutions Australia Pty Limited (MessageManager) becoming fully amortized. This was partially offset by additions of new acquired technology-based intangible assets from our acquisitions of Daegis, Actuate IGC, and GXS.Informative Graphics Corporation (IGC).
During the nine months ended March 31, 2015, amortization of acquired technology-based intangible assets increased by $6.8 million, as compared to the same period in the prior fiscal year. This is due to the addition of new acquired technology-based intangible assets from our acquisitions of Actuate, IGC, and GXS, which was partially offset by the intangible assets pertaining to our acquisitions of Vignette Corporation (Vignette), Hummingbird Corporation (Hummingbird), IXOS Software AG (IXOS), and Captaris Inc. becoming fully amortized.

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Operating Expenses
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
Research and development $53,222
 $6,023
 $47,199
 $144,134
 $14,802
 $129,332
 $48,160
 $(5,062) $53,222
 $140,310
 $(3,824) $144,134
Sales and marketing 95,787
 2,087
 93,700
 265,896
 21,493
 244,403
 84,600
 (12,546) 97,146
 248,420
 (20,747) 269,167
General and administrative 45,722
 6,386
 39,336
 121,327
 20,290
 101,037
 37,731
 (7,821) 45,552
 107,067
 (13,895) 120,962
Depreciation 12,809
 2,282
 10,527
 37,516
 13,633
 23,883
 13,754
 945
 12,809
 39,998
 2,482
 37,516
Amortization of acquired customer-based intangible assets 28,250
 3,571
 24,679
 79,498
 25,110
 54,388
 27,966
 (284) 28,250
 83,564
 4,066
 79,498
Special charges 5,622
 (10,280) 15,902
 4,032
 (21,869) 25,901
 (1,671) (7,293) 5,622
 24,754
 20,722
 4,032
Total operating expenses $241,412
 $10,069
 $231,343
 $652,403
 $73,459
 $578,944
 $210,540
 $(32,061) $242,601
 $644,113
 $(11,196) $655,309
                        
% of Total Revenues:                        
Research and development 11.9%   10.7% 10.5%   11.4% 10.9 %   11.9% 10.5%   10.5%
Sales and marketing 21.4%   21.2% 19.4%   21.6% 19.2 %   21.7% 18.5%   19.7%
General and administrative 10.2%   8.9% 8.9%   8.9% 8.6 %   10.2% 8.0%   8.8%
Depreciation 2.9%   2.4% 2.7%   2.1% 3.1 %   2.9% 3.0%   2.7%
Amortization of acquired customer-based intangible assets 6.3%   5.6% 5.8%   4.8% 6.3 %   6.3% 6.2%   5.8%
Special charges 1.3%   3.6% 0.3%   2.3% (0.4)%   1.3% 1.8%   0.3%
Research and development expenses consist primarily of payroll and payroll-related benefits expenses, contracted research and development expenses, and facility costs. Research and development assists with organic growth and improves product stability and functionality, and as suchaccordingly, we dedicate extensive efforts to update and upgrade our product offerings. The primary driver is typically budgeted software upgrades and software development.

 Quarter-over-Quarter Change between Fiscal YTD-over-YTD Change between Fiscal Quarter-over-Quarter Change between Fiscal YTD-over-YTD Change between Fiscal
(In thousands)
 2015 and 2014 2015 and 2014 2016 and 2015 2016 and 2015
Payroll and payroll-related benefits $5,505
 $14,971
 $(3,502) $(979)
Contract labour and consulting (401) (2,238) (467) (1,738)
Share based compensation 331
 (115)
Share-based compensation (217) 91
Travel and communication (223) (1,267) (96) (252)
Facilities 937
 3,443
 (735) (489)
Other miscellaneous (126) 8
 (45) (457)
Total year-over-year change in research and development expenses $6,023
 $14,802
 $(5,062) $(3,824)
Research and development expenses increaseddecreased by $6.0$5.1 million during the three months ended March 31, 20152016 as compared to the same period in the prior fiscal year. Payroll and payroll-related benefits increaseddecreased by $5.5$3.5 million and the use of facility and related resources increaseddecreased by $0.9 million, primarily as a result of the acquisition of Actuate. These increases were partially offset by a decrease in$0.7 million. Additionally, contract labour and consulting expenses of $0.4decreased by $0.5 million, resulting from continued efforts to reduce the usage of external servicesservices. Overall, our research and replace them with internal resources.development expenses, as a percentage of total revenues, decreased to approximately 11% from approximately 12%.
Research and development expenses decreased by $3.8 million during the nine months ended March 31, 2016 as compared to the same period in the prior fiscal year. Contract labour and consulting expenses decreased by $1.7 million, resulting from continued efforts to reduce the usage of external services. Additionally, payroll and payroll-related benefits decreased by $1.0 million and the use of facility and related resources decreased by $0.5 million. Overall, our research and development expenses, as a percentage of total revenues, have increased to approximately 12% from approximately 11% during the same period in the prior fiscal year.
Research and development expenses increased by $14.8 million during the nine months ended March 31, 2015 as compared to the same period in the prior fiscal year. Payroll and payroll-related benefits increased by $15.0 million and the use of facility and related resources increased by $3.4 million, primarily as a result of the acquisitions of GXS in the third quarter of Fiscal 2014 and the acquisition of Actuate in the third quarter of Fiscal 2015. These increases were partially offset by a decrease in contract labour and consulting expenses of $2.2 million, resulting from continued efforts to reduce the usage of external services and replace them with internal resources, and a $1.3 million decrease in travel and communication expense. Overall,

    39

our research and development expenses, as a percentage of total revenues, have remained relatively stable at approximately 11%10%.
Our research and development labour resources increaseddecreased by 305123 employees, from 1,854 employees at March 31, 2014 to 2,159 employees at March 31, 2015.2015 to 2,036 employees at March 31, 2016.
Sales and marketing expenses consist primarily of personnel expenses and costs associated with advertising, marketing and trade shows.
 Quarter-over-Quarter Change between Fiscal YTD-over-YTD Change between Fiscal Quarter-over-Quarter Change between Fiscal YTD-over-YTD Change between Fiscal
(In thousands) 2015 and 2014 2015 and 2014 2016 and 2015 2016 and 2015
Payroll and payroll-related benefits $1,940
 $11,696
 $(7,658) $(15,166)
Commissions (995) 6,365
 (691) 575
Contract labour and consulting (143) 37
 (565) (976)
Share based compensation 822
 1,296
Share-based compensation 435
 1,566
Travel and communication (428) (1,542) (1,554) (4,018)
Marketing expenses (576) 1,737
 (364) (342)
Facilities 224
 92
 (1,046) (646)
Other miscellaneous 1,243
 1,812
 (1,103) (1,740)
Total year-over-year change in sales and marketing expenses $2,087
 $21,493
 $(12,546) $(20,747)
Sales and marketing expenses increaseddecreased by $2.1$12.5 million during the three months ended March 31, 2015,2016, as compared to the same period in the prior fiscal year. This was primarily due to a $1.9$7.7 million increasedecrease in payroll and payroll-related benefits, primarily attributed to our acquisitiona $1.6 million decrease in travel and communication expenses, a $1.0 million decrease in the use of Actuate.facility and related resources, and a $0.7 million decrease in commission expense. Overall, our sales and marketing expenses, as a percentage of total revenues, have remained stable atdecreased to approximately 21%.19% from approximately 22% during the same period in the prior fiscal year.
Sales and marketing expenses increaseddecreased by $21.5$20.7 million during the nine months ended March 31, 2014,2016, as compared to the same period in the prior fiscal year. This was primarily due to a $11.7$15.2 million increasedecrease in payroll and payroll-related benefits, primarily attributed to our acquisitions of GXS and Actuate, and a $6.4 million increase in commission benefits resulting from the increase in total revenues. In addition, marketing expenses increased by $1.7 million, primarily on account promotional activity for our global "sales kick off" event held during the first quarter of Fiscal 2015 and our annual user conference held during the second quarter of Fiscal 2015. These increases were partially offset by a $1.5$4.0 million decrease in travel and communication expenses.expenses, and a $1.0 million decrease in contract labour and consulting expense, and a $0.6 million decrease in the use of facility and related resources. These decreases were partially offset by a $1.6 million increase in share-based compensation expense. Overall, our sales and marketing expenses, as a percentage of total revenues, have decreased slightly to approximately 19% from approximately 22%.20% during the same period in the prior fiscal year.

Our sales and marketing labour resources increaseddecreased by 123218 employees, from 1,425 employees at March 31, 2014 to 1,548 employees at March 31, 2015.2015 to 1,330 employees at March 31, 2016.
General and administrative expenses consist primarily of payroll and payroll related benefits expenses, related overhead, audit fees, other professional fees, consulting expenses and public company costs.
 Quarter-over-Quarter Change between Fiscal YTD-over-YTD Change between Fiscal Quarter-over-Quarter Change between Fiscal YTD-over-YTD Change between Fiscal
(In thousands) 2015 and 2014 2015 and 2014 2016 and 2015 2016 and 2015
Payroll and payroll-related benefits $2,964
 9,571
 $(3,560) $(4,843)
Contract labour and consulting (693) (363) (212) (241)
Share based compensation 699
 (1,759)
Share-based compensation (636) 1,372
Travel and communication 360
 1,994
 240
 1,882
Facilities 258
 (835) 1,616
 1,187
Other miscellaneous 2,798
 11,682
 (5,269) (13,252)
Total year-over-year change in general and administrative expenses $6,386
 $20,290
 $(7,821) $(13,895)
General and administrative expenses increaseddecreased by $6.4$7.8 million during the three months ended March 31, 2015,2016, as compared to the same period in the prior fiscal year. Payroll and payroll-related benefits increased by $3.0 million, primarily as

    40

a result of the acquisition of Actuate. Additionally, otherOther miscellaneous expenses, which includes professional fees such as legal, audit and tax related expenses, increaseddecreased by $2.8$5.3 million primarily on account of litigation.lower litigation expenses. Additionally, payroll and payroll-related benefits decreased by $3.6 million, and share-based compensation decreased by $0.6 million. These decreases were partially offset by an increase in facility and related resources of $1.6 million and a $0.2 million increase in travel and communications. Overall, general and administrative expenses, as a percentage of total revenue increaseddecreased slightly to approximately 10%9% from approximately 9%.10% during the same period in the prior fiscal year.
General and administrative expenses increaseddecreased by $20.3$13.9 million during the nine months ended March 31, 2015,2016, as compared to the same period in the prior fiscal year. Payroll and payroll-related benefits increased by $9.6 million and travel and communication expenses increased by $2.0 million, primarily as a result of the acquisitions of GXS and Actuate. Additionally, otherOther miscellaneous expenses, increasedwhich includes professional fees such as legal, audit and tax related expenses, decreased by $11.7$13.3 million primarily on account of lower litigation expenses. Additionally, payroll and audit and tax fees due to our increased acquisition-related activities.payroll-related benefits decreased by $4.8 million. These increasesdecreases were partially offset by a $1.8$1.9 million decreaseincrease in share based compensation which was due to the one-time issuance of fully vested RSUs during the second quarter of Fiscal 2014.travel and communications and a $1.4 million increase in share-based compensation. Overall, general and administrative expenses, as a percentage of total revenue remained stable atdecreased slightly to approximately 8% from approximately 9%.
Our general and administrative labour resources increaseddecreased by 11540 employees, from 985 employees at March 31, 2014 to 1,100 employees at March 31, 2015.2015 to 1,060 employees at March 31, 2016.
Depreciation expenses:
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
Depreciation $12,809
 $2,282
 $10,527
 $37,516
 $13,633
 $23,883
 $13,754
 $945
 $12,809
 $39,998
 $2,482
 $37,516
Depreciation expenses increasedas a percentage of total revenue remained relatively stable, at approximately 3% during the three and nine months ended March 31, 2015 by $2.3 million and $13.6 million, respectively. This is primarily due2016, as compared to an increasethe same periods in capital expenditures and the acquisition of GXS.prior fiscal year.
Amortization of acquired customer-based intangible assets:
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
Amortization of acquired customer-based intangible assets $28,250
 $3,571
 $24,679
 $79,498
 $25,110
 $54,388
 $27,966
 $(284) $28,250
 $83,564
 $4,066
 $79,498
Acquired customer-based intangible assets amortization expense decreased during the three months ended March 31, 2016 by $0.3 million. This is primarily due to the intangible customer-based assets pertaining to our acquisitions of Global 360 and weComm becoming fully amortized, partially offset by additions of new acquired customer-based intangible assets from our acquisitions of Daegis, Actuate and IGC.

Acquired customer-based intangible assets amortization expense increased during the three and nine months ended March 31, 20152016 by $3.6 million and $25.1 million, respectively.$4.1 million. This is primarily due to theadditions of new acquired customer-based intangible assets from our acquisitions of Daegis, Actuate and IGC, during the third quarter of Fiscal 2015 and GXS during the third quarter of Fiscal 2014,partially offset by the intangible customer-based assets pertaining to our acquisitions of Hummingbird, IXOS,Global 360, Captaris Inc., Vignette Corporation and VignetteweComm becoming fully amortized.
Special charges (recoveries):
Special charges typically relate to amounts that we expect to pay in connection with restructuring plans relating to employee workforce reduction and abandonment of excess facilities, acquisition-related costs and other similar charges. Generally, we implement such plans in the context of integrating existing OpenText operations with that of acquired entities. Actions related to such restructuring plans are typically completed within a period of one year. In certain limited situations, if the planned activity does not need to be implemented, or an expense lower than anticipated is paid out, we record a recovery of the originally recorded expense to Special charges.
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
Special charges (recoveries) $5,622
 $(10,280) $15,902
 $4,032
 $(21,869) $25,901
 $(1,671) $(7,293) $5,622
 $24,754
 $20,722
 $4,032
Special charges decreased during the three months ended March 31, 20152016 by $10.3$7.3 million, as compared to the same period in the prior fiscal year. This wasis primarily due to (i) a $11.7net recovery $2.3 million decrease in restructuring activities, and a $2.0 million decrease in acquisition related costs. These decreases were offset by a $3.4 million increase in other miscellaneous charges, which is primarily relatedrelating to the write offreversal of certain pre-acquisition sales and use tax liabilities and interest being settled, or in certain instances, becoming statute barred, (ii) a decrease of $2.9 million relating to the write-off of unamortized debt issuance costs associated with the reversalrepayment of certain pre-acquisition tax liabilities, includingour previously existing $600 million term loan facility (Term Loan A) in the third quarter of Fiscal 2015, (iii) a $2.1 million decrease related interest, based on our revised estimateto post-business combination compensation obligations, associated with the acquisition of Actuate in the third quarter of Fiscal 2015, (iv) a net decrease in restructuring charges of $0.5 million and (v) a decrease in acquisition related costs of $0.7 million. These decreases were partially offset by an increase of $1.1 million relating to costs incurred for a one-time ERP implementation project in which we are involved. The remainder of the liability and offset, in certain cases,change is due to tax years becoming statute barred.miscellaneous items.

    41

Special charges decreasedincreased during the nine months ended March 31, 20152016 by $21.9$20.7 million, as compared to the same period in the prior fiscal year. This wasis primarily due to (i) a $14.4 million decreasenet increase in restructuring activities,charges of $14.7 million primarily on account of our "Fiscal 2015 Restructuring Plan", which had not been in effect as of March 31, 2015, (ii) an increase of $6.6 million relating to a $4.9lower net impact of reversals from certain pre-acquisition sales and use tax liabilities and interest being settled, or in certain instances, becoming statute barred, in the current fiscal year compared to the prior, and (iii) an increase of $5.9 million relating to costs incurred for a one-time ERP implementation project in which we are involved. These increases were partially offset by (i) a decrease of $2.9 million relating to the write-off of unamortized debt issuance costs associated with the repayment of Term Loan A in the third quarter of Fiscal 2015, (ii) a decrease in acquisition related costs of $2.3 million and (iii) a $2.5$2.1 million decrease related to post-business combination compensation obligations, associated with the acquisition of Actuate in otherthe third quarter of Fiscal 2015. The remainder of the change is due to miscellaneous charges.items.
For more details on Special charges (recoveries), see note 17 "Special Charges (Recoveries)" to our Condensed Consolidated Financial Statements.Statements.
Net Other Income (Expense)
Net other income (expense) relates to certain non-operational charges consisting primarily of transactional foreign exchange gains (losses). This income (expense) is dependent upon the change in foreign currency exchange rates vis-à-vis the functional currency of the legal entity.
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
Other income (expense), net $(9,550) $(11,202) $1,652
 $(28,737) $(31,575) $2,838
 $2,120
 $11,670
 $(9,550) $(1,832) $26,905
 $(28,737)
During the three and nine months ended March 31, 2015, Other income included a gain of $3.1 million, respectively, as a result of remeasuring to fair value our investment in Actuate shares held before the date of acquisition. For more details see note 18 "Acquisitions" to our Condensed Consolidated Financial Statements.
Net Interest and Other Related Expense
Net interest and other related expense is primarily comprised of cash interest paid and accrued on our debt facilities, offset by interest income earned on our cash and cash equivalents.
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change (increase) decrease 2015 2016 Change (increase) decrease 2015
Interest and other related expense, net $16,872
 $7,138
 $9,734
 $36,426
 $19,267
 $17,159
 $16,228
 $(644) $16,872
 $54,461
 $18,035
 $36,426
Net interest and other related expense decreased during the three months ended March 31, 2016 by $0.6 million as compared to the same period in the prior fiscal year. This is primarily due to investment income of $2.1 million received as part of income distributions made from companies accounted for as cost basis investments, and a reduction in interest expense resulting from the repayment of our Term Loan A. These were partially offset by additional interest expense incurred relating to the Senior Notes (defined below).
Net interest and other related expense increased during the three and nine months ended March 31, 20152016 by $7.1$18.0 million and $19.3 million, respectively.as compared to the same period in the prior fiscal year. This wasis primarily the result ofdue to additional interest expense incurred relating to the Senior Notes, and our Term Loan B, offset by a reduction in interest expense resulting from the repayment of our Term Loan A (each as defined below). Additionally, we received investment income of $0.4 million and $2.1 million, respectively, during the three and nine months ended March 31, 2015 as part of income distributions made from one of our cost basis investments.A.
For more details see note 10 "Long-Term Debt" to our Condensed Consolidated Financial Statements.Statements.
Provision for Income Taxes
We initiated an internal reorganization of our international subsidiaries in our fiscal year which began on July 1, 2009 and ended June 30, 2010 and we continue to integrateintegrated certain acquisitions into this new organizational structure, where appropriate, for the following reasons: 1) to consolidate our intellectual property within certain jurisdictions, 2) to effect an operational reduction of our global subsidiaries with a view to, eventually, having a single operating legal entity in each jurisdiction, 3) to better safeguard our intellectual property in jurisdictions with well established legal regimes and protections and 4) to simplify the management of our intellectual property ownership.
We operate in several tax jurisdictions and are exposed to various foreign tax rates. We also note that we are subject to tax rate discrepancies between our domestic tax rate and foreign tax rates that are significant and these discrepancies are primarily related to earnings in Luxembourg.
 Three Months Ended March 31, Nine Months Ended March 31, Three Months Ended March 31, Nine Months Ended March 31,
(In thousands) 2015 Change increase (decrease) 2014 2015 Change increase (decrease) 2014 2016 Change increase (decrease) 2015 2016 Change increase (decrease) 2015
Provision for income taxes $(309) $(13,280) $12,971
 $35,401
 $(13,175) $48,576
 $5,353
 $5,662
 $(309) $20,629
 $(14,772) $35,401

    42

The effective GAAP tax rate (which is the provision for taxes expressed as a percentage of net income before taxes) decreasedincreased to a recovery, representing 1.2%an expense of income7.2% for the three months ended March 31, 2015,2016, compared to a chargerecovery of 22.1%1.2% for the three months ended March 31, 2014, resulting in a reduction of2015. The increase to tax expense in the amount of $13.3 million. This decrease$5.7 million is primarily the result of (i) lowerhigher net income, having an impact of $10.8$12.8 million, partially offset by (i) variances in income among jurisdictions resulting in an increased benefit of foreign rates in the amount of $4.4 million and (ii) a decrease in the impact of adjustments on filingamount of tax returnsfilings in excess of amounts booked in the amount of $1.5 million, and (iii) a decrease in the impact of permanent differences in the amount of $1.3 million. These impacts were offset by an increase in the net change in valuation allowance in the amount of $1.5$3.4 million. The remainder of the differences are due to normal course movements and non-material items.
The effective GAAP tax rate (which isdecreased to 9.4% for the provision for taxes expressed as a percentage of income before taxes) decreasednine months ended March 31, 2016, compared to 17.6% for the nine months ended March 31, 2015, from 27.2% for the nine months ended March 31, 2014, resulting in a reduction of2015. The decrease to tax expense in the amount of $13.2 million. This decrease$14.8 million is primarily due to a decrease in the impactresult of non-deductible amortization expense in the amount of $4.8 million, a decrease in the net change in valuation allowance in the amount of $1.3 million, a decrease in the net expense of unrecognized tax benefits with related interest and penalties in the amount of $2.4 million, and a decrease in the impact of adjustments on filing of tax returns in the amount of $3.8$14.5 million. The remainder of the differences are due to normal course movements and non-material items.
For information with regards to certain potential tax contingencies, see note 13 "Guarantees and Contingencies" to our Condensed Consolidated Financial Statements.


    43


Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with U.S. GAAP, the Company provides certain financial measures that are not in accordance with U.S. GAAP (Non-GAAP).These. These Non-GAAP financial measures have certain limitations in that they do not have a standardized meaning and thus the Company's definition may be different from similar Non-GAAP financial measures used by other companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company's financial performance to that of other companies. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of these Non-GAAP financial measures both in its reconciliation to the U.S. GAAP financial measures and its Condensed Consolidated Financial Statements, all of which should be considered when evaluating the Company's results.
The Company uses these Non-GAAP financial measures to supplement the information provided in its Condensed Consolidated Financial Statements, which are presented in accordance with U.S. GAAP. The presentation of Non-GAAP financial measures are not meant to be a substitute for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a supplement to such U.S. GAAP measures. OpenText strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement the disclosure of the U.S. GAAP measures with certain Non-GAAP measures defined below.
Non-GAAP-based net income and Non-GAAP-based EPS are calculated as net income or earnings per share on a diluted basis, excluding the amortization of acquired intangible assets, other income (expense), share-based compensation, and specialSpecial charges (recoveries), all net of tax. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit and the amortization of acquired technology-based intangible assets.assets and share-based compensation within cost of sales. Non-GAAP-based gross margin is calculated as Non-GAAP-based gross profit expressed as a percentage of revenue. Non-GAAP-based income from operations is calculated as income from operations, excluding the amortization of acquired intangible assets, specialSpecial charges (recoveries), and share-based compensation expense. Non-GAAP-based operating margin is calculated as Non-GAAP-based income from operations expressed as a percentage of revenue.
The Company's management believes that the presentation of the above defined Non-GAAP financial measures provides useful information to investors because they portray the financial results of the Company before the impact of certain non-operational charges. The use of the term “non-operational charge” is defined for this purpose as an expense that does not impact the ongoing operating decisions taken by the Company's management and is based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports. In the course of such evaluation and for the purpose of making operating decisions, the Company's management excludes certain items from its analysis, including amortization of acquired intangible assets, specialSpecial charges (recoveries), share-based compensation, other income (expense), and the taxation impact of these items. These items are excluded based upon the manner in which management evaluates the business of the Company and are not excluded in the sense that they may be used under U.S. GAAP.
The Company believes the provision of supplemental Non-GAAP measures allow investors to evaluate the operational and financial performance of the Company's core business using the same evaluation measures that management uses, and is therefore a useful indication of OpenText's performance or expected performance of future operations and facilitates period-to-period comparison of operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary Non-GAAP financial measures that exclude certain items from the presentation of its financial results.
The following charts provide unaudited reconciliations of U.S. GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented:

    44


Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended March 31, 20152016
(in thousands except for per share data)
Three Months Ended March 31, 2015Three Months Ended March 31, 2016
GAAP-based MeasuresGAAP-based Measures % of RevenueAdjustmentsNoteNon-GAAP-based MeasuresNon-GAAP-based Measures % of RevenueGAAP-based MeasuresGAAP-based Measures % of RevenueAdjustmentsNoteNon-GAAP-based MeasuresNon-GAAP-based Measures % of Revenue
Cost of revenues            
Cloud services$59,989
 $(182)(1)$59,807
 
Cloud services and subscriptions$61,298
 $(202)(1)$61,096
 
Customer support24,092
 (224)(1)23,868
 22,427
 (215)(1)22,212
 
Professional service and other44,330
 (316)(1)44,014
 37,599
 (247)(1)37,352
 
Amortization of acquired technology-based intangible assets22,136
 (22,136)(2)—
 17,630
 (17,630)(2)—
 
GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)		294,016
65.7%22,858
(3)316,874
70.8%299,109
67.9%18,294
(3)317,403
72.0%
Operating expenses            
Research and development53,222
 (654)(1)52,568
 48,160
 (500)(1)47,660
 
Sales and marketing95,787
 (1,919)(1)93,868
 84,600
 (3,213)(1)81,387
 
General and administrative45,722
 (3,267)(1)42,455
 37,731
 (1,589)(1)36,142
 
Amortization of acquired customer-based intangible assets28,250
 (28,250)(2)—
 27,966
 (27,966)(2)—
 
Special charges (recoveries)5,622
 (5,622)(4)—
 (1,671) 1,671
(4)—
 
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)52,604
11.8%62,570
(5)115,174
25.7%88,569
20.1%49,891
(5)138,460
31.4%
Other income (expense), net(9,550) 9,550
(6)—
 2,120
 (2,120)(6)—
 
Provision for (recovery of) income taxes(309) 18,122
(7)17,813
 5,353
 19,100
(7)24,453
 
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText26,610
 53,998
(8)80,608
 69,115
 28,671
(8)97,786
 
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText$0.22
 $0.44
(8)$0.66
 $0.57
 $0.23
(8)$0.80
 

(1)Adjustment relates to the exclusion of share basedshare-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 revenue.
(4)Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods following the relevant acquisitions and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5)GAAP-based and Non-GAAP-based income from operations stated in dollars and operating margin stated as a percentage of revenue.
(6)Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.
(7)Adjustment relates to differences between the GAAP-based tax provision rate of approximately 7% and a Non-GAAP-based tax rate of 20%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, tax arising on internal reorganizations, and “book to return” adjustments for tax return filings and tax assessments (in total “adjusted expenses”). In arriving at our Non-GAAP-based tax rate of 20%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

(8)Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income:
 Three Months Ended March 31, 2016
  Per share diluted
Non-GAAP-based net income, attributable to OpenText$97,786
$0.80
Less:  
Amortization45,596
0.37
Share-based compensation5,966
0.05
Special charges (recoveries)(1,671)(0.01)
Other (income) expense, net(2,120)(0.02)
GAAP-based provision for (recovery of) income taxes5,353
0.04
Non-GAAP based provision for income taxes(24,453)(0.20)
GAAP-based net income, attributable to OpenText$69,115
$0.57

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended March 31, 2015
(in thousands except for per share data)
 Three Months Ended March 31, 2015
 GAAP-based MeasuresGAAP-based Measures % of RevenueAdjustmentsNoteNon-GAAP-based MeasuresNon-GAAP-based Measures % of Revenue
Cost of revenues      
Cloud services and subscriptions$60,776
 $(182)(1)$60,594
 
Customer support24,084
 (224)(1)23,860
 
Professional service and other42,396
 (316)(1)42,080
 
Amortization of acquired technology-based intangible assets22,136
 (22,136)(2)—
 
GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)		295,205
66.0%22,858
(3)318,063
71.1%
Operating expenses      
Research and development53,222
 (654)(1)52,568
 
Sales and marketing97,146
 (1,919)(1)95,227
 
General and administrative45,552
 (3,267)(1)42,285
 
Amortization of acquired customer-based intangible assets28,250
 (28,250)(2)—
 
Special charges (recoveries)5,622
 (5,622)(4)—
 
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)52,604
11.8%62,570
(5)115,174
25.7%
Other income (expense), net(9,550) 9,550
(6)—
 
Provision for (recovery of) income taxes(309) 18,122
(7)17,813
 
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText26,610
 53,998
(8)80,608
 
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText$0.22
 $0.44
(8)$0.66
 

(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 revenue.
(4)Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods following the relevant acquisitions and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5)GAAP-based and Non-GAAP-based income from operations stated in dollars and operating margin stated as a percentage of revenue.
(6)Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.
(7)Adjustment relates to differences between the GAAP-based tax recovery rate of approximately 1% and a non-GAAP-basedNon-GAAP-based tax rate of 18%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating non-GAAP-basedNon-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, specialSpecial charges (recoveries) and other income (expense), net. Also excluded are tax expense items unrelated to current period income such as movementschanges in FIN48reserves for tax uncertainties and valuation allowance reserves, tax arising on internal reorganizations, and “book to return” adjustments for tax return filings and tax assessments (in total “adjusted expenses”). In arriving at our non-GAAP-basedNon-GAAP-based tax rate of 18%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

    45


(8)Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income:
 Three Months Ended March 31, 2015
  Per share diluted
Non-GAAP-based net income, attributable to OpenText$80,608
$0.66
Less:  
Amortization50,386
0.41
Share-based compensation6,562
0.05
Special charges (recoveries)5,622
0.05
Other (income) expense, net9,550
0.08
GAAP-based provision for (recovery of) income taxes(309)—
Non-GAAP based provision for income taxes(17,813)(0.15)
GAAP-based net income, attributable to OpenText$26,610
$0.22

    46


Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the threenine months ended March 31, 20142016
(in thousands except for per share data)
Three Months Ended March 31, 2014Nine Months Ended March 31, 2016
GAAP-based MeasuresGAAP-based Measures % of RevenueAdjustmentsNoteNon-GAAP-based MeasuresNon-GAAP-based Measures % of RevenueGAAP-based MeasuresGAAP-based Measures % of RevenueAdjustmentsNoteNon-GAAP-based MeasuresNon-GAAP-based Measures % of Revenue
Cost of revenues            
Cloud services$49,464
 $(167)(1)$49,297
 
Cloud services and subscriptions$179,132
 $(641)(1)$178,491
 
Customer support25,206
 (138)(1)25,068
 64,624
 (631)(1)63,993
 
Professional service and other49,218
 (245)(1)48,973
 114,038
 (1,086)(1)112,952
 
Amortization of acquired technology-based intangible assets17,147
 (17,147)(2)—
 56,244
 (56,244)(2)—
 
GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)		298,192
67.3%17,697
(3)315,889
71.3%919,197
68.6%58,602
(3)977,799
72.9%
Operating expenses            
Research and development47,199
 (384)(1)46,815
 140,310
 (1,988)(1)138,322
 
Sales and marketing93,700
 (1,926)(1)91,774
 248,420
 (9,043)(1)239,377
 
General and administrative39,336
 (1,558)(1)37,778
 107,067
 (5,691)(1)101,376
 
Amortization of acquired customer-based intangible assets24,679
 (24,679)(2)—
 83,564
 (83,564)(2)—
 
Special charges (recoveries)15,902
 (15,902)(4)—
 24,754
 (24,754)(4)—
 
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)66,849
15.1%62,146
(5)128,995
29.1%275,084
20.5%183,642
(5)458,726
34.2%
Other income (expense), net1,652
 (1,652)(6)—
 (1,832) 1,832
(6)—
 
Provision for (recovery of) income taxes12,971
 3,814
(7)16,785
 20,629
 60,149
(7)80,778
 
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText45,884
 56,680
(8)102,564
 198,087
 125,325
(8)323,412
 
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText$0.38
 $0.46
(8)$0.84
 $1.62
 $1.03
(8)$2.65
 

(1)Adjustment relates to the exclusion of share basedshare-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 revenue.
(4)Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods following the relevant acquisitions and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5)GAAP-based and Non-GAAP-based income from operations stated in dollars and operating margin stated as a percentage of revenue.
(6)Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.
(7)Adjustment relates to differences between the GAAP-based tax provision rate of approximately 22%9% and a non-GAAP-basedNon-GAAP-based tax rate of 14%20%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating non-GAAP-basedNon-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, specialSpecial charges (recoveries) and other income (expense), net. Also excluded are tax expense items unrelated to current period income such as movementschanges in FIN48reserves for tax uncertainties and valuation allowance reserves, tax arising on internal reorganizations, and “book to return” adjustments for tax return filings and tax assessments (in total “adjusted expenses”). In arriving at our non-GAAP-basedNon-GAAP-based tax rate of 14%20%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

    47


(8)Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income:
Three Months Ended March 31, 2014Nine Months Ended March 31, 2016
 Per share diluted
 Per share diluted
Non-GAAP-based net income, attributable to OpenText$102,564
$0.84
$323,412
$2.65
Less:  
Amortization41,826
0.34
139,808
1.15
Share-based compensation4,418
0.04
19,080
0.16
Special charges (recoveries)15,902
0.13
24,754
0.20
Other (income) expense, net(1,652)(0.01)1,832
0.02
GAAP-based provision for (recovery of) income taxes12,971
0.11
20,629
0.17
Non-GAAP based provision for income taxes(16,785)(0.15)(80,778)(0.67)
GAAP-based net income, attributable to OpenText$45,884
$0.38
$198,087
$1.62

    48


Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the nine months ended March 31, 2015
(in thousands except for per share data)
 Nine Months Ended March 31, 2015
 GAAP-based MeasuresGAAP-based Measures % of RevenueAdjustmentsNoteNon-GAAP-based MeasuresNon-GAAP-based Measures % of Revenue
Cost of revenues      
Cloud services$174,959
 $(581)(1)$174,378
 
Customer support71,252
 (632)(1)70,620
 
Professional service and other136,332
 (914)(1)135,418
 
Amortization of acquired technology-based intangible assets58,548
 (58,548)(2)—
 
GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)		918,604
67.1%60,675
(3)979,279
71.5%
Operating expenses      
Research and development144,134
 (1,831)(1)142,303
 
Sales and marketing265,896
 (6,587)(1)259,309
 
General and administrative121,327
 (5,395)(1)115,932
 
Amortization of acquired customer-based intangible assets79,498
 (79,498)(2)—
 
Special charges (recoveries)4,032
 (4,032)(4)—
 
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)266,201
19.4%158,018
(5)424,219
31.0%
Other income (expense), net(28,737) 28,737
(6)—
 
Provision for (recovery of) income taxes35,401
 34,288
(7)69,689
 
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText165,523
 152,467
(8)317,990
 
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText$1.35
 $1.24
(8)$2.59
 
 Nine Months Ended March 31, 2015
 GAAP-based MeasuresGAAP-based Measures % of RevenueAdjustmentsNoteNon-GAAP-based MeasuresNon-GAAP-based Measures % of Revenue
Cost of revenues      
Cloud services and subscriptions$178,886
 $(581)(1)$178,305
 
Customer support70,878
 (632)(1)70,246
 
Professional service and other129,999
 (914)(1)129,085
 
Amortization of acquired technology-based intangible assets58,548
 (58,548)(2)—
 
GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)		921,510
67.3%60,675
(3)982,185
71.7%
Operating expenses      
Research and development144,134
 (1,831)(1)142,303
 
Sales and marketing269,167
 (6,587)(1)262,580
 
General and administrative120,962
 (5,395)(1)115,567
 
Amortization of acquired customer-based intangible assets79,498
 (79,498)(2)—
 
Special charges (recoveries)4,032
 (4,032)(4)—
 
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)266,201
19.4%158,018
(5)424,219
31.0%
Other income (expense), net(28,737) 28,737
(6)—
 
Provision for (recovery of) income taxes35,401
 34,288
(7)69,689
 
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText165,523
 152,467
(8)317,990
 
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText$1.35
 $1.24
(8)$2.59
 

(1)Adjustment relates to the exclusion of share basedshare-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 revenue.
(4)Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods following the relevant acquisitions and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5)GAAP-based and Non-GAAP-based income from operations stated in dollars and operating margin stated as a percentage of revenue.
(6)Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.
(7)Adjustment relates to the income tax effects of expenses that are excluded for the purpose of calculating non-GAAP-basedNon-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, specialSpecial charges (recoveries) and other income (expense), net. Also excluded are tax expense items unrelated to current period income such as movementschanges in FIN48reserves for tax uncertainties and valuation allowance reserves, tax arising on internal reorganizations, and “book to return” adjustments for tax return filings and tax assessments (in total “adjusted expenses”). In arriving at our non-GAAP-basedNon-GAAP-based tax rate of 18%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

    49


(8)Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income:
 Nine Months Ended March 31, 2015
  Per share diluted
Non-GAAP-based net income, attributable to OpenText$317,990
$2.59
Less:  
Amortization138,046
1.12
Share-based compensation15,940
0.13
Special charges (recoveries)4,032
0.03
Other (income) expense, net28,737
0.23
GAAP-based provision for (recovery of) income taxes35,401
0.29
Non-GAAP based provision for income taxes(69,689)(0.56)
GAAP-based net income, attributable to OpenText$165,523
$1.35

    50


Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the nine months ended March 31, 2014
(in thousands except for per share data)
 Nine Months Ended March 31, 2014
 GAAP-based MeasuresGAAP-based Measures % of RevenueAdjustmentsNoteNon-GAAP-based MeasuresNon-GAAP-based Measures % of Revenue
Cost of revenues      
Cloud services$79,692
 $(145)(1)$79,547
 
Customer support71,785
 (547)(1)71,238
 
Professional service and other145,898
 (743)(1)145,155
 
Amortization of acquired technology-based intangible assets51,712
 (51,712)(2)—
 
GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)		771,767
68.3%53,147
(3)824,914
73.0%
Operating expenses      
Research and development129,332
 (1,906)(1)127,426
 
Sales and marketing244,403
 (6,200)(1)238,203
 
General and administrative101,037
 (6,166)(1)94,871
 
Amortization of acquired customer-based intangible assets54,388
 (54,388)(2)—
 
Special charges (recoveries)25,901
 (25,901)(4)—
 
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)192,823
17.1%147,708
(5)340,531
30.1%
Other income (expense), net2,838
 (2,838)(6)—
 
Provision for (recovery of) income taxes48,576
 (3,216)(7)45,360
 
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText130,014
 148,086
(8)278,100
 
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText$1.08
 $1.24
(8)$2.32
 
(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 revenue.
(4)Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges are generally incurred in the periods following the relevant acquisitions and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5)GAAP-based and Non-GAAP-based income from operations stated in dollars and operating margin stated as a percentage of revenue.
(6)Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.
(7)Adjustment relates to differences between the GAAP-based tax provision rate of approximately 27% and a non-GAAP-based tax rate of 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 and other income (expense), net. Also excluded are tax expense items unrelated to current period income such as movements in FIN48 and valuation allowance reserves, tax arising on internal reorganizations, and “book to return” adjustments for tax return filings and tax assessments (in total “adjusted expenses”). In arriving at our non-GAAP-based tax rate of 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

    51


(8)Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income:
 Nine Months Ended March 31, 2014
  Per share diluted
Non-GAAP-based net income, attributable to OpenText$278,100
$2.32
Less:  
Amortization106,100
0.88
Share-based compensation15,707
0.13
Special charges (recoveries)25,901
0.22
Other (income) expense, net(2,838)(0.02)
GAAP-based provision for (recovery of) income taxes48,576
0.40
Non-GAAP based provision for income taxes(45,360)(0.37)
GAAP-based net income, attributable to OpenText$130,014
$1.08


    52

LIQUIDITY AND CAPITAL RESOURCES
The following tables set forth changes in cash flows from operating, investing and financing activities for the periods indicated:
(In thousands)
 As of March 31, 2015 Change increase (decrease) As of June 30, 2014 As of March 31, 2016 
Change
increase (decrease)
 As of June 30, 2015
Cash and cash equivalents $613,177
 $185,287
 $427,890
 $877,405
 $177,406
 $699,999
Marketable Securities* $30,211
 $30,211
 $—
Short-term investments $13,008
 $(7,266) $20,274
*The long-term portion of the marketable securities are included within "Other Assets" in the Condensed Consolidated Balance Sheets
 Nine Months Ended March 31, Nine Months Ended March 31,
(In thousands)
 2015 Change 2014 2016 Change 2015
Cash provided by operating activities $391,214
 $109,001
 $282,213
 $406,602
 $15,388
 $391,214
Cash used in investing activities $(390,169) $749,937
 $(1,140,106) $(81,572) $308,597
 $(390,169)
Cash provided by financing activities $211,452
 $(506,299) $717,751
Cash provided by (used in) financing activities $(141,678) $(353,130) $211,452
Cash and cash equivalents
Cash and cash equivalents primarily consist of deposits held at major banks with original maturities of 90 days or less.
We anticipate that our cash and cash equivalents, as well as available credit facilities, will be sufficient to fund our anticipated cash requirements for working capital, contractual commitments, capital expenditures, dividends, potential acquisitions under our normal course issuer bid, and operating needs for the next 12 months. However, any further material or acquisition-related activities may require additional sources of financing and would be subject to the financial covenants established under our credit facilities. For more details, see "Long-term Debt and Credit Facilities" below.
We do not have any material restrictions on repatriation of cash from foreign subsidiaries nor do we expect taxes on repatriation of cash held in foreign subsidiaries to have a material effect on our overall liquidity, financial condition or results of operations.  As at March 31, 2015,2016, we have provided $8.9$13.6 million (June 30, 2014-2015—$7.612.1 million) in respect of both additional foreign withholding taxes or deferred income tax liabilities for temporary differences related to the undistributed earnings of certain non-United States subsidiaries, and planned periodic repatriations from certain United States and Luxembourg subsidiaries, that will be subject to withholding taxes upon distribution.
Cash flows provided by operating activities
Cash flows from operating activities increased by $109.0$15.4 million due to an increase in net income before the impact of non-cash items of $83.9$30.1 million, and an increasepartially offset by a decrease in changes from working capital of $25.1$14.7 million. The increasedecrease in operating cash flow from changes in working capital of $25.1 million is primarily due to the net impacta higher accounts receivable balance, resulting in a decrease to operating cash flow of the following changes:$54.4 million. This was partially offset by (i) $57.4$26.3 million relating to a lowerhigher accounts receivablepayable and accrued liabilities balance, (ii) $14.6$5.9 million relating to a higher deferred revenue balance, (iii) $4.2 million due to a lower prepaid and other current assets balance, and (iii) $1.3 million relating to a higher other assets balance, absent the impact of a $3.1 million non-cash pre-acquisition adjustment relating to the mark-to-market from our pre-acquisition investment in Actuate. These increases were offset by the net impact of the following changes: (i) $14.1(iv) $1.9 million relating to the net impact of changes in income taxes payable and deferred charges and credits (ii) $13.3and (v) $1.4 million relatingdue to a lower deferred revenue balance,prepaid and (iii) $20.8 million relating to a lower accounts payable and accrued liabilitiesother current assets balance. The changes in working capital were largely due to the increased scale of operations resulting from our GXS acquisition.
During the third quarter of Fiscal 20152016 our Days Sales Outstanding (DSO) was 5154 days compared to a DSO of 5251 days during the third quarter of Fiscal 20142015 and the per day impact of our DSO in the third quarters of Fiscal 20152016 and Fiscal 20142015 on our cash flows was $2.8$3.0 million and $2.9$2.8 million, respectively.
Cash flows used in investing activities
Our cash flows used in investing activities is primarily on account of acquisitions and additions of property and equipment.
Cash flows used in investing activities decreased by $749.9$308.6 million. This is primarily due to lower(i) the purchase consideration for our acquisitions made duringActuate in the first nine monthsamount of Fiscal 2015 than$283.6 million, inclusive of a payment of $8.2 million relating to Actuate equity-based liabilities that were accrued for our acquisitions made duringbut were unpaid at the first nine monthstime of Fiscal 2014, and proceedsacquisition (ii) the purchase consideration for IGC in the amount of $7.1$31.7 million, from the maturityinclusive of short-term investments acquireda payment of $3.5 million relating to an amount that was previously held back in accordance with the acquisition of Actuate.

    53

These were partially offset by incrementalpurchase agreement (iii) a decrease in additions to property and equipment of $32.1$11.7 million, and(iv) a $6.4 million increasedecrease in other investing activities.activities of $2.8 million, and (v) proceeds of $2.1 million received from the maturity of short-term investments. These decreases were partially offset by (i) the purchase consideration for Daegis in the amount of $22.1 million, and (ii) a payment of $2.0 million relating to an amount previously held back on a prior acquisition in accordance with the terms of the agreement.

Cash flows from financing activities
Our cash flows from financing activities generally consist of long-term debt financing and amounts received from stock options exercised by our employees. These inflows are typically offset by scheduled and non-scheduled repayments of our long-term debt financing and, when applicable, the payment of dividends and/or the repurchases of our Common Shares.
Cash flows provided byused in financing activities decreasedincreased by $506.3$353.1 million. This is primarily due to (i) the issuance of $800.0 million in aggregate principal amount of our Senior Notes (defined below), (ii) the repurchase of approximately 1.5 million Common Shares for approximately $65.5 million under our Share Repurchase Plan, (iii) a $9.4 million increase in the repurchase of Common Shares for potential reissuance under our Long Term Incentive Plans (LTIP) or other plans, and (iv) a $8.5 million increase in dividend payments made to our shareholders. These increases were partially offset by (i) a reduction in principal payments on our credit facilities of $514.5 million, inclusive of the repayment of the outstanding balance of our Term Loan A during the third quarter of Fiscal 2015, and (ii) a $9.5 million increasereduction in dividend payments made to our shareholders, and a $6.8 million decrease in cash collected from the issuanceincurrence of Common Shares. Additionally, we incurred approximately $2.0 million in additional debt issuance costs (see note 7 "Other Assets", and note 10 "Long-term Debt" to our Condensed Consolidated Financial Statements).of $18.1 million.
Cash Dividends
During the three and nine months endedMarch 31, 2015,2016, we declared and paid cash dividends of $0.1725$0.20 per Common Share and $0.5175$0.60 per Common Share, respectively, that totaled $21.1$24.1 million and $63.2$71.6 million, respectively. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of our Board of Directors.the Board.
Long-term Debt and Credit Facilities
Senior Unsecured Fixed Rate Notes
On January 15, 2015, we issued $800.0$800 million in aggregate principal amount of our 5.625% Senior Notes due 2023 (the Senior(Senior Notes) in a private placementan unregistered offering to initial purchasers in connection with offeringsqualified 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. The Senior Notes 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. The Senior Notes will mature on January 15, 2023, unless earlier redeemed in accordance with their terms, or repurchased.
We may redeem all or a portion of the Senior Notes at any time prior to January 15, 2018 at a redemption price equal to 100% of the principal amount of the Senior Notes plus an applicable premium, plus accrued and unpaid interest, if any, to the redemption date. In addition, we may also redeem up to 40% of the aggregate principal amount of the Senior Notes, on one or more occasions, prior to January 15, 2018, using the net proceeds from certain qualified equity offerings at a redemption price of 105.625% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, subject to compliance with certain conditions. We may, on one or more occasion, redeem the Senior Notes, in whole or in part, at any time on and after January 15, 2018 at the applicable redemption prices set forth in the indenture, dated as of January 15, 2015, among the Company, the subsidiary guarantors party thereto, Citibank, N.A., as U.S. trustee, and Citi Trust Company Canada, as Canadian Trustee (the Indenture), plus accrued and unpaid interest, if any, to the redemption date.
If we experience one of the kinds of changes of control triggering events specified in the Indenture, we will be required to make an offer to repurchase the Senior Notes at a price equal to 101% of the principal amount of the Senior Notes, plus accrued and unpaid interest, if any, to the date of purchase.
The Indenture contains covenants that limit our and certain of our subsidiaries’ ability to, among other things: (i) create certain liens and enter into sale and lease-back transactions; (ii) create, assume, incur or guarantee additional indebtedness of the Company or the subsidiary guarantors without such subsidiary becoming a subsidiary guarantor of the Senior Notes; and (iii) consolidate, amalgamate or merge with, or convey, transfer, lease or otherwise dispose of its property and assets substantially as an entirety to, another person. These covenants are subject to a number of important limitations and exceptions as set forth in the Indenture. The indentureIndenture also provides for events of default, which, if any of them occurs, may permit or, in certain circumstances, require the principal, premium, if any, interest and any other monetary obligations on all the then-outstanding notes to be due and payable immediately.
The Senior Notes are initially guaranteed on a senior unsecured basis by our existing and future wholly-owned subsidiaries that borrow or guarantee the obligations under the Revolver and Term Loan B (each defined below). The Senior Notes and the guarantees rank equally in right of payment with all of our and our subsidiary guarantors’ existing and future senior unsubordinated debt and will rank senior in right of payment to all of our and our subsidiary guarantors’ future subordinated debt. The Senior Notes and the guarantees will be effectively subordinated to all of ours and our guarantors’ existing and future secured debt, including the obligations under the Revolver and Term Loan B, to the extent of the value of the assets securing such secured debt.

    54

On January 15, 2015, we used a portion of the net proceeds of the offering of the Senior Notes to repay in full the outstanding Term Loan A (as defined below). We have added the remaining net proceeds of the offering to our cash balances for general corporate purposes, including potential future acquisitions.
The foregoing description of the Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the Indenture, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on January 15, 2015.
Term Loan A and Revolver
Prior to January 15, 2015, one of our credit facilities consisted of a $600 million term loan facility (Term Loan A) and a $300 million committed revolving credit facility (the Revolver and, together with Term Loan A, the 2011 Credit Agreement).
On January 15, 2015, concurrently with the closing of the offering of the Senior Notes, we used a portion of the net proceeds from the offering of the Senior Notes to repay in full the outstanding balance of our Term Loan A.
On January 15, 2015, concurrently with the closing of the offering of the Senior Notes and effective upon the repayment in full of Term Loan A with a portion of the net proceeds of the offering, the 2011 Credit Agreement was amended and restated as described in the second amendment to the 2011 Credit Agreement to, among other things, remove the provisions related to Term Loan A and modify certain provisions related to the incurrence of debt and liens and the making of acquisitions, investments and restricted payments, replace the covenants to maintain a “consolidated leverage” ratio of no more than 3:1 and a “consolidated interest coverage” ratio of 3:1 or more with a covenant to maintain a “consolidated net leverage” ratio of no more than 4:1, and make other changes, in each case, generally to conform with Term Loan B, as further described below.  Borrowings under  the Revolver are secured by a first charge over substantially all of our assets, and as of January 16, 2014, on a pari passu basis with Term Loan B (as defined below). As part of the second amendment to the 2011 Credit Agreement, the commitments available under the Revolver was increased to $300 million from $100 million. The Revolver will mature on December 22, 2019 with no fixed repayment date prior to the end of the term. As of March 31, 2015, we have not drawn any amounts on the Revolver.
Term Loan B
In connection with the acquisition of GXS, on January 16, 2014, we entered into a second credit facility, which provides for a $800 million term loan facility with certain lenders named therein, Barclays Bank PLC (Barclays), as sole administrative agent and collateral agent, and with Barclays and RBC Capital Markets as lead arrangers and joint bookrunners (Term Loan B). Repayments made under Term Loan B are equal to 0.25% of the original principal amount in equal quarterly installments for the life of Term Loan B, with the remainder due at maturity.
Borrowings under Term Loan B are secured by a first charge over substantially all of our assets on a pari passu basis with Term Loan A (prior to the repayment of Term Loan A) and the Revolver. We entered into Term Loan B and borrowed the full amount of $800 million on January 16, 2014. Term Loan B has a seven year term.
Borrowings under Term Loan B bear interest at a rate per annum equal to an applicable margin plus, at the borrower’s option, either (1) the eurodollar rate for the interest period relevant to such borrowing or (2) an ABR rate determined by reference to the greatest of (i) the prime rate of Barclays, (ii) the federal funds rate plus 0.50% per annum and (iii) the one month eurodollar rate plus 1.00% per annum. The applicable margin for borrowings under Term Loan B will be 2.5% with respect to LIBOR borrowings and 1.5% with respect to ABR rate borrowings.
Currently we have chosen for our borrowings under Term Loan B to bear a floating rate of interest at a rate per annum equal to 2.5% plus the higher of LIBOR or 0.75%. As of March 31, 2015,2016, the interest rate was 3.25%.
Term Loan B has incremental facility capacity of (i) $250 million plus (ii) additional amounts, subject to meeting a “consolidated senior secured net leverage” ratio not exceeding 2.75:1.00, in each case subject to certain conditions. Consolidated senior secured net leverage ratio is defined for this purpose as the proportion of our total debt reduced by unrestricted cash, including guarantees and letters of credit, that is secured by our or any of our subsidiaries’ assets, over our trailing twelve months net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges.
Under Term Loan B, we must maintain a “consolidated net leverage” ratio of no more than 4:1 at the end of each financial quarter. Consolidated net leverage ratio is defined for this purpose as the proportion of our total debt reduced by unrestricted cash, including guarantees and letters of credit, over our trailing twelve months net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges. As of March 31, 2015,2016, our consolidated net leverage ratio was 1.6:1.1:1.

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For further details relating to our Term Loan B, please see note 10 "Long-Term Debt" to our Condensed Consolidated Financial Statements.
MortgageRevolver
We currently have an "open" mortgage with a bank where we can pay all or a portion of$300 million committed revolving credit facility (the Revolver). Borrowings under the mortgage on or before August 1, 2015. The original principal amount of the mortgage was Canadian $15.0 million and interest accrues monthly at a variable rate of Canadian prime plus 0.50%. Principal and interestRevolver are payable in monthly installments of Canadian $0.1 million with a final lump sum principal payment due on maturity. The mortgage is secured by a lienfirst charge over substantially all of our assets, and on our headquarters in Waterloo, Ontario, Canada. We entered into this mortgage ina pari passu basis with Term Loan B. The Revolver will mature on December 2005.22, 2019 with no fixed repayment date prior to the end of the term. As of March 31, 2015,2016, we have not drawn any amounts on the carrying valueRevolver.
Employee Share Purchase Plan (ESPP)
In order to encourage further participation by eligible employees in the ESPP, we implemented a number of amendments to our ESPP, including increasing the purchase price discount from 5% to 15% and permitting Common Shares to be purchased on the open market by the trustee of a trust, or by an agent or broker designated by an administrator, and transferred to eligible employees under the ESPP, as an alternative to the issuance of Common Shares from treasury (the Amendments). The Amendments apply to purchase periods commencing on or after January 1, 2016 unless otherwise determined by the Board or the compensation committee of the mortgageBoard.
In accordance with the Amendments, during the three months ended March 31, 2016, we have determined that 40,900 Common Shares are eligible for issuance to employees enrolled in the ESPP, after factoring a purchase price discount of 15%. Any Common Shares that were issued under the ESPP prior to the purchase period commencing on January 1, 2016 were issued at a purchase price discount of 5%.
Share Repurchase Plan

On July 28, 2015, the Board authorized the repurchase of up to $200 million of Common Shares (Share Repurchase Plan). Shares may be repurchased from time to time in the open market, private purchases through forward, derivative, accelerated repurchase or automatic repurchase transactions or otherwise.
During the nine months ended March 31, 2016, we repurchased and cancelled approximately 1.5 million Common Shares for approximately $65.5 million, under our Share Repurchase Plan. We did not repurchase and cancel any Common Shares during the three months ended March 31, 2016. (three and nine months ended March 31, 2015—nil). Of the $65.5 million repurchased, $55.7 million was $7.8 million. recorded to retained earnings to reflect the difference between the market price of Common Shares repurchased and their book value.
As of March 31, 2015,2016, approximately $134.5 million remained available for the carrying valuerepurchase of Common Shares under the Waterloo building that secures the mortgage was $15.5 million.Share Repurchase Plan.
Shelf Registration Statement
In response to the demand and piggyback registration requests we received pursuant to the registration rights agreement entered into in connection with the acquisition of GXS, we filed a universal shelf registration statement on Form S-3 (the Shelf Registration Statement) with the SEC, which became effective automatically. The Shelf Registration Statement allows for primary and secondary offeringofferings from time to time of equity, debt and other securities, including Common Shares, Preference Shares, debt securities, depositary shares, warrants, purchase contracts, units and subscription receipts. A base shelf prospectus qualifying the distribution of such securities was also filed with certain Canadian securities regulators. The type of securities and the specific terms thereof will be determined at the time of any offering and will be described in the applicable prospectus supplement to be filed separately with the SEC and such Canadian securities regulators.
Pensions
As of March 31, 2015,2016, our total unfunded pension plan obligations were $65.4$60.9 million,, of which $1.4$2.6 million is payable within the next 12 months. We expect to be able to make the long-term and short-term payments related to these obligations in the normal course of operations.
Our anticipated payments under our most significant plans for the fiscal years indicated below are as follows:

Fiscal years ending June 30,Fiscal years ending June 30,

CDT GXS GER GXS PHPCDT GXS GER GXS PHP
2015 (three months ended June 30)$137
 $189
 $6
2016557
 780
 27
2016 (three months ending June 30)$144
 $193
 $7
2017596
 841
 36
629
 787
 30
2018641
 909
 47
672
 876
 39
2019717
 947
 75
753
 936
 65
2020 to 20245,324
 4,875
 1,298
2020820
 988
 101
2021 to 20255,034
 5,368
 1,262
Total$7,972
 $8,541
 $1,489
$8,052
 $9,148
 $1,504
For a detailed discussion on all pensions, see note 11 "Pension Plans and Other Post Retirement Benefits" to our Condensed Consolidated Financial Statements.Statements.
Commitments and Contractual Obligations
As of March 31, 2015,2016, we have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:
 Payments due between
(In thousands) 
Total April 1, 2015—
June 30, 2015		 July 1, 2015—
June 30, 2017		 July 1, 2017—
June 30, 2019		 July 1, 2019
and beyond
Long-term debt obligations*$2,104,616
 $8,707
 $165,195
 $156,417
 $1,774,297
Operating lease obligations**212,250
 13,057
 83,577
 57,310
 58,306
Purchase obligations18,415
 3,173
 14,421
 821
 —
 $2,335,281
 $24,937
 $263,193
 $214,548
 $1,832,603
 Payments due between
 Total April 1, 2016—
June 30, 2016		 July 1, 2016—
June 30, 2018		 July 1, 2018—
June 30, 2020		 July 1, 2020
and beyond
Long-term debt obligations$2,017,741
 $8,424
 $156,944
 $155,957
 $1,696,416
Operating lease obligations*188,797
 11,136
 74,506
 51,022
 52,133
Purchase obligations9,921
 2,732
 6,661
 528
 —
 $2,216,459
 $22,292
 $238,111
 $207,507
 $1,748,549
*Long-term debt obligations include the Senior Notes issued on January 15, 2015.

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**Net of $3.2$6.9 million of sublease income to be received from properties which we have subleased to third parties.

The long-term debt obligations are comprised of interest and principal payments on the Senior Notes and credit facilities, and a mortgage on our headquarters in Waterloo, Ontario, Canada.facilities. See note 10 "Long-Term Debt" to our Condensed Consolidated Financial Statements.Statements.
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.Statements.
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 aggregatedestimated losses were not material to our consolidated financial position or resultresults 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
EasyLink Services International Corporation (EasyLink) and itsAs we have previously disclosed, the United States subsidiaries were assessedInternal Revenue Service (IRS) is examining certain of our tax returns for our fiscal year ended June 30, 2010 (Fiscal 2010) through our fiscal year ended June 30, 2012 (Fiscal 2012), and in connection with those examinations is reviewing our internal reorganization in Fiscal 2010 to consolidate certain intellectual property ownership in Luxembourg and Canada and our integration of certain acquisitions into the resulting structure. We also previously disclosed that the examinations may lead to proposed adjustments to our taxes that may be material, individually or in the aggregate, and that we have not recorded any material accruals for any such potential adjustments in our Condensed Consolidated Financial Statements.
As part of these examinations, (which are ongoing), on July 17, 2015 we received from the IRS a Notice of Proposed Adjustment (“NOPA”) in draft form proposing a one-time approximately $280 million increase to our U.S. federal taxes arising from the reorganization in Fiscal 2010 and proposing penalties equal to 20% of the additional taxes, plus interest at the applicable statutory rate (which will continue to accrue until the matter is resolved and may be substantial). A NOPA is an IRS position and does not impose an obligation to pay tax. The draft NOPA may be changed before the final NOPA is issued, including because the IRS reserved the right in the draft NOPA to increase the adjustment. Based on our 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 New York State Departmentamount reflected in the NOPA when received). Depending upon the outcome of Taxationthese matters, additional state income taxes plus penalties and Finance forinterest may be due. We currently estimate that, as of March 31, 2016, adjustments under the potential applicabilitydraft NOPA in its present form and the anticipated additional NOPA could result in an aggregate liability of telecommunications exciseapproximately $550 million, inclusive of U.S. federal and franchisestate taxes, penalties and interest.
We strongly disagree with the IRS’ position and intend to its New York State revenues for certain pre-acquisition EasyLink revenue.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 March 31, 2015the 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 settlement was reached with the New York State Departmentmaterial adverse effect on our financial position and results of Taxation and Finance for $2.8 million, which was paid during the three months ended March 31, 2015.operations.
As part of our acquisition of GXS, we have inherited a tax dispute in Brazil between the Company’s subsidiary, GXS Tecnologia da Informação (Brasil) Ltda. (GXS Brazil), and the municipality of São Paulo, in connection with GXS Brazil’s judicial appeal of a tax claim in the amount of $2.2 million as of March 31, 2015.2016. We currently have in place a bank guarantee in the amount of $3.0$3.4 million in recognition of this dispute. However, we believe that the position of the São Paulo tax

authorities is not consistent with the relevant facts and based on information available on the case and other similar matters provided by local counsel, we believe that we can defend our position and that no tax is owed. Although we believe that the facts support our position, the ultimate outcome of this matter could result in a loss of up to the claim amount discussed above, plus future interest or penalties that may accrue.
Historically, prior to our acquisition of GXS, GXS would charge certain costs to its subsidiaries, including GXS Brazil, primarily based on historical transfer pricing studies that were intended to reflect the costs incurred by subsidiaries in relation to services provided by the parent company to the subject subsidiary. GXS recorded taxes on amounts billed, that were considered to be due based on the intercompany charges. GXS subsequently re-evaluated its intercompany charges to GXS Brazil and related taxes and, upon taking into consideration the current environment and judicial proceedings in Brazil, concluded that it was probable that certain indirect taxes would be assessable and payable based upon the accrual of such intercompany charges and has approximately $6.2$4.5 million accrued for the probable amount of a settlement related to the indirect taxes, interest and penalties.
Our Indian subsidiary, GXS India Technology Centre Private Limited (GXS India), is subject to potential assessments by Indian tax authorities in the city of Bangalore. GXS India has received assessment orders from the Indian tax authorities alleging that the transfer price applied to intercompany transactions was not appropriate. Based on advice from our tax advisors, we believe that the facts that the Indian tax authorities are using to support their assessment are incorrect. We have filed appeals and anticipate an eventual settlement with the Indian tax authorities. We have accrued $1.4$1.5 million to cover our anticipated financial exposure in this matter.

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The United States Internal Revenue Service (IRS) is examining certain of our tax returns for Fiscal 2010 through 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. These examinations may lead to proposed adjustments to our taxes, which may be material, individually or in the aggregate. As of the date of this Quarterly Report on Form 10-Q, no adjustments have been proposed by the IRS, and we have not recorded any material accruals for any such potential adjustments in our Condensed Consolidated Financial Statements.
Please also see "Risk Factors" included in our Annual Report on Form 10-K for our fiscal year ended June 30, 2014.Fiscal 2015.
Off-Balance Sheet Arrangements
We do not enter into off-balance sheet financing as a matter of practice except for the use of operating leases for office space, computer equipment, and vehicles. None of the operating leases described in the previous sentence has, and we currently do not believe that they potentially may have, a material effect on our financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources. In accordance with U.S. GAAP, neither the lease liability nor the underlying asset is carried on the balance sheet, as the terms of the leases do not meet the criteria for capitalization.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk
We are primarily exposed to market risks associated with fluctuations in interest rates on our term loans and foreign currency exchange rates.
Interest rate risk
Our exposure to interest rate fluctuations relate primarily to our Term Loan B.
As of March 31, 2015,2016, we had an outstanding balance of $790.0$782.0 million on Term Loan B. Term Loan B bears a floating interest rate of 2.5% plus the higher of LIBOR or 0.75%. As of March 31, 2015,2016, an adverse change of one percent on the interest rate would have the effect of increasing our annual interest payment on Term Loan B by approximately $7.9$7.8 million, assuming that the loan balance as of March 31, 20152016 is outstanding for the entire period.
At June 30, 2014,2015, an adverse change of one percent would have had the effect of increasing our annual interest payments on Term Loan B by approximately $8.0$7.9 million, assuming that the loan balance was outstanding for the entire period.
Foreign currency risk
Foreign currency transaction risk
We transact business in various foreign currencies. Our foreign currency exposures typically arise from intercompany fees, intercompany loans and other intercompany transactions that are expected to be cash settled in the near term. We expect that we will continue to realize gains or losses with respect to our foreign currency exposures. Our ultimate realized gain or loss with respect to foreign currency exposures will generally depend on the size and type of cross-currency transactions that we enter into, the currency exchange rates associated with these exposures and changes in those rates. Additionally, we have hedged certain of our Canadian dollar foreign currency exposures relating to our payroll expenses in Canada.
Based on the foreign exchange forward contracts outstanding as at March 31, 2016, a one cent change in the Canadian dollar to U.S. dollar exchange rate would have caused a change of approximately $0.5 million in the mark to market on our existing foreign exchange forward contracts.
At June 30, 2015,, a one cent change in the Canadian dollar to U.S. dollar exchange rate would have caused a change of approximately $0.8 million in the mark to market on our existing foreign exchange forward contracts.
At June 30, 2014, a one cent change in the Canadian dollar to U.S. dollar exchange rate would have caused a change of approximately $1.1 million in the mark to market on our existing foreign exchange forward contracts.
Foreign currency translation risk
Our reporting currency is the U.S. dollar. Fluctuations in foreign currencies impact the amount of total assets and liabilities that we report for our foreign subsidiaries upon the translation of these amounts into U.S. dollars. In particular, the amount of cash and cash equivalents that we report in U.S. dollars for a significant portion of the cash held by these subsidiaries is subject to translation variance caused by changes in foreign currency exchange rates as of the end of each respective reporting period (the offset to which is recorded to accumulated other comprehensive income on our Condensed Consolidated Balance Sheets)Sheets).
The following table shows our cash and cash equivalents denominated in certain major foreign currencies as of March 31, 20152016 (equivalent in U.S. dollar):
(In thousands) U.S. Dollar
Equivalent at
March 31, 2015		 U.S. Dollar
Equivalent at
June 30, 2014		 U.S. Dollar
Equivalent at
March 31, 2016		 U.S. Dollar
Equivalent at
June 30, 2015
Euro $66,979
 $85,729
 $188,827
 $125,411
British Pound 29,323
 24,552
 42,235
 28,634
Canadian Dollar 10,458
 6,182
 21,951
 21,358
Swiss Franc 8,246
 11,735
 26,807
 12,364
Other foreign currencies 54,275
 60,791
 65,799
 55,996
Total cash and cash equivalents denominated in foreign currencies 169,281
 188,989
 345,619
 243,763
U.S. dollar 443,896
 238,901
 531,786
 456,236
Total cash and cash equivalents $613,177
 $427,890
 $877,405
 $699,999
If overall foreign currency exchange rates in comparison to the U.S. dollar uniformly weakened by 10%, the amount of cash and cash equivalents we would report in equivalent U.S. dollars would decrease by approximately $16.9$34.6 million (June 30, 2014—2015—$18.9 million)24.4 million).

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Item 4.    Controls and Procedures
(A) Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, our management, with the participation of the Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2015,2016, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act were recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that information required to be disclosed by us in the reports we file under the Exchange Act (according to Rule 13(a)-15(e)) is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
(B) Changes in Internal Control over Financial Reporting (ICFR)
Based on the evaluation completed by our management, in which our Chief Executive Officer and Chief Financial Officer participated, our management has concluded that there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter ended March 31, 20152016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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PART II - Other Information

Item 1A. Risk Factors
You should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended June 30, 2014.2015. These are not the only risks and uncertainties facing us. Additional risks not currently known to us or that we currently believe are immaterial may also impair our operating results, financial condition and liquidity. Our business is also subject to general risks and uncertainties that affect many other companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
PURCHASE OF EQUITY SECURITIES OF THE COMPANY
FOR THE THREE MONTHS ENDED MARCH 31, 2015
Period (a) Total
Number of
Shares
(or Units)
Purchased 		 (b)
Average
Price Paid
per Share
(or Unit) 		 (c) Total
Number of Shares
(or Units) Purchased
as Part of
Publicly
Announced Plans or
Programs 		 (d) Maximum
Number of Shares
(or Units) that May
Yet Be Purchased
Under the Plans or
Programs 
01/01/15 to 03/31/15 —
 $—
 —
 —
02/01/15 to 02/28/15 22,222
 $56.28
 —
 —
03/01/15 to 03/31/15 —
 $—
 —
 —
Total 22,222
 $56.28
 —
 —
The above represents Common Shares repurchased for potential reissuance under our Long Term Incentive Plans (LTIP) or otherwise. For more details of this repurchase, please see “Treasury Stock” under note 12 “Share Capital, Option Plans and Share-based Payments” to our Condensed Consolidated Financial Statements.

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Item 6.    Exhibits and Financial Statements Schedules

The following documents are filed as a part of this report:
Exhibit
Number
  Description of Exhibit
2.1Agreement and Plan of Merger, dated as of December 5, 2014, by and among Open Text Corporation, Asteroid Acquisition Corporation and Actuate. (1)
4.1Indenture, dated as of January 15, 2015, among the Company, the subsidiary guarantors party thereto, Citibank, N.A., as U.S. trustee, and Citi Trust Company Canada, as Canadian trustee (including form of 5.625% Senior Notes due 2023). (2)
31.1  Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2  Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1  Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2  Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS  XBRL instance document.
101.SCH  XBRL taxonomy extension schema.
101.CAL  XBRL taxonomy extension calculation linkbase.
101.DEF  XBRL taxonomy extension definition linkbase.
101.LAB  XBRL taxonomy extension label linkbase.
101.PRE  XBRL taxonomy extension presentation.


(1)Filed as an Exhibit to the Company's Current Report on Form 8-K, as filed with the SEC on December 5, 2014 and incorporated herein by reference.
(2)Filed as an Exhibit to the Company's Current Report on Form 8-K, as filed with the SEC on January 15, 2015 and incorporated herein by reference.


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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
OPEN TEXT CORPORATION
Date: April 28, 201527, 2016
By:/s/ MARK J. BARRENECHEA        
 
Mark J. Barrenechea
PresidentChief Executive Officer and Chief ExecutiveTechnology Officer
(Principal Executive Officer)
 /s/ JOHN M. DOOLITTLE
 
John M. Doolittle
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
 /s/ SUJEET KINI        ADITYA MAHESHWARI
 
Sujeet Kini
Aditya Maheshwari
Chief Accounting Officer

(Principal Accounting Officer)


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