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Acquisitions | 9 Months Ended
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Mar. 31, 2017
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS Fiscal 2017 Acquisitions Purchase of an Asset Group Constituting a Business - ECD Business On January 23, 2017, we acquired certain assets and assumed certain liabilities of the enterprise content division of EMC Corporation, a Massachusetts corporation, and certain of its subsidiaries, collectively referred to as Dell-EMC (ECD Business) for approximately $1.62 billion. In accordance with Topic 805 "Business Combinations" (Topic 805), this acquisition was accounted for as a business combination. The ECD Business offers OpenText a suite of leading Enterprise Content Management solutions with deep industry focus, including the Documentum TM, InfoArchive TM, and LEAP TM product families. We believe this acquisition complements and extends our EIM portfolio. The results of operations of this acquisition have been consolidated with those of OpenText beginning January 23, 2017. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of January 23, 2017, are set forth below:
Current assets | $ | 11,651 |
Non-current assets | 103,557 |
Intangible customer assets | 407,000 |
Intangible technology assets | 459,000 |
Liabilities assumed | (178,180 | )
Total identifiable net assets | 803,028 |
Goodwill | 819,366 |
Net assets acquired | $ | 1,622,394 |
The goodwill of $819.4 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $661.3 million is expected to be deductible for tax purposes. Included in net tangible assets is acquired deferred revenue which represents advance payments from customers related to various revenue contracts. We estimated our obligation related to the deferred revenue using the cost build-up approach. The cost build-up approach determines fair value by estimating the costs relating to supporting the obligation plus an assumed profit. The sum of the costs and assumed profit approximates, in theory, the amount that we would be required to pay a third party to assume the obligation. The estimated costs to fulfill the obligation were based on the near-term projected cost structure for various revenue contracts. As a result, we recorded an adjustment to reduce the ECD Business' carrying value of deferred revenue by $52.0 million, which represents our estimate of the fair value of the contractual obligations assumed based on a preliminary valuation. The net deferred revenues included in the liabilities assumed above is $163.6 million, after the impact of this adjustment. Further, included within net tangible assets are also certain contract assets which represent revenue earned by Dell-EMC on long-term projects for which billings had not yet occurred as of January 23, 2017. As these long-term projects have now been inherited by OpenText, we will be responsible for billing and collecting cash on these projects at the appropriate time, yet we will not recognize revenue for these billings. The fair value assigned to these contract assets as of January 23, 2017 was $8.3 million. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for assets acquired and liabilities assumed, including tax balances. We expect to finalize this determination on or before December 31, 2017. Acquisition-related costs for ECD Business included in "Special charges (recoveries)" in the Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2017 were $4.1 million and $10.7 million, respectively. The amount of the ECD Business’ revenues and net loss included in our Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2017 is set forth below:
| January 23, 2017 - March 31, 2017
Revenues | $ | 79,846 |
Net Loss* | $ | (16,582 | )
*Net loss includes one-time fees of approximately $12.2 million on account of special charges and $22.8 million of amortization charges relating to acquired intangible assets. These losses were partially offset by a tax recovery of $7.5 million. Net loss includes certain expenses that have been allocated to the ECD Business, as separately identifiable expenses are not available because of our continued efforts at fully integrating the ECD Business within our combined company. The unaudited pro forma revenues and net income of the combined entity for the three and nine months ended March 31, 2017 and 2016, respectively, had the acquisition been consummated as of July 1, 2015, are set forth below:
Supplemental Unaudited Pro forma Information | Three Months Ended March 31, |  | Nine Months Ended March 31,
| 2017 |  | 2016 |  | 2017 |  | 2016
Total revenues | $ | 631,664 |  |  | $ | 576,503 |  |  | $ | 1,962,090 |  |  | $ | 1,772,684 |
Net income (1)(2) | $ | 24,007 |  |  | $ | 83,924 |  |  | $ | 975,851 |  |  | $ | 245,714 |
(1) Included in pro forma net income for the periods above are estimated amortization charges relating to the allocated values of acquired intangible assets. (2) Included in net income for the nine months ended March 31, 2017 is a significant tax benefit of $876.1 million associated with the recognition of a net deferred tax asset ensuing from the Company’s internal reorganization that occurred in July 2016. 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. Purchase of an Asset Group Constituting a Business - CCM Business On July 31, 2016, we acquired certain customer communications management software and services assets and liabilities from HP Inc. (CCM Business) for approximately $315.0 million. Previously, $2.8 million was held back and unpaid in accordance with the terms of the purchase agreement. This amount has since been released and paid. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition complements our current software portfolio, and allows us to better serve our customers by offering a wider set of CCM capabilities. The results of operations of this acquisition have been consolidated with those of OpenText beginning July 31, 2016. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of July 31, 2016, are set forth below:
Current assets | $ | 683 |
Non-current deferred tax asset | 11,861 |
Non-current tangible assets | 2,348 |
Intangible customer assets | 64,000 |
Intangible technology assets | 101,000 |
Liabilities assumed | (38,090 | )
Total identifiable net assets | 141,802 |
Goodwill | 173,198 |
Net assets acquired | $ | 315,000 |
The goodwill of $173.2 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $147.4 million is expected to be deductible for tax purposes. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for assets acquired and liabilities assumed, including tax balances. We expect to finalize this determination on or before June 30, 2017. Acquisition-related costs for CCM Business included in "Special charges (recoveries)" in the Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2017 were $0.1 million and $0.9 million, respectively. The acquisition had no significant impact on revenues and net earnings for the three and nine months ended March 31, 2017, since the date of acquisition. Pro forma results of operations for this acquisition have not been presented because they are not material to the consolidated results of operations. Acquisition of Recommind, Inc. O n July 20, 2016, we acquired all of the equity interest in Recommind, Inc. (Recommind), a leading provider of eDiscovery and information analytics, for approximately $170.1 million. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition complements our EIM solutions, and through eDiscovery and analytics, provides increased visibility into structured and unstructured data. The results of operations of Recommind, have been consolidated with those of OpenText beginning July 20, 2016. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of July 20, 2016, are set forth below:
Current assets | $ | 30,034 |
Non-current tangible assets | 1,245 |
Intangible customer assets | 51,900 |
Intangible technology assets | 24,800 |
Deferred tax liabilities | (4,360 | )
Other liabilities assumed | (27,497 | )
Total identifiable net assets | 76,122 |
Goodwill | 93,985 |
Net assets acquired | $ | 170,107 |
The goodwill of $94.0 million is primarily attributable to the synergies expected to arise after the acquisition. No portion of this goodwill is expected to be deductible for tax purposes. The fair value of current assets acquired includes accounts receivable with a fair value of $28.7 million. The gross amount receivable was $29.6 million of which $0.9 million of this receivable was expected to be uncollectible. The finalization of the purchase price allocation is pending the finalization of the valuation of fair value for taxation-related balances and for potential adjustments to assets and liabilities. We expect to finalize this determination on or before June 30, 2017. Acquisition-related costs for Recommind included in "Special charges (recoveries)" in the Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2017 were $0.2 million and $1.1 million, respectively. The acquisition had no significant impact on revenues and net earnings for the three and nine months ended March 31, 2017, since the date of acquisition. Pro forma results of operations for this acquisition have not been presented because they are not material to the consolidated results of operations. Fiscal 2016 Acquisitions Acquisition of ANXe Business Corporation O n May 1, 2016, we acquired all of the equity interest in ANXe Business Corporation (ANX), a leading provider of cloud-based information exchange services to the automotive and healthcare industries, for approximately $104.4 million. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition strengthens our industry presence and reach in the automotive and healthcare industries through strong customer relationships and targeted business partner collaboration solutions. The results of operations of ANX have been consolidated with those of OpenText beginning May 1, 2016. Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of May 1, 2016, are set forth below:
Current assets | $ | 9,712 |
Non-current tangible assets | 511 |
Intangible customer assets | 49,700 |
Intangible technology assets | 5,600 |
Liabilities assumed | (26,204 | )
Total identifiable net assets | 39,319 |
Goodwill | 65,108 |
Net assets acquired | $ | 104,427 |
The goodwill of $65.1 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $7.0 million is expected to be deductible for tax purposes. The fair value of current assets acquired includes accounts receivable with a fair value of $5.7 million. The gross amount receivable was $5.8 million of which $0.1 million of this receivable was expected to be uncollectible. Purchase of an Asset Group Constituting a Business - CEM Business On April 30, 2016, we acquired certain customer experience software and services assets and liabilities from HP Inc. (CEM Business) for approximately $160.0 million. Previously, $7.3 million was held back and unpaid in accordance with the terms of the purchase agreement. This amount has since been released and paid during the three months ended September 30, 2016. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition complements our current software portfolio, particularly our Customer Experience Management and Cloud offerings. The results of operations of this acquisition have been consolidated with those of OpenText beginning April 30, 2016. Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of April 30, 2016, are set forth below:
Current assets | $ | 3,078 |
Non-current tangible assets | 14,302 |
Intangible customer assets | 33,000 |
Intangible technology assets | 47,000 |
Liabilities assumed | (24,887 | )
Total identifiable net assets | 72,493 |
Goodwill | 87,507 |
Net assets acquired | $ | 160,000 |
The goodwill of $87.5 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $77.0 million is expected to be deductible for tax purposes.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1497-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1490-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1392-128463 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1486-128463 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4845-128472 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1524-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4922-128472 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4934-128472 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4926-128472 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=73530397&loc=SL65897772-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1383-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479 + Details
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