XML 23 R11.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Basis of Presentation | 6 Months Ended
--- | ---
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying Condensed Consolidated Financial Statements include the accounts of Open Text Corporation and our subsidiaries, collectively referred to as "OpenText" or the "Company". We wholly own all of our subsidiaries with the exception of Open Text South Africa Proprietary Ltd. (OT South Africa) and EC1 Pte. Ltd. (GXS Singapore), which as of December 31, 2018, were 70% and 81% owned, respectively, by OpenText. All inter-company balances and transactions have been eliminated. Previously, our ownership in GXS Inc. (GXS Korea) was 85%. During the first quarter of Fiscal 2019, we acquired all of the outstanding non-controlling interests in GXS Korea for $0.6 million in cash. Throughout this Quarterly Report on Form 10-Q: (i) the term “Fiscal 2019” means our fiscal year beginning on July 1, 2018 and ending June 30, 2019; (ii) the term “Fiscal 2018” means our fiscal year beginning on July 1, 2017 and ended June 30, 2018; (iii) the term “Fiscal 2017” means our fiscal year beginning on July 1, 2016 and ended June 30, 2017; (iv) the term “Fiscal 2016” means our fiscal year beginning on July 1, 2015 and ended June 30, 2016; and (v) the term “Fiscal 2015” means our fiscal year beginning on July 1, 2014 and ended June 30, 2015. 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 Liaison Technologies, Inc. (Liaison), with effect from December 17, 2018 (see note 18 "Acquisitions"). Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements. These estimates, judgments and assumptions are evaluated on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. In particular, more material estimates, judgments and assumptions include those related to: (i) revenue recognition, (ii) testing of goodwill for impairment, (iii) the valuation of acquired intangible assets, (iv) the valuation of long-lived assets, (v) the recognition of contingencies, (vi) restructuring accruals, (vii) acquisition accruals and pre-acquisition contingencies, (viii) the realization of investment tax credits, (ix) the valuation of stock options granted and obligations related to share-based payments, including the valuation of our long-term incentive plans, (x) the valuation of pension assets and obligations, and (xi) accounting for income taxes. Impact of Recently Adopted Accounting Pronouncements Revenue Recognition Effective July 1, 2018, we adopted Accounting Standards Codification (ASC) Topic 606 "Revenue from Contracts with Customers" (Topic 606) using the cumulative effect approach. We applied the standard to contracts that were not completed as of the date of the initial adoption. Results for reporting periods commencing on July 1, 2018 are presented under the new revenue standard, while prior period results continue to be reported under the previous standard. As a result of this adoption, we recorded a net increase of approximately $30 million to retained earnings as of July 1, 2018 on the Condensed Consolidated Balance Sheets, with the following corresponding impacts:
• | A decrease to deferred revenues of approximately $31 million;
• | A decrease to other assets of approximately $22 million in connection with lower deferred implementation costs;
• | An increase to other assets of approximately $14 million in connection with higher capitalized sales commission costs;
• | An increase in contract assets of approximately $18 million representing future billings in excess of revenues; and
• | An increase in net deferred tax liabilities of approximately $11 million.
Please refer to Note 3 "Revenues" for additional information relating to Topic 606, including our updated revenue recognition policies. Additionally, certain prior period balances have been reclassified within other assets on the Condensed Consolidated Balance Sheets, to conform to the current period presentation as a result of this adoption. Please refer to Note 8 "Other Assets" for details. Income Taxes Effective July 1, 2018, we adopted Accounting Standards Update (ASU) No. 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory" (ASU 2016-16) which requires entities to recognize the income tax consequence of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. We adopted ASU 2016-16 on a modified retrospective basis through a cumulative-effect adjustment to opening retained earnings. Results for reporting periods as of July 1, 2018 are presented under the new standard, while prior period results continue to be reported under the previous standard. As a result of this adoption, we recorded a net decrease of approximately $27 million to retained earnings as of July 1, 2018 on the Condensed Consolidated Balance Sheets, with the following corresponding impacts:
• | A decrease to deferred charges of approximately $38 million;
• | An increase to deferred tax assets of approximately $8 million; and
• | A decrease to deferred credits of approximately $3 million.
There was no impact to the Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Shareholders' Equity or Condensed Consolidated Statements of Cash Flows as a result of this adoption. Restricted Cash Effective July 1, 2018, we adopted ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (ASU 2016-18), which requires amounts described as restricted cash and cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts in the statement of cash flows. We adopted ASU 2016-18 using the retrospective method. As a result, certain prior period comparative figures in the Condensed Consolidated Statements of Cash Flows have been adjusted to conform to current period presentation as follows:
| Six Months Ended December 31, 2017
| As Previously Reported |  | Adjustments |  | As Adjusted
Net cash provided by operating activities | $ | 233,749 |  |  | $ | (317 | ) |  | $ | 233,432 |
Cash, cash equivalents and restricted cash at beginning of period | 443,357 |  |  | 2,853 |  |  | 446,210 |
Increase (decrease) in cash, cash equivalents and restricted cash during the period | 32,657 |  |  | (317 | ) |  | 32,340 |
Cash, cash equivalents and restricted cash at end of period | $ | 476,014 |  |  | $ | 2,536 |  |  | $ | 478,550 |
There was no impact to the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Shareholders' Equity or Condensed Consolidated Statements of Comprehensive Income as a result of this adoption. Pension Expense Effective July 1, 2018, we adopted ASU No. 2017-07, “Retirement Benefits - Presentation of Net Period Pension Costs (Topic 715)” (ASU 2017-07), which provides guidance on the capitalization, presentation and disclosure of net benefit costs related to postretirement benefit plans. Upon adoption, only service-related net periodic pension costs will be recorded within operating expense. All other non-service related net periodic pension costs will be classified under "Interest and other related expense" on our Condensed Consolidated Statements of Income. We adopted ASU 2017-07 on a retrospective basis. As a result, certain prior period comparative figures in the Condensed Consolidated Statements of Income for the three and six months ended December 31, 2017 have been adjusted to conform to current period presentation as follows:
| Three Months Ended December 31, 2017 |  | Six Months Ended December 31, 2017
| As Previously Reported |  | Adjustments |  | As Adjusted |  | As Previously Reported |  | Adjustments |  | As Adjusted
Cost of revenues - Cloud services | $ | 90,418 |  |  | $ | 67 |  |  | $ | 90,485 |  |  | $ | 174,748 |  |  | $ | (129 | ) |  | $ | 174,619 |
Cost of revenues - Customer Support | 33,194 |  |  | (77 | ) |  | 33,117 |  |  | 65,985 |  |  | (98 | ) |  | 65,887 |
Cost of revenues - Professional service and other | 64,985 |  |  | (99 | ) |  | 64,886 |  |  | 124,444 |  |  | (130 | ) |  | 124,314 |
Total cost of revenues | 240,312 |  |  | (109 | ) |  | 240,203 |  |  | 463,812 |  |  | (357 | ) |  | 463,455 |
Gross profit | 494,093 |  |  | 109 |  |  | 494,202 |  |  | 911,280 |  |  | 357 |  |  | 911,637 |
Research and Development | 80,304 |  |  | (181 | ) |  | 80,123 |  |  | 157,933 |  |  | (236 | ) |  | 157,697 |
Sales and Marketing | 129,142 |  |  | 9 |  |  | 129,151 |  |  | 251,964 |  |  | (198 | ) |  | 251,766 |
General and administrative | 48,985 |  |  | (31 | ) |  | 48,954 |  |  | 97,900 |  |  | (44 | ) |  | 97,856 |
Total operating expense | 327,485 |  |  | (203 | ) |  | 327,282 |  |  | 657,549 |  |  | (478 | ) |  | 657,071 |
Income from operations | 166,608 |  |  | 312 |  |  | 166,920 |  |  | 253,731 |  |  | 835 |  |  | 254,566 |
Interest and other related expense, net | (34,092 | ) |  | (312 | ) |  | (34,404 | ) |  | (67,380 | ) |  | (835 | ) |  | (68,215 | )
There was no change to net income or net earnings per share in any of the periods presented as a result of this adoption. Additionally, there was no impact to the Condensed Consolidated Balance Sheets, Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Shareholders' Equity or Condensed Consolidated Statements of Cash Flows as a result of this adoption.

X
- References No definition available. + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI http://asc.fasb.org/topic&trid=2122149 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI http://asc.fasb.org/topic&trid=2197479 + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration