WATERLOO, ON, May 6 /CNW/ - Open Text(TM) Corporation (NASDAQ:OTEX) (TSX:
OTC), a leading provider of Enterprise Content Management (ECM) software,
today announced unaudited financial results for its third quarter, ending
March 31, 2009.(1)
Total revenue for the third quarter was $192.0 million, up 7% compared to
$178.8 million for the same period in the prior fiscal year. License revenue
in the third quarter was $51.9 million, compared to $51.5 million for the same
period in the prior fiscal year.
Adjusted net income for the third quarter was $31.4 million or $0.59 per
share on a diluted basis, up 24% compared to $25.4 million or $0.48 per share
on a diluted basis, for the same period in the prior fiscal year. Net income
for the third quarter, in accordance with U.S. generally accepted accounting
principles ("U.S. GAAP"), was $22.0 million or $0.41 per share on a diluted
basis, compared to $7.3 million or $0.14 per share on a diluted basis, for the
same period in the prior fiscal year.(3)
Total cash and cash equivalents, as of March 31, 2009 was $237.0 million,
after deducting the net cash payment for Captaris of approximately $100.0
million. This compares to $254.9 million as of June 30, 2008. Accounts
receivable as of March 31, 2009, totaled $111.7 million, compared to $134.4
million as of June 30, 2008 and Days Sales Outstanding (DSO) was 52 days at
the end of the third quarter of Fiscal 2009, compared to 60 days at June 30,
2008.
Operating cash flow in the third quarter of fiscal 2009 was $72.9
million, up 46% compared to $49.8 million in the third quarter of the prior
fiscal year and up 83% compared to $39.8 million in the previous quarter.
"Compliance based solutions continue to lead our sales initiatives, and
we are experiencing renewed demand for the classic ECM solutions that improve
business processes and efficiencies, to achieve rapid return-on-investment for
our customers," said John Shackleton, Chief Executive Officer of Open Text.
"In the current economic environment we are focused on the bottom line and
remain committed to meeting our profitability targets while generating strong
cash flow from operations."
Please see notes (2) and (3) below for a reconciliation of non-U.S. GAAP
based financial measures used in this press release, to U.S. GAAP based
financial measures.
Teleconference Call
Open Text will host a conference call on May 6, 2009 at 5:00 p.m. ET to
discuss the financial results of its third quarter ending March 31, 2009.Date: Wednesday, May 6, 2009
Time: 5:00 p.m. ET/2:00 p.m. PT
Length: 60 minutes
Where: 416-644-3415
800-733-7571 (Toll Free)Please dial-in approximately 10 minutes before the teleconference is
scheduled to begin. A replay of the call will be available beginning May 6,
2009 at 7:00 p.m. ET through 11:59 p.m. on May 20, 2009 and can be accessed by
dialing 416-640-1917 and using pass code 21302245 followed by the number sign.
For more information or to listen to the call via Web cast, please use
the following link:
http://www.opentext.com/events/wa-event.html?id=7573788
About Open Text
Open Text(TM) is the world's largest independent provider of Enterprise
Content Management (ECM) software. The Company's solutions manage information
for all types of business, compliance and industry requirements in the world's
largest companies, government agencies and professional service firms. Open
Text supports approximately 46,000 customers and millions of users in 114
countries and 12 languages. For more information about Open Text, visit
www.opentext.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995
This press release contains forward-looking statements, including
statements about the financial conditions, and results of operations and
earnings for Open Text Corporation ("Open Text" or "the Company").
Forward-looking statements in this press release are not promises or
guarantees of future performance and are subject to risks and uncertainties
that could cause the Company's actual results to differ materially from those
anticipated. The Company cautions you not to place undue reliance upon any
such forward-looking statements, which speak only as of the date made. The
results included in this press release are unaudited and therefore are deemed
to be forward-looking statements. Factors that may cause actual results or
earnings to differ materially from such forward-looking statements include,
among others, the following: (i) the future performance, financial and
otherwise, of Open Text; (ii) the ability of Open Text to bring new products
to market and to increase sales; (iii) the strength of the Company's product
development pipeline; (iv) the Company's growth and profitability prospects;
(v) the estimated size and growth prospects of the ECM market; (vi) the
Company's competitive position in the ECM market and its ability to take
advantage of future opportunities in this market; (vii) the benefits of the
Company's products to be realized by customers; (viii) the demand for the
Company's product, the extent of deployment of the Company's products in the
ECM marketplace and delays in the purchasing decisions of its customers; (ix)
risks related to the integration of acquisitions and related restructuring
efforts, including the quantum of restructuring charges and the timing
thereof; (10) fluctuations in currency exchange rates; and (xi) technical,
logistical or planning issues in connection with the deployment of the
Company's products or services. More information about other risks and other
potential factors that could affect the Company's business and financial
results are detailed from time to time in the Company's filings with the
Securities and Exchange Commission, including the Company's Annual Report on
Form 10-K for the year ended June 30, 2008 and Form 10-Q for the quarters
ended September 30, 2008 and December 31, 2008. Forward-looking statements are
based on management's beliefs and opinions at the time the statements are
made, and the Company does not undertake any obligation to update
forward-looking statements should circumstances or management's beliefs or
opinions change.Notes
(1) Based on comparison of historical revenue figures publicly
disseminated by companies in the ECM sector. All dollar amounts in
this press release are expressed in U.S. Dollars unless otherwise
indicated.
(2) In addition to these GAAP and adjusted results, the Company has
provided financial information in the table below that adds-back
maintenance revenue eliminated due to the impact of purchase
accounting entries on deferred revenue and the impact of interest
expense. Management believes that the furnishing of these adjustments
provides a consistent basis for comparison between quarters and helps
to more accurately reflect Open Text's underlying operating results.
Three Three
months months
ended ended
March March
(in millions of US dollars except share data) 31, 2009 31, 2008
GAAP Revenue $ 192.0 $ 178.8
Maintenance revenue adjustment for purchase
accounting 0.5 -
--------- ---------
Non-GAAP revenue $ 192.5 $ 178.8
--------- ---------
--------- ---------
Adjusted Net Income $ 31.4 $ 25.4
Maintenance revenue adjustment for purchase
accounting 0.5 -
Net Interest Expense 2.4 6.7
Income tax effect (0.9) (2.0)
--------- ---------
Non-GAAP net income $ 33.4 $ 30.1
--------- ---------
--------- ---------
(3) Use of U.S. Non-GAAP financial measures
In addition to reporting financial results in accordance with U.S. GAAP,
the Company provides adjusted net income and adjusted earnings per share
(EPS), which are non U.S. GAAP financial measures. The Company uses
adjusted EPS and adjusted net income to supplement the information
provided in its consolidated financial statements, which are presented in
accordance with U.S. GAAP. The Company believes the provision of these
non U.S. GAAP measures allows 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 Open Text's performance or expected performance of
recurring operations and facilitates for period-to-period comparison of
operating performance.
The presentation of adjusted net income and adjusted EPS is not meant to
be a substitute for net income or EPS 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. These non U.S. 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 U.S. 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 attempts to compensate for these
limitations by providing the relevant disclosure of the items excluded in
the calculation of adjusted net income and adjusted EPS both in its
reconciliation to the U.S. GAAP financial measures of net income and EPS
and its consolidated financial statements, all of which should be
considered when evaluating the Company's results. Open Text strongly
encourages investors to review its financial information in its entirety
and not to rely on a single financial measure.
Adjusted net income and adjusted EPS are calculated as net income and net
income per share on a diluted basis, excluding, where applicable, the
effect of amortization of acquired intangible assets, other income
(expense), share-based compensation expense, and special charges
(recoveries), all net of tax. The Company's management believes that the
presentation of adjusted net income and adjusted EPS provides useful
information to investors because it excludes non-operational charges and
is based on the way the Company's management evaluates the performance of
the Company's business for use in the Company's internal reports and
makes operating decisions. The term "non-operational charge" is defined
by the Company as a charge that does not impact operating decisions taken
by the Company's management and excludes certain items, such as
amortization of acquired intangibles, other income (expense), share-based
compensation expense, special charges (recoveries), and the taxation
impact of these items.
The following unaudited charts provide a reconciliation of U.S. GAAP
based financial measures to non U.S. GAAP based financial measures
referred to in this press release:
Reconciliation of (unaudited) U.S. GAAP based Net Income to Adjusted Net
Income (in millions of U.S. dollars) for the three months ended March 31,
2009 and 2008:
Three Three
months months
ended ended
March March
31, 2009 31, 2008
--------- ---------
GAAP based "Net Income"........................ $ 22.0 $ 7.3
Special Charges/(recovery)..................... 1.8 0.0
Amortization of intangibles.................... 22.8 18.5
Other (Income)/Expense......................... (11.7) 6.8
Share-based compensation....................... 1.4 1.1
Tax Impact of Above............................ (4.9) (8.3)
--------- ---------
Non-GAAP based "Adjusted Net Income"........... $ 31.4 $ 25.4
Reconciliation of (unaudited) US GAAP based EPS to non-U.S. GAAP
based EPS (calculated on a diluted basis) for the three months ended
March 31, 2009 and 2008:
Three Three
months months
ended ended
March March
31, 2009 31, 2008
--------- ---------
GAAP based "Net Income"......................... $ 0.41 $ 0.14
Special Charges/(recovery)...................... 0.03 0.00
Amortization of intangibles..................... 0.43 0.35
Other (Income)/Expense.......................... (0.22) 0.13
Share-based compensation........................ 0.03 0.02
Tax Impact of Above............................. (0.09) (0.16)
--------- ---------
Non-GAAP based "Adjusted Net Income"............ $ 0.59 $ 0.48
(4) The following table provides a composition of our major currencies
for revenue and expenses, expressed as a percentage, for the third
quarter of Fiscal 2009:
% of % of
Currencies Revenue Expenses(*)
------------------------------------------------- ------- -----------
EURO............................................. 27% 26%
GBP.............................................. 9% 7%
CHF.............................................. 6% 4%
CAD.............................................. 6% 22%
USD.............................................. 46% 35%
Others........................................... 6% 6%
------- -----------
Total............................................ 100% 100%
-------------------
-------------------
(*) Expenses include all cost of revenues and operating expenses
included within the Condensed Consolidated Statements of Income,
except for amortization of intangible assets, share-based
compensation and special charges.
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars, except share data)
March 31, June 30,
2009 2008
------------ ------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 237,048 $ 254,916
Accounts receivable trade, net of allowance
for doubtful accounts of $3,784 as of
March 31, 2009 and $3,974 as of June 30, 2008 111,731 134,396
Inventory 1,939 -
Income taxes recoverable 6,895 16,763
Prepaid expenses and other current assets 14,401 10,544
Deferred tax assets 16,838 13,455
------------ ------------
Total current assets 388,852 430,074
Investments in marketable securities 6,656 -
Capital assets 39,202 43,582
Goodwill 564,018 564,648
Acquired intangible assets 354,743 281,824
Deferred tax assets 61,339 59,881
Other assets 11,245 10,491
Long-term income taxes recoverable 41,073 44,176
------------ ------------
$ 1,467,128 $ 1,434,676
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 116,372 $ 99,035
Current portion of long-term debt 3,407 3,486
Deferred revenues 193,676 176,967
Income taxes payable 1,705 13,499
Deferred tax liabilities 3,315 4,876
------------ ------------
Total current liabilities 318,475 297,863
Long-term liabilities:
Accrued liabilities 19,984 20,513
Pension liability 15,790 -
Long-term debt 299,174 304,301
Deferred revenues 7,305 2,573
Long-term income taxes payable 51,472 54,681
Deferred tax liabilities 136,776 109,912
------------ ------------
Total long-term liabilities 530,501 491,980
Minority interest - 8,672
Shareholders' equity:
Share capital
52,618,018 and 51,151,666 Common Shares
issued and outstanding at March 31,
2009 and June 30, 2008, respectively;
Authorized Common Shares: unlimited 456,278 438,471
Additional paid-in capital 50,991 39,330
Accumulated other comprehensive income 25,885 110,819
Retained earnings 84,998 47,541
------------- ------------
Total shareholders' equity 618,152 636,161
------------- ------------
$ 1,467,128 $ 1,434,676
------------- ------------
------------- ------------
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. Dollars, except per share data)
(Unaudited)
Three months ended Nine months ended
March 31, March 31,
------------------------- -------------------------
2009 2008 2009 2008
------------ ------------ ------------ ------------
Revenues:
License $ 51,919 $ 51,534 $ 166,845 $ 150,952
Customer support 101,949 91,606 300,816 268,524
Service and other 38,167 35,622 114,648 105,787
------------ ------------ ------------ ------------
Total revenues 192,035 178,762 582,309 525,263
------------ ------------ ------------ ------------
Cost of revenues:
License 4,496 3,093 12,670 11,296
Customer support 17,304 14,292 50,227 41,081
Service and other 30,288 28,856 89,898 86,552
Amortization of
acquired
technology-based
intangible assets 11,625 10,440 34,171 30,900
------------ ------------ ------------ ------------
Total cost of
revenues 63,713 56,681 186,966 169,829
------------ ------------ ------------ ------------
Gross profit 128,322 122,081 395,343 355,434
------------ ------------ ------------ ------------
Operating expenses:
Research and
development 28,809 27,990 87,335 78,120
Sales and marketing 44,426 41,307 138,605 121,466
General and
administrative 17,937 18,268 54,604 52,233
Depreciation 3,229 2,909 8,847 9,645
Amortization of
acquired customer-
based intangible
assets 11,176 8,077 29,529 23,006
Special charges
(recoveries) 1,788 (14) 13,234 (122)
------------ ------------ ------------ ------------
Total operating
expenses 107,365 98,537 332,154 284,348
------------ ------------ ------------ ------------
Income from operations 20,957 23,544 63,189 71,086
------------ ------------ ------------ ------------
Other income (expense),
net 11,655 (6,831) (148) (12,341)
Interest expense, net (2,431) (6,684) (10,772) (22,123)
------------ ------------ ------------ ------------
Income before income
taxes 30,181 10,029 52,269 36,622
Provision for income
taxes 8,146 2,594 14,761 10,448
------------ ------------ ------------ ------------
Net income before
minority interest 22,035 7,435 37,508 26,174
Minority interest - 168 51 422
------------ ------------ ------------ ------------
Net income for the
period $ 22,035 $ 7,267 $ 37,457 $ 25,752
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per
share-basic $ 0.42 $ 0.14 $ 0.72 $ 0.51
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per
share-diluted $ 0.41 $ 0.14 $ 0.71 $ 0.49
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average
number of Common
Shares outstanding
-basic 52,312 50,979 51,825 50,666
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average
number of Common
Shares outstanding-
diluted 53,441 52,789 53,122 52,424
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. Dollars)
(Unaudited)
Three months ended Nine months ended
March 31, March 31,
------------------------- -------------------------
2009 2008 2009 2008
------------ ------------ ------------ ------------
Cash flows from
operating activities:
Net income for the
period $ 22,035 $ 7,267 $ 37,457 $ 25,752
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization 26,030 21,426 72,547 63,551
In-process research
and development - - 121 500
Share-based
compensation expense 1,424 1,077 3,957 2,795
Employee long-term
incentive plan (409) 733 2,396 1,490
Excess tax benefits
from share-based
compensation (1,729) (101) (8,382) (867)
Undistributed earnings
related to minority
interest - 168 51 422
Pension accruals 218 - 1,124 -
Amortization of debt
issuance costs 281 293 831 1,004
Unrealized (gain) loss
on financial
instruments (941) 2,728 (134) 5,579
Loss on sale and write
down of capital assets 84 - 353 -
Deferred taxes (7,492) (506) (3,577) (4,619)
Changes in operating
assets and liabilities:
Accounts receivable 15,107 (14,597) 47,897 (7,018)
Inventory 289 - (320) -
Prepaid expenses and
other current assets (2,564) (1,811) (3,425) (2,008)
Income taxes 3,187 (2,662) 9,656 5,892
Accounts payable and
accrued liabilities (5,080) (9,321) (21,177) (7,849)
Deferred revenue 24,309 44,938 (1,304) 36,055
Other assets (1,862) 176 (528) 686
------------ ------------ ------------ ------------
Net cash provided by
operating activities 72,887 49,808 137,543 121,365
Cash flows from
investing activities:
Net (acquisitions)/
disposals of capital
assets (4,214) (2,028) (6,308) (5,414)
Purchase of a division
of Spicer Corporation (601) - (11,437) -
Purchase of eMotion LLC,
net of cash acquired - - (3,635) -
Purchase of Captaris
Inc., net of cash
acquired - - (101,033) -
Additional purchase
consideration for
prior period
acquisitions - (12) (4,612) (451)
Purchase of an asset
group constituting
a business - - - (2,209)
Investments in marketable
securities (5,322) - (8,930) -
Acquisition related
costs (4,824) (3,065) (12,578) (14,907)
------------ ------------ ------------ ------------
Net cash used in
investment activities (14,961) (5,105) (148,533) (22,981)
Cash flows from financing
activities:
Excess tax benefits on
share-based
compensation expense 1,729 101 8,382 867
Proceeds from issuance
of Common Shares 11,635 2,198 17,674 11,415
Repayment of long-term
debt (849) (869) (2,570) (62,746)
Debt issuance costs - - - (349)
------------ ------------ ------------ ------------
Net cash provided by
(used in) financing
activities 12,515 1,430 23,486 (50,813)
------------ ------------ ------------ ------------
Foreign exchange gain
(loss) on cash held in
foreign currencies (6,263) 9,920 (30,364) 18,212
Increase (decrease) in
cash and cash equivalents
during the period 64,178 56,053 (17,868) 65,783
Cash and cash equivalents
at beginning of the
period 172,870 159,709 254,916 149,979
------------ ------------ ------------ ------------
Cash and cash
equivalents at end
of the period $ 237,048 $ 215,762 $ 237,048 $ 215,762
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
For further information: Paul McFeeters, Chief Financial Officer, Open
Text Corporation, (905) 762-6121, pmcfeeters@opentext.com; Greg Secord, Vice
President, Investor Relations, Open Text Corporation, (519) 888-7111 ext.2408,
gsecord@opentext.com
