Open Text Reports Fourth Quarter and Fiscal Year 2010 Financial Results

WATERLOO, ON, Aug. 18 /CNW/ - Open Text(TM) Corporation (NASDAQ: OTEX) (TSX:OTC), today announced financial results for its fourth quarter and fiscal year ended June 30, 2010.(1)

Total revenue for the fourth quarter of fiscal 2010 was $240.0 million, up 18% compared to $203.4 million for the same period in the prior fiscal year. License revenue in the fourth quarter of fiscal 2010 was $68.5 million, up 9% compared to $63.0 million for the same period in the prior fiscal year.

Adjusted net income in the fourth quarter of fiscal 2010 was $54.9 million, up 40 % compared to $39.2 million for the same period in the prior fiscal year. Adjusted earnings per share for the fourth quarter of fiscal 2010 was $0.95 per share on a diluted basis, up 30% compared to $0.73 per share on a diluted basis, for the same period in the prior fiscal year. Net income in accordance with U.S. generally accepted accounting principles ("US GAAP") was $51.5 million or $0.89 per share on a diluted basis, compared to $19.5 million or $0.36 per share on a diluted basis for the same period in the prior fiscal year.(2)

Total revenue for fiscal 2010 was $912.0 million, up 16% compared to $785.7 million in the prior fiscal year. License revenue for fiscal 2010 was $238.1 million, up 4% compared to $229.8 million in the prior fiscal year.

Adjusted net income for fiscal 2010 was $178.0 million compared to $132.8 million in the prior fiscal year. Adjusted earnings per share for fiscal 2010 was $3.10 per share on a diluted basis, up 24% compared to $2.49 per share on a diluted basis, in the prior fiscal year. Net income for fiscal 2010 in accordance with US GAAP was $87.6 million, or $1.53 per share on a diluted basis, compared to $56.9 million, or $1.07 per share on a diluted basis, in the prior fiscal year.(2)

Operating cash flow in the fourth quarter of fiscal 2010 was $65.2 million, compared to $38.6 million for the same period in prior fiscal year. For the full 2010 fiscal year, Open Text generated $180.2 million in operating cash flow compared to $176.2 million in fiscal 2009.

The cash and cash equivalents balance as of June 30, 2010 was $326.2 million. Accounts receivable as of June 30, 2010, totaled $132.1 million, compared to $115.8 million as of June 30, 2009, and Days Sales Outstanding (DSO) was 50 days in the fourth quarter of fiscal 2010, compared to 51 days in the fourth quarter of fiscal 2009.

"Our focus for the year has been on profitability and I am pleased that in this difficult economic environment, we have exceeded our profitability targets with disciplined cost control," said John Shackleton, President and Chief Executive Officer of Open Text. "Demand for vertical solutions, as well as customer need for compliance and back office efficiencies, continue to contribute to our strong pipeline."

Please see note (2) below for a reconciliation of non-US GAAP based financial measures used in this press release, to US GAAP based financial measures.

Teleconference Call

Open Text will host a conference call on August 18, 2010 at 5:00 p.m. ET to discuss its final financial results.

    
                    Date:    Wednesday, August 18, 2010
                    Time:    5:00 p.m. ET/2:00 p.m. PT
                    Length:  60 minutes
                    Where:   416-644-3414
                             800-814-4859 (Toll Free)
    

Investors should dial in approximately 10 minutes before the teleconference is scheduled to begin. A replay of the call will be available beginning August 18, 2010 at 7:00 p.m. ET through 11:59 p.m. on September 1, 2010 and can be accessed by dialing 416-640-1917 and using passcode 4325575 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/2/ex_event.html?evtype=events&id=701200000003lzHAAQ

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.

Certain statements in this press release, including statements about the financial conditions, and results of operations and earnings for Open Text Corporation ("Open Text" or "the Company"), may contain words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on the Company's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. The Company's assumptions, although considered reasonable by the Company at the date of this press release, may provide to be inaccurate and consequently the Company's actual results could differ materially from the expectations set out herein.

Actual results or events could differ materially from those contemplated in forward-looking statements as a result of 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; and (viii) the demand for the Company's product and the extent of deployment of the company's products in the ECM marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. 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 Securities Exchange Act of 1934, as amended, and the rules promulgated there under; (iii) the risks associated with bringing new products 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 possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (viii) the continuous commitment of the Company's customers; and (ix) demand for the Company's products.

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 and other securities filings with the SEC and other securities regulators. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Copyright (C) 2010 by Open Text Corporation. "OPEN TEXT", "OPEN TEXT EVERYWHERE" and the "OPEN TEXT ECM SUITE" are trademarks or registered trademarks of Open Text Corporation in the United States of America, Canada, the European Union and/or other countries. This list of trademarks is not exhaustive. Other trademarks, registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text Corporation or other respective owners.

Notes

(1) All dollar amounts in this press release are in US dollars unless otherwise indicated.

(2) Use of US Non-GAAP financial measures

In addition to reporting financial results in accordance with US GAAP, the Company provides certain non-US GAAP financial measures that are not in accordance with US GAAP. These non-US 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-US 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 adjusted net income and adjusted EPS both in its reconciliation to the US 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. The Company uses the financial measures adjusted EPS and adjusted net income to supplement the information provided in its consolidated financial statements, which are presented in accordance with US GAAP. The presentation of adjusted net income and adjusted EPS is not meant to be a substitute for net income or net income per share presented in accordance with US GAAP, but rather should be evaluated in conjunction with and as a supplement to such US GAAP measures. Open Text 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 US GAAP measures with certain non-US GAAP measures for the reasons set forth below. Adjusted net income and adjusted EPS are calculated as net income or net income per share on a diluted basis, excluding, where applicable, the amortization of acquired intangible assets, other income (expense), share-based compensation, and special charges, 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. The use of the term "non-operational charge" is defined by the Company as those that do not impact 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, such as amortization of acquired intangibles, special charges, 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 US GAAP. The Company believes the provision of supplemental non-US 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 period-to-period comparison of operating performance. As a result, the Company considers it appropriate and reasonable to provide, in addition to US GAAP measures, supplementary non-US GAAP financial measures that exclude certain items from the presentation of its financial results in this press release. The following charts provide a reconciliation of (unaudited) US GAAP based financial measures to non-US GAAP based financial measures referred to in this press release:

The following tables present non GAAP-based measures, and their reconciliation to GAAP, for the three months and year ended June 30, 2010:

    
    Non GAAP-based Adjusted Operating Margin and Adjusted Net income*:
    --------------------------------------------------------------------

                        Three                                     Open Text
                       months                   Year                 Fiscal
                        ended                  ended                   2010
    In millions       June 30,   Percent-    June 30,   Percent-     Target
     USD                 2010        age        2010        age       Model
    -------------- ----------- ----------- ---------- ----------- -----------
    Revenue:
    License.......  $    68.5       28.5%   $   238.1      26.1%      25-30%
    Customer
     Support......      129.1       53.8%       507.4      55.6%      50-55%
    Service and
     Other........       42.4       17.7%       166.5      18.3%      20-25%
                   -----------             -----------
    Total Revenue.      240.0                   912.0

    Cost of
     revenues
     (excluding
     amortization
     of acquired
     technology-
     based in-
     tangible
     assets)......       60.3                   236.0
                   -----------             -----------
    Gross profit
     excluding
     amortization
     of acquired
     technology-
     based in-
     tangible
     assets.......      179.7       74.9%       676.0      74.1%      72-75%

    Operating
     expenses:

    Development...       31.8       13.3%       129.4      14.2%      14-16%
    Sales &
     Marketing....       47.6       19.8%       198.2      21.7%      24-26%
    General &
     Admin-
     istration....       21.3        8.9%        83.3       9.1%       9-10%
    Depreciation..        4.4        1.8%        17.4       1.9%          2%
                   -----------             -----------
                        105.1                   428.3
    Gross margin
     less operat-
     ing expenses.       74.6                   247.7
    Add: Share-
     based comp-
     ensation
     expense......        2.6                     6.6
                   -----------             -----------
    Non GAAP-based
     Adjusted
     Operating
     Margin.......       77.2       32.2%       254.3      27.9%      22-27%
    Less: Interest
     expense......        2.0                    10.4
                   -----------             -----------
    Sub-total.....       75.2                   243.9
    Less: tax
     @ 27% ....          20.3                    65.9
                   -----------             -----------
    Non GAAP-based
     Adjusted Net
     Income.......  $    54.9               $   178.0
                   -----------             -----------
                   -----------             -----------
    Non GAAP-based
     Adjusted Net
     Income per
     share........  $    0.95               $    3.10
                   -----------             -----------
                   -----------             -----------


    Reconciliation of Non GAAP-based Adjusted Operating Margin to GAAP-based
     Net Income:
    -------------------------------------------------------------------------

    Non GAAP-based Adjusted Operating
     Margin..........................................  $    77.2   $   254.3
    Less:
    Amortization.....................................       25.5        96.4
    Share-based compensation expense.................        2.6      6.6(xx)
    Special charges..................................        8.6        43.7
    Other expense, net...............................        4.6         8.3
    Interest expense, net............................        2.0        10.4
    GAAP-based provision for (recovery of) income
     taxes...........................................      (17.6)        1.3
                                                      ----------- -----------
    GAAP-based net income for the period.............  $    51.5   $    87.6
                                                      ----------- -----------
                                                      ----------- -----------


    Reconciliation of Non GAAP based Adjusted Net income to GAAP-based
     Net Income:
    -------------------------------------------------------------------------

                                                   per                   per
                                                 share                 share
    Non GAAP-based
     Adjusted Net
     Income                         $  54.9    $  0.95    $ 178.0     $ 3.10
    Less:
    Amortization...................    25.5       0.44       96.4       1.68
    Share-based compensation
     expense.......................     2.6       0.04     6.6(xx)      0.11
    Special charges................     8.6       0.15       43.7       0.76
    Other expense, net.............     4.6       0.08        8.3       0.14
    GAAP-based provision for (re-
     covery of) income taxes.......   (17.6)     (0.30)       1.3       0.02
    Tax on non GAAP-based adjusted
     net income (per above) .......   (20.3)     (0.35)     (65.9)     (1.14)
                                   ------------------------------------------
    GAAP-based net income for the
     period........................ $  51.5    $  0.89    $  87.6     $ 1.53
                                   ------------------------------------------
                                   ------------------------------------------

    *  Amounts may differ from those shown on the face of the financial
         statements due to non-material rounding adjustments.
    (xx) In addition $3.2 million of share-based compensation is included
         within Special charges.
    

The following tables present non GAAP-based measures, and their reconciliation to GAAP, for the three months and year ended June 30, 2009:

    
    Non GAAP-based Adjusted Operating Margin and Adjusted Net income*:
    --------------------------------------------------------------------

                        Three                                     Open Text
                       months                   Year                 Fiscal
                        ended                  ended                   2009
    In millions       June 30,   Percent-    June 30,   Percent-     Target
     USD                 2009        age        2009        age       Model
    -------------- ----------- ----------- ---------- ----------- -----------
    Revenue:
    License.......  $    63.0       31.0%   $   229.8      29.3%      25-30%
    Customer
     Support......      104.5       51.4%       405.4      51.6%      50-55%
    Service and
     Other........       35.9       17.6%       150.5      19.2%      20-25%
                   -----------             -----------
    Total Revenue.      203.4                   785.7

    Cost of
     revenues
     (excluding
     amortization
     of acquired
     technology-
     based in-
     tangible
     assets)......       51.3                   204.2
                   -----------             -----------
    Gross profit
     excluding
     amortization
     of acquired
     technology-
     based in-
     tangible
     assets.......      152.1       74.8%       581.5      74.0%      72-75%

    Operating
     expenses:

    Development...       28.8       14.2%       116.2      14.8%      14-16%
    Sales &
     Marketing....       47.9       23.5%       186.5      23.7%      24-26%
    General &
     Admin-
     istration....       19.2        9.4%        73.8       9.4%       9-10%
    Depreciation..        3.2        1.6%        12.0       1.5%          2%
                   -----------             -----------
                         99.1                   388.5
    Gross margin
     less operat-
     ing expenses.       53.0                   193.0
    Add: Share-
     based comp-
     ensation
     expense......        1.1                     5.0
                   -----------             -----------
    Non GAAP-based
     Adjusted
     Operating
     Margin.......       54.1       26.6%       198.0      25.2%      22-27%
    Less: Interest
     expense......        2.8                    13.6
                   -----------             -----------
    Sub-total.....       51.3                   184.4
    Less: tax
     @ 23.5%
     and 28%,
     respectively.       12.1                    51.6
                   -----------             -----------
    Non GAAP-based
     Adjusted Net
     Income         $    39.2               $   132.8
                   -----------             -----------
                   -----------             -----------
    Non GAAP-based
     Adjusted Net
     Income per
     share........  $    0.73               $    2.49
                   -----------             -----------
                   -----------             -----------


    Reconciliation of Non GAAP-based Adjusted Operating Margin to GAAP-based
     Net Income:
    -------------------------------------------------------------------------

    Non GAAP-based Adjusted Operating Margin.........   $    54.1  $   198.0
    Less:
    Amortization.....................................        17.3       81.0
    Share-based compensation expense.................         1.1        5.0
    Special charges..................................         1.2       14.4
    Other expense, net...............................         3.0        3.2
    Interest expense, net............................         2.8       13.6
    GAAP-based provision for income taxes............         9.2       23.9
                                                      ----------- -----------
    GAAP-based net income for the period.............   $    19.5  $    56.9
                                                      ----------- -----------
                                                      ----------- -----------

    Reconciliation of Non GAAP based Adjusted Net income to GAAP-based
     Net Income:
    -------------------------------------------------------------------------
                                                   per                   per
                                                 share                 share
    Non GAAP-based
     Adjusted Net
     Income                         $  39.2    $  0.73    $ 132.8     $ 2.49
    Less:
    Amortization...................    17.3       0.32       81.0       1.52
    Share-based compensation
     expense.......................     1.1       0.02        5.0       0.09
    Special charges................     1.2       0.02       14.4       0.27
    Other expense, net.............     3.0       0.06        3.2       0.06
    GAAP-based provision for income
     taxes.........................     9.2       0.17       23.9       0.45
    Tax on non GAAP-based adjusted
     net income (per above)........   (12.1)     (0.22)     (51.6)     (0.97)
                                    -----------------------------------------
    GAAP-based net income for the
     period........................ $  19.5    $  0.36    $  56.9     $ 1.07
                                    -----------------------------------------
                                    -----------------------------------------

    * Amounts may differ from those shown on the face of the financial
        statements due to non-material rounding adjustments.

    (3) The following table provides a composition of our major currencies
        for revenue under U.S. GAAP and expenses, expressed as a percentage,
        for the fourth quarter and fiscal year ended June 30, 2010:

                                                            Fourth quarter
                                                            of fiscal 2010
                                                         --------------------
                                                             % of    % of Ex-
    Currencies                                            Revenue   penses*
    ---------------------------------------------------- --------- ----------
    EURO................................................      25%        20%
    GBP.................................................       9%         8%
    CHF.................................................       5%         2%
    CAD.................................................      10%        31%
    USD.................................................      44%        31%
    Others..............................................       7%         8%
                                                         --------- ----------
    Total...............................................     100%       100%
                                                         --------- ----------
                                                         --------- ----------


                                                              Fiscal 2010
                                                         --------------------
                                                             % of    % of Ex-
    Currencies                                            Revenue   penses*
    ---------------------------------------------------- --------- ----------
    EURO................................................      25%        22%
    GBP.................................................      10%         8%
    CHF.................................................       5%         3%
    CAD.................................................       8%        26%
    USD.................................................      44%        33%
    Others..............................................       8%         8%
                                                         --------- ----------
    Total...............................................     100%       100%
                                                         --------- ----------
                                                         --------- ----------

    * Expenses include all cost of revenues and operating expenses included
        within the Consolidated Statements of Income, except for amortization
        of intangible assets, share-based compensation expense and special
        charges.




                            OPEN TEXT CORPORATION
                         CONSOLIDATED BALANCE SHEETS
              (In thousands of U.S. dollars, except share data)

                                                        June 30,     June 30,
                                                           2010         2009
                                                    ------------ ------------
                                 ASSETS
    Cash and cash equivalents...................... $   326,192  $   275,819
    Accounts receivable trade, net of allowance
     for doubtful accounts of $4,868 as of June 30,
     2010 and $4,208 as of June 30, 2009...........     132,143      115,802
    Income taxes recoverable.......................      44,509        4,496
    Prepaid expenses and other current assets......      21,086       18,172
    Deferred tax assets............................      15,714       20,621
                                                    ------------ ------------
      Total current assets.........................     539,644      434,910
    Investments in marketable securities...........           -       13,103
    Capital assets.................................      54,286       45,165
    Goodwill.......................................     671,624      576,111
    Acquired intangible assets.....................     328,193      315,048
    Deferred tax assets............................      27,405       69,877
    Other assets...................................      44,454       13,064
    Long-term income taxes recoverable.............      48,418       39,958
                                                    ------------ ------------
      Total assets                                  $ 1,714,024  $ 1,507,236
                                                    ------------ ------------
                                                    ------------ ------------

               LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued liabilities..... $   119,604  $   116,992
      Current portion of long-term debt............      15,486        3,449
      Deferred revenues............................     219,752      189,397
      Income taxes payable.........................      39,666       10,356
      Deferred tax liabilities.....................      28,384          508
                                                    ------------ ------------
        Total current liabilities..................     422,892      320,702
    Long-term liabilities:
      Accrued liabilities..........................      15,755       21,099
      Pension liability............................      15,888       15,803
      Long-term debt...............................     285,026      299,234
      Deferred revenues............................      10,085        7,914
      Long-term income taxes payable...............      64,699       47,131
      Deferred tax liabilities.....................      13,459      108,889
                                                    ------------ ------------
        Total long-term liabilities................     404,912      500,070
    Shareholders' equity:
      Share capital
        56,825,995 and 52,716,751 Common Shares
        issued and outstanding at June 30, 2010
        and June 30, 2009, respectively;
        Authorized Common Shares: unlimited........     602,868      457,982
      Additional paid-in capital...................      61,298       52,152
      Accumulated other comprehensive income.......      44,021       71,851
      Retained earnings............................     192,033      104,479
      Treasury stock, at cost (307,579 and nil
       shares, respectively at June 30, 2010 and
       June 30, 2009)..............................     (14,000)           -
                                                    ------------ ------------
    Total shareholders' equity.....................     886,220      686,464
                                                    ------------ ------------
    Total liabilities and shareholders' equity..... $ 1,714,024  $ 1,507,236
                                                    ------------ ------------
                                                    ------------ ------------



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

                                                 Year ended June 30,
                                       --------------------------------------
                                            2010         2009         2008
                                       ------------ ------------ ------------
    Revenues:
      License......................... $   238,074  $   229,818  $   219,103
      Customer support................     507,452      405,310      363,580
      Service and other...............     166,497      150,537      142,849
                                       ------------ ------------ ------------
        Total revenues................     912,023      785,665      725,532

    Cost of revenues:
      License.........................      16,922       16,204       15,415
      Customer support................      83,741       68,902       58,764
      Service and other...............     135,396      118,998      117,037
      Amortization of acquired
       technology-based intangible
       assets.........................      60,472       47,733       41,515
                                       ------------ ------------ ------------
        Total cost of revenues........     296,531      251,837      232,731
                                       ------------ ------------ ------------
    Gross profit......................     615,492      533,828      492,801
                                       ------------ ------------ ------------
    Operating expenses:
      Research and development........     129,378      116,164      107,206
      Sales and marketing.............     198,208      186,533      172,873
      General and administrative......      83,295       73,842       69,985
      Depreciation....................      17,425       12,012       12,017
      Amortization of acquired
       customer-based intangible
       assets.........................      35,940       33,259       30,759
      Special charges (recoveries)....      43,666       14,434         (418)
                                       ------------ ------------ ------------
        Total operating expenses......     507,912      436,244      392,422
                                       ------------ ------------ ------------
    Income from operations............     107,580       97,584      100,379
                                       ------------ ------------ ------------
    Other income (expense), net.......      (8,349)      (3,238)      (1,521)
    Interest expense, net.............     (10,366)     (13,620)     (22,859)
                                       ------------ ------------ ------------
    Income before income taxes........      88,865       80,726       75,999
    Provision for income taxes........       1,311       23,788       22,993
                                       ------------ ------------ ------------
    Net income for the year........... $    87,554  $    56,938  $    53,006
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------
    Net income per share-basic........ $      1.56  $      1.09  $      1.04
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------
    Net income per share-diluted...... $      1.53  $      1.07  $      1.01
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------
    Weighted average number of Common
     Shares outstanding-basic.........      56,280       52,030       50,780
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------
    Weighted average number of Common
     Shares outstanding-diluted.......      57,385       53,271       52,604
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------



                            OPEN TEXT CORPORATION
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (In thousands of U.S. dollars)

                                                 Year ended June 30,
                                       --------------------------------------
                                            2010         2009         2008
                                       ------------ ------------ ------------
    Cash flows from operating
     activities:
      Net income for the year......... $    87,554  $    56,938  $    53,006
      Adjustments to reconcile net
       income to net cash provided by
       operating activities:
        Depreciation and amortization.     113,837       93,004       84,291
        In-process research and
         development..................           -          121          500
        Share-based compensation
         expense......................       9,765        5,032        3,789
        Excess tax benefits from
         share-based compensation.....      (1,143)      (8,631)      (1,079)
        Pension expense...............         211        1,377            -
        Amortization of debt issuance
         costs........................       1,390        1,099        1,220
        Unrealized (gain) loss on
         financial instruments........        (878)      (1,682)       3,178
        Loss on sale and write down
         of capital assets............         136          130            -
        Release of unrealized gain on
         marketable securities to
         income.......................      (4,353)           -            -
        Deferred taxes................     (24,219)      (9,914)     (24,326)
        Impairment and Other non cash
         charges......................         577          223            -
      Changes in operating assets and
       liabilities:
        Accounts receivable...........      24,521       43,761       (5,626)
        Prepaid expenses and other
         current assets...............        (814)      (3,080)        (168)
        Income taxes..................       5,066       23,274       12,600
        Accounts payable and accrued
         liabilities..................     (11,340)     (15,999)       3,566
        Deferred revenue..............       3,077       (6,861)      33,751
        Other assets..................     (23,196)      (2,622)       1,274
                                       ------------ ------------ ------------
    Net cash provided by operating
     activities.......................     180,191      176,170      165,976
    Cash flows from investing
     activities:
      Additions of capital assets-net.     (19,314)     (12,150)      (6,895)
      Purchase of Burntsand Inc.,
       net of cash acquired...........      (8,163)           -            -
      Purchase of Nstein Technologies
       Inc., net of cash acquired.....     (20,370)           -            -
      Purchase of New Generation
       Consulting Inc.................      (3,500)           -            -
      Purchase of Vignette
       Corporation, net of cash
       acquired.......................     (90,600)           -            -
      Purchase of Vizible Corporation.           -         (850)           -
      Purchase of Captaris Inc.,
       net of cash acquired...........           -     (101,033)           -
      Purchase of eMotion LLC, net of
       cash acquired..................        (556)      (3,635)           -
      Purchase of a division of Spicer
       Corporation....................           -      (11,437)           -
      Purchase consideration for prior
       period acquisitions............     (12,843)     (22,794)     (21,522)
      Investments in marketable
       securities.....................           -       (8,930)           -
      Maturity of short-term
       investments....................      45,525            -            -
                                       ------------ ------------ ------------
    Net cash used in investing
     activities.......................    (109,821)    (160,829)     (28,417)
    Cash flow from financing
     activities:
      Excess tax benefits on share-
       based compensation expense.....       1,143        8,631        1,079
      Proceeds from issuance of Common
       Shares.........................       9,971       19,593       12,272
      Purchase of Treasury Stock......     (14,000)           -            -
      Repayment of long-term debt.....      (3,485)      (3,426)     (63,616)
      Debt issuance costs.............      (1,024)           -         (349)
                                       ------------ ------------ ------------
    Net cash provided by (used in)
     financing activities.............      (7,395)      24,798      (50,614)
    Foreign exchange gain (loss) on
     cash held in foreign currencies..     (12,602)     (19,236)      17,992
    Increase in cash and cash
     equivalents during the year......      50,373       20,903      104,937
    Cash and cash equivalents at
     beginning of the year............     275,819      254,916      149,979
                                       ------------ ------------ ------------
    Cash and cash equivalents at end
     of the year...................... $   326,192  $   275,819  $   254,916
                                       ------------ ------------ ------------
                                       ------------ ------------ ------------



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

                                                          Three months ended
                                                                June 30,
                                                    -------------------------
                                                           2010         2009
                                                    ------------ ------------
    Revenues:
      License...................................... $    68,527  $    62,973
      Customer support.............................     129,077      104,494
      Service and other............................      42,430       35,889
                                                    ------------ ------------
        Total revenues                                  240,034      203,356

    Cost of revenues:
      License......................................       5,400        3,534
      Customer support.............................      20,532       18,675
      Service and other............................      34,360       29,100
      Amortization of acquired technology-based
       intangible assets...........................      16,134       13,562
                                                    ------------ ------------
        Total cost of revenues.....................      76,426       64,871
                                                    ------------ ------------
    Gross profit...................................     163,608      138,485
                                                    ------------ ------------
    Operating expenses:
      Research and development.....................      31,835       28,829
      Sales and marketing..........................      47,644       47,928
      General and administrative...................      21,288       19,238
      Depreciation.................................       4,443        3,165
      Amortization of acquired customer-based
       intangible assets...........................       9,378        3,730
      Special charges..............................       8,571        1,200
                                                    ------------ ------------
        Total operating expenses...................     123,159      104,090
                                                    ------------ ------------
    Income from operations.........................      40,449       34,395
                                                    ------------ ------------
    Other expense, net.............................      (4,564)      (3,039)
    Interest expense, net..........................      (1,979)      (2,848)
                                                    ------------ ------------
    Income before income taxes.....................      33,906       28,508
    Provision for (recovery of) income taxes.......     (17,603)       9,027
                                                    ------------ ------------
    Net income for the period...................... $    51,509  $    19,481
                                                    ------------ ------------
                                                    ------------ ------------

    Net income per share-basic..................... $      0.91  $      0.37
                                                    ------------ ------------
                                                    ------------ ------------
    Net income per share-diluted................... $      0.89  $      0.36
                                                    ------------ ------------
                                                    ------------ ------------
    Weighted average number of Common Shares
     outstanding-basic.............................      56,802       52,648
                                                    ------------ ------------
                                                    ------------ ------------
    Weighted average number of Common Shares
     outstanding-diluted...........................      57,897       53,670
                                                    ------------ ------------
                                                    ------------ ------------



                            OPEN TEXT CORPORATION
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (In thousands of U.S. dollars)

                                                          Three months ended
                                                                June 30,
                                                    -------------------------
                                                           2010         2009
                                                    ------------ ------------
    Cash flows from operating activities:
      Net income for the period.................... $    51,509  $    19,481
      Adjustments to reconcile net income to net
       cash provided by operating activities:
        Depreciation and amortization..............      29,955       20,457
        Share-based compensation expense...........       2,611        1,075
        Excess tax benefits from share-based
         compensation..............................        (239)        (249)
        Pension expense............................        (351)         253
        Amortization of debt issuance costs........         326          268
        Unrealized (gain) loss on financial
         instruments...............................           -       (1,548)
        Deferred taxes.............................     (20,505)      (6,337)
        Impairment and Other non cash charges......        (253)           -
      Changes in operating assets and liabilities:
        Accounts receivable........................         568       (4,136)
        Prepaid expenses and other current assets..         492          665
        Income taxes...............................      23,304       13,618
        Accounts payable and accrued liabilities...         126        2,731
        Deferred revenue...........................       4,106       (5,557)
        Other assets...............................     (26,429)      (2,094)
                                                    ------------ ------------
    Net cash provided by operating activities......      65,220       38,627
    Cash flows from investing activities:
      Additions of capital assets-net..............      (4,045)      (5,842)
      Purchase of Burntsand Inc., net of cash
       acquired....................................      (8,163)           -
      Purchase of Nstein Technologies Inc., net
       of cash acquired............................     (20,370)           -
      Purchase of New Generation Consulting Inc,...      (3,500)           -
      Purchase of Vizible Corporation..............           -         (850)
      Purchase consideration for prior period
       acquisitions................................      (1,436)      (5,604)
                                                    ------------ ------------
    Net cash used in investing activities..........     (37,514)     (12,296)
    Cash flow from financing activities:
      Excess tax benefits on share-based
       compensation expense........................         239          249
      Proceeds from issuance of Common Shares......       1,034        1,919
      Purchase of Treasury Stock...................     (14,000)           -
      Repayment of long-term debt..................        (878)        (856)
                                                    ------------ ------------
    Net cash provided by (used in) financing
       activities..................................     (13,605)       1,312
    Foreign exchange gain (loss) on cash held in
     foreign currencies............................      (9,237)      11,128
    Increase in cash and cash equivalents during
     the period....................................       4,864       38,771
    Cash and cash equivalents at beginning of
     the period....................................     321,328      237,048
                                                    ------------ ------------
    Cash and cash equivalents at end of the period. $   326,192  $   275,819
                                                    ------------ ------------
                                                    ------------ ------------
    

SOURCE Open Text Corporation

For further information: For further information: Greg Secord, Vice President, Investor Relations, Open Text Corporation, 519-888-7111 ext.2408, gsecord@opentext.com


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