Open Text Reports Third Quarter Fiscal 2009 Financial Results



    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:

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


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