Open Text Reports First Quarter Fiscal 2010 Financial Results
WATERLOO, ON,
Total revenue for the first quarter was
Adjusted net income in the quarter was
The cash and cash equivalents balance as of
"We met our profit and revenue goals in what has seasonally been our toughest quarter. License revenue fell short of our expectations, mainly due to deferred purchase decisions for our Web Content Management (WCM) products," said
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.
Open Text Renews Normal Course Issuer Bid
The Company also announced its intention to renew its Normal Course Issuer Bid (the "Bid") through the facilities of the NASDAQ Global Select Market ("NASDAQ").
Purchases over the NASDAQ could commence in November, 2009 if desirable. As of
The maximum number of shares that may be purchased is calculated as 5% of the outstanding common shares of Open Text at the beginning of the Bid.
Teleconference Call
Open Text will host a conference call on
Date: Tuesday, October 27, 2009
Time: 5:00 p.m. ET/2:00 p.m. PT
Length: 60 minutes
Where: 800-814-4861
Please dial-in approximately 10 minutes before the teleconference is scheduled to begin. A replay of the call will be available beginning
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=7735475.
Supplemental materials regarding new accounting rules - Topic 805: Business Combinations - which will be discussed on the call are available for download on the Investor Relations section of the Open Text web site at: http://mimage.opentext.com/alt_content/binary/ot/investor/2010/fy2010q1.pdf.
About Open Text
Open Text(TM) is the world's largest independent provider of Enterprise Content Management software. The company's solutions manage information for all types of business, compliance and industry requirements in large companies, government agencies and professional service firms. Open Text supports approximately 46,000 customers 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 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; 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 thereunder; (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; (ix) demand for the Company's products; and (10) other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 10-K for the year ended
Notes
(1) Based on comparison of historical revenue figures publicly disseminated by companies in the Enterprise Content Management ("ECM") sector. 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 restructuring, 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, restructuring costs, 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 reconciliation (unaudited) of US GAAP based financial measures to non-US GAAP based financial measures referred to in this press release:
Reconciliation (unaudited) of US GAAP based Net Income to Adjusted Net
----------------------------------------------------------------------
Income (in millions of US dollars) for the quarters ended September 30,
-----------------------------------------------------------------------
2009 and 2008:
--------------
Three months ended Three months ended
September 30, 2009 September 30, 2008
GAAP based "Net Income" $1.7 $14.7
Special Charges/(recovery) 18.6 -
Amortization of intangibles 23.1 19.0
Other (Income)/Expense (3.4) (0.7)
Share-based compensation 1.5 1.4
Tax Impact on Above (8.7) (6.2)
-------------------------------------------------------------------------
Non-GAAP based "Adjusted Net Income" $32.8 $28.2
-------------------------------------------------------------------------
Reconciliation (unaudited) of US GAAP based EPS to non-US GAAP based EPS
------------------------------------------------------------------------
(calculated on a diluted basis) for the quarters ended September 30, 2009
-------------------------------------------------------------------------
and 2008:
---------
Three months ended Three months ended
September 30, 2009 September 30, 2008
GAAP based "Net Income" $0.03 $0.28
Special Charges/(recovery) 0.33 -
Amortization of intangibles 0.41 0.36
Other (Income)/Expense (0.06) (0.01)
Share-based compensation 0.03 0.03
Tax Impact on Above (0.16) (0.13)
-------------------------------------------------------------------------
Non-GAAP based "Adjusted Net Income" $0.58 $0.53
-------------------------------------------------------------------------
(3) The following table provides a composition of our major currencies
for revenue and expenses, expressed as a percentage, for the first
quarter of Fiscal 2010:
Currencies % of Revenue % of Expenses*
--------------------------------------- ---------------- ----------------
EURO................................... 25% 23%
GBP.................................... 12% 9%
CHF.................................... 6% 4%
CAD.................................... 6% 23%
USD.................................... 44% 34%
Others................................. 7% 7%
---------------- ----------------
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, depreciation, share-based compensation and
special charges.
OPEN TEXT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except per share data)
September 30 June 30
2009 2009
--------------- ---------------
ASSETS Unaudited Audited
Current assets:
Cash and cash equivalents $ 212,190 $ 275,819
Short-term investments 19,768 -
Accounts receivable trade, net of
allowance for doubtful accounts of
$4,464 as of September 30, 2009 and
$4,208 as of June 30, 2009 135,575 115,802
Income taxes recoverable 6,225 4,496
Prepaid expenses and other current
assets 27,858 18,172
Deferred tax assets 22,185 20,621
--------------- ---------------
Total current assets 423,801 434,910
Investments in marketable securities - 13,103
Capital assets 57,435 45,165
Goodwill 718,600 576,111
Acquired intangible assets 384,242 315,048
Deferred tax assets 75,211 69,877
Other assets 18,871 13,064
Long-term Income taxes recoverable 42,391 39,958
--------------- ---------------
Total assets $ 1,720,551 $ 1,507,236
--------------- ---------------
--------------- ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 128,660 $ 115,018
Current portion of long-term debt 3,489 3,449
Deferred revenues 205,998 189,397
Income taxes payable 7,707 10,356
Deferred tax liabilities 2,083 508
--------------- ---------------
Total current liabilities 347,937 318,728
Long-term liabilities:
Accrued liabilities 21,506 23,073
Pension liability 16,510 15,803
Long-term debt 299,182 299,234
Deferred revenues 10,969 7,914
Long-term income taxes payable 53,465 47,131
Deferred tax liabilities 134,543 108,889
--------------- ---------------
Total long-term liabilities 536,175 502,044
Shareholders' equity:
Share capital:
56,373,651 and 52,716,751 Common
Shares issued and outstanding at
September 30, 2009 and June 30, 2009,
respectively; Authorized Common
Shares: unlimited 588,871 457,982
Additional paid-in capital 55,307 52,152
Accumulated other comprehensive income 86,052 71,851
Retained earnings 106,209 104,479
--------------- ---------------
Total shareholders' equity 836,439 686,464
--------------- ---------------
Total liabilities and shareholders'
equity $ 1,720,551 $ 1,507,236
--------------- ---------------
--------------- ---------------
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
(Unaudited)
Three months ended September 30,
---------------------------------
2009 2008
---------------------------------
Revenues:
License $ 47,329 $ 50,074
Customer support 123,649 98,429
Service and other 40,444 34,120
---------------------------------
Total revenues 211,422 182,623
---------------------------------
Cost of revenues:
License 3,145 2,893
Customer support 20,939 15,567
Service and other 33,294 27,729
Amortization of acquired
technology-based intangible assets 14,142 10,747
---------------------------------
Total cost of revenues 71,520 56,936
---------------------------------
Gross profit 139,902 125,687
---------------------------------
Operating expenses:
Research and development 31,542 28,578
Sales and marketing 50,690 44,832
General and administrative 21,225 18,387
Depreciation 4,147 2,698
Amortization of acquired
customer-based intangible assets 8,917 8,215
Special charges 18,589 -
---------------------------------
Total operating expenses 135,110 102,710
---------------------------------
Income from operations 4,792 22,977
---------------------------------
Other income, net 3,440 729
Interest expense, net (3,046) (2,994)
---------------------------------
Income before income taxes 5,186 20,712
Provision for income taxes 3,456 5,932
---------------------------------
Net income before minority
interest 1,730 14,780
Minority interest - 119
---------------------------------
Net income for the period $ 1,730 $ 14,661
---------------------------------
---------------------------------
Net income per share - basic $ 0.03 $ 0.29
---------------------------------
---------------------------------
Net income per share - diluted $ 0.03 $ 0.28
---------------------------------
---------------------------------
Weighted average number of
Common Shares outstanding - basic 55,388 51,298
---------------------------------
---------------------------------
Weighted average number of
Common Shares outstanding - diluted 56,469 52,990
---------------------------------
---------------------------------
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASHFLOWS
(In thousands of U.S. Dollars)
Unaudited
---------------------------------
Three months ended
September 30
---------------------------------
2009 2008
---------------------------------
Cash flows from operating activities:
Net income for the period $ 1,730 $ 14,661
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 27,206 21,660
Share-based compensation expense 3,506 1,423
Employee long-term incentive plan 2,675 1,059
Excess tax benefits on share-based
compensation expense (691) (6,629)
Undistributed earnings related to
minority interest - 119
Pension expense 192 -
Amortization of debt issuance costs 266 224
Unrealized (gain) loss on financial
instruments (2,390) (722)
Release of unrealized gain on marketable
securities to income (4,353) -
Deferred taxes (2,957) (256)
Changes in operating assets and
liabilities:
Accounts receivable 7,928 27,946
Prepaid expenses and other current
assets (3,218) (1,926)
Income taxes (4,787) 4,731
Accounts payable and accrued
liabilities (9,343) (18,369)
Deferred revenue (12,437) (19,430)
Other assets 1,175 322
---------------------------------
Net cash provided by operating
activities 4,502 24,813
Cash flows from investing activities:
Additions of capital assets, net (7,665) (3,887)
Purchase of Vignette Corporation,
net of cash acquired (90,600) -
Purchase of eMotion LLC, net of cash
acquired - (3,635)
Purchase of a division of Spicer
Corporation - (10,836)
Purchase consideration for prior
period acquisitions (4,801) (3,293)
Investments in marketable securities - (3,608)
Maturity of short-term investments 27,171 -
---------------------------------
Net cash used in investing activities (75,895) (25,259)
Cash flows from financing activities:
Excess tax benefits on share-based
compensation expense 691 6,629
Proceeds from issuance of Common shares 4,477 5,542
Repayment of long-term debt (864) (867)
Debt issuance costs (1,024) -
---------------------------------
Net cash provided by financing
activities 3,280 11,304
---------------------------------
Foreign exchange gain (loss) on
cash held in foreign currencies 4,484 (15,641)
Decrease in cash and cash equivalents
during the period (63,629) (4,783)
Cash and cash equivalents at
beginning of the period 275,819 254,916
---------------------------------
Cash and cash equivalents at end
of the period $ 212,190 $ 250,133
---------------------------------
---------------------------------
For further information: Paul McFeeters, Chief Financial Officer, Open Text Corporation, (905) 762-6121, [email protected]; Greg Secord, Vice President, Investor Relations, Open Text Corporation, (519) 888-7111 ext. 2408, [email protected]
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