WATERLOO, ON, Feb. 3 /PRNewswire-FirstCall/ -- Open Text(TM)
Corporation (NASDAQ:OTEX) (TSX:OTC), a leading provider of
Enterprise Content Management (ECM) software, today announced
unaudited financial results for its second quarter ended December
31, 2009.(1) Total revenue for the second quarter of fiscal 2010
was $247.8 million, up 19% compared to $207.7 million for the same
period in the prior fiscal year. License revenue in the second
quarter was $72.7 million, up 12% compared to $64.9 million in the
second quarter of the prior fiscal year. Adjusted net income in the
quarter was $50.1 million or $0.87 per share on a diluted basis, up
47% compared to $34.0 million or $0.64 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 $21.2 million or $0.37 per share on a diluted basis,
compared to $0.8 million or $0.01 per share on a diluted basis for
the same period in the prior fiscal year.(2) The cash and cash
equivalents balance as of December 31, 2009 was $247.6 million,
compared to $275.8 million as of June 30, 2009. During the six
months that ended December 31, 2009, the net cash paid for the
Vignette acquisition was $90.6 million. Accounts receivable as of
December 31, 2009, totaled $143.4 million, compared to $115.8
million as of June 30, 2009, and Days Sales Outstanding (DSO) was
52 days in the second quarter of fiscal 2010, compared to 53 days
in the second quarter of fiscal 2009. "We had a very good quarter
across the board - in all geographies and verticals," said John
Shackleton, President and Chief Executive Officer of Open Text.
"Our strong license revenue growth has brought us to where we
expected to be on a year to date basis." "We are also pleased with
our profitability this quarter, generating a pre-tax adjusted
operating margin of 28.8%," said Shackleton. "The integration of
Vignette is progressing well and we are very encouraged by the
synergies we see from the combined businesses."(4) 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 February 3, 2010 at 5:00 p.m. ET to discuss the financial
results of its second quarter. Date: Wednesday, February 3, 2010
Time: 5:00 p.m. ET/2:00 p.m. PT Length: 60 minutes Where:
416-644-3414 800-814-4859 (Toll Free) Please dial-in approximately
10 minutes before the teleconference is scheduled to begin. A
replay of the call will be available beginning February 3, 2010 at
7:00 p.m. ET through 11:59 p.m. on February 17, 2010 and can be
accessed by dialing 416-640-1917 and using pass code 4198863
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=7736136 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 http://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
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; 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.
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 in this press release 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 intangible assets, 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 a reconciliation
of (unaudited) US GAAP based financial measures to non-US GAAP
based financial measures referred to in this press release:
Reconciliation of (Unaudited) US GAAP based Net Income to Adjusted
Net
----------------------------------------------------------------------
Income (in millions of US dollars) for the periods indicated:
------------------------------------------------------------- Three
months ended Three months ended December 31, 2009 December 31, 2008
GAAP based "Net Income" $21.2 $0.8 Special charges 10.4 11.4
Amortization of intangibles 23.9 21.9 Other expense 1.7 12.5
Share-based compensation 1.2 1.1 Tax Impact on above (8.3) (13.7)
-------------------------------------------------------------------------
Non-GAAP based "Adjusted Net Income" $50.1 $34.0
-------------------------------------------------------------------------
Reconciliation of (Unaudited) US GAAP based EPS to non-US GAAP
based EPS
------------------------------------------------------------------------
(calculated on a diluted basis) for the periods indicated:
---------------------------------------------------------- Three
months ended Three months ended December 31, 2009 December 31, 2008
GAAP based "Net Income" $0.37 $0.01 Special charges 0.18 0.21
Amortization of intangibles 0.41 0.41 Other expense 0.03 0.23
Share-based compensation 0.02 0.02 Tax Impact on Above (0.14)
(0.24)
-------------------------------------------------------------------------
Non-GAAP based "Adjusted Net Income" per share $0.87 $ 0.64
-------------------------------------------------------------------------
(3) The following table provides a composition of our major
currencies for revenue and expenses, expressed as a percentage, for
the second quarter of fiscal 2010: Currencies % of Revenue % of
Expenses* --------------------------------------- ----------------
---------------- EURO................................... 27% 23%
GBP.................................... 9% 8%
CHF.................................... 6% 3%
CAD.................................... 7% 24%
USD.................................... 43% 34%
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, depreciation, share-based
compensation and special charges. (4) The following table sets
forth our revenue type as a percentage of total revenue, certain
operating expenses by function and certain operating expenses as a
percentage of total revenue compared to our "forecasted" percentage
range within our "operating model", as communicated in our investor
relations presentation, posted on our corporate website at the
following web address:
http://www.opentext.com/2/global/company/investors.html Open Text
(in '000s Three months ended Six months ended "operating of USD)
December 31, 2009 December 31, 2009 model"
----------------------------------------------- Percentage
Percentage Revenue: License $ 72,691 29.3% $ 120,020 26.1% 25-30%
Customer Support 130,283 52.6% 253,932 55.3% 50-55% Service and
Other 44,816 18.1% 85,260 18.6% 20-25% ----------- -----------
Total Revenue 247,790 459,212 ----------- ----------- -----------
----------- Gross profit excluding amortization of acquired
technology- based intangible assets 185,236 74.8% 339,280 73.9%
72-75% Operating expenses: Research and development 34,347 13.9%
65,889 14.3% 14-16% Sales and marketing 53,891 21.7% 104,581 22.8%
24-26% General and administrative 22,377* 9.0% 43,602** 9.5% 9-10%
Depreciation 4,398 1.8% 8,545 1.9% 2% Pre-tax adjusted operating
margin $ 71,383 28.8% $ 119,332 26.0% 22-27% * Includes share-based
compensation of $1,160 ** Includes share-based compensation of
$2,669 Reconciliation of (unaudited) pre-tax adjusted operating
margin to
------------------------------------------------------------------
US GAAP-based net income: ------------------------- Three months
ended Six months ended (in '000s of USD) December 31, 2009 December
31, 2009 Pre-tax adjusted operating margin $ 71,383 $ 119,332 Less:
Amortization 23,887 46,946 Share-based compensation 1,160 2,669
Special charges 10,423 29,012 Other (income) expense, net 1,671
(1,769) Interest expense, net 2,716 5,762 Provision for income
taxes 10,325 13,781 -------------------- -------------------- US
GAAP-based net income for the period $ 21,201 $ 22,931
-------------------- -------------------- OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of U.S.
dollars, except share data) December 31, June 30, 2009 2009
------------- ------------- (unaudited) ASSETS Cash and cash
equivalents..................... $ 247,630 $ 275,819 Short-term
investments........................ 8,414 - Accounts receivable
trade, net of allowance for doubtful accounts of $5,063 as of
December 31, 2009 and $4,208 as of June 30,
2009......................................... 143,446 115,802
Income taxes recoverable...................... 7,555 4,496 Prepaid
expenses and other current assets..... 26,255 18,172 Deferred tax
assets........................... 18,940 20,621 -------------
------------- Total current assets........................ 452,240
434,910 Investments in marketable securities.......... - 13,103
Capital assets................................ 55,884 45,165
Goodwill...................................... 712,967 576,111
Acquired intangible assets.................... 359,987 315,048
Deferred tax assets........................... 68,748 69,877 Other
assets.................................. 17,809 13,064 Long-term
income taxes recoverable............ 43,876 39,958 -------------
------------- Total assets.................................. $
1,711,511 $ 1,507,236 ------------- ------------- -------------
------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable and accrued liabilities.... $ 122,660
$ 116,992 Current portion of long-term debt........... 3,508 3,449
Deferred revenues........................... 191,736 189,397 Income
taxes payable........................ 7,023 10,356 Deferred tax
liabilities.................... 2,216 508 -------------
------------- Total current liabilities................. 327,143
320,702 Long-term liabilities: Accrued
liabilities......................... 19,333 21,099 Pension
liability........................... 16,188 15,803 Long-term
debt.............................. 298,601 299,234 Deferred
revenues........................... 12,132 7,914 Long-term income
taxes payable.............. 53,770 47,131 Deferred tax
liabilities.................... 126,626 108,889 -------------
------------- Total long-term liabilities 526,650 500,070
Shareholders' equity: Share capital 56,444,939 and 52,716,751
Common Shares issued and outstanding at December 31, 2009 and June
30, 2009, respectively; Authorized Common Shares: unlimited......
590,328 457,982 Additional paid-in capital.................. 57,233
52,152 Accumulated other comprehensive income...... 82,747 71,851
Retained earnings........................... 127,410 104,479
------------- ------------- Total shareholders'
equity.................... 857,718 686,464 -------------
------------- Total liabilities and shareholders' equity.... $
1,711,511 $ 1,507,236 ------------- ------------- -------------
------------- OPEN TEXT CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (In thousands of U.S. dollars, except share
and per share data) (Unaudited) Three months ended Six months ended
December 31, December 31, ---------------------
--------------------- 2009 2008 2009 2008 ---------- ----------
---------- ---------- Revenues: License.................... $
72,691 $ 64,852 $ 120,020 $ 114,926 Customer support...........
130,283 100,438 253,932 198,867 Service and other.......... 44,816
42,361 85,260 76,481 ---------- ---------- ---------- ----------
Total revenues........... 247,790 207,651 459,212 390,274
---------- ---------- ---------- ---------- Cost of revenues:
License.................... 4,633 5,281 7,778 8,174 Customer
support........... 21,493 17,356 42,432 32,923 Service and
other.......... 36,428 31,881 69,722 59,610 Amortization of
acquired technology-based intangible assets......... 15,152 11,799
29,294 22,546 ---------- ---------- ---------- ---------- Total
cost of revenues... 77,706 66,317 149,226 123,253 ----------
---------- ---------- ---------- Gross profit.................
170,084 141,334 309,986 267,021 ---------- ---------- ----------
---------- Operating expenses: Research and development... 34,347
29,948 65,889 58,526 Sales and marketing........ 53,891 49,347
104,581 94,179 General and administrative. 22,377 18,280 43,602
36,667 Depreciation............... 4,398 2,920 8,545 5,618
Amortization of acquired customer-based intangible
assets.................... 8,735 10,138 17,652 18,353 Special
charges............ 10,423 11,446 29,012 11,446 ----------
---------- ---------- ---------- Total operating expenses. 134,171
122,079 269,281 224,789 ---------- ---------- ---------- ----------
Income from operations....... 35,913 19,255 40,705 42,232
---------- ---------- ---------- ---------- Other income (expense),
net.. (1,671) (12,464) 1,769 (11,854) Interest expense, net........
(2,716) (5,347) (5,762) (8,341) ---------- ---------- ----------
---------- Income before income taxes... 31,526 1,444 36,712 22,037
Provision for income taxes... 10,325 683 13,781 6,615 ----------
---------- ---------- ---------- Net income for the period.... $
21,201 $ 761 $ 22,931 $ 15,422 ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- Net income
per share-basic... $ 0.38 $ 0.01 $ 0.41 $ 0.30 ----------
---------- ---------- ---------- ---------- ---------- ----------
---------- Net income per share-diluted. $ 0.37 $ 0.01 $ 0.40 $
0.29 ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- Weighted average number of Common
Shares outstanding- basic....................... 56,403 51,873
55,895 51,586 ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- Weighted average number
of Common Shares outstanding- diluted..................... 57,448
53,242 56,964 52,955 ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of
U.S. dollars) (Unaudited) Three months ended Six months ended
December 31, December 31, Cash flows from operating
--------------------- --------------------- activities: 2009 2008
2009 2008 ---------- ---------- ---------- ---------- Net income
for the period.... $ 21,201 $ 761 $ 22,931 $ 15,422 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amorti- zation................... 28,285 24,857
55,491 46,517 In-process research and development.............. -
121 - 121 Share-based compensation expense.................. 1,943
1,110 5,449 2,533 Employee long-term incentive plan...........
2,971 1,746 5,646 2,805 Excess tax benefits on share-based
compensation expense.................. (6) (24) (697) (6,653)
Pension expense........... 218 906 410 906 Amortization of debt
issuance costs........... 468 326 734 550 Unrealized (gain) loss on
financial instruments.... (1,482) 1,529 (3,872) 807 Loss on sale
and write down capital assets...... 453 269 453 269 Unrealized gain
on marketable securities.... - - (4,353) - Deferred
taxes............ 1,657 4,171 (1,300) 3,915 Changes in operating
assets and liabilities: Accounts receivable....... (6,541) 4,844
1,387 32,790 Prepaid expenses and other current assets...........
(105) 456 (3,323) (1,470) Income taxes.............. (3,217) 1,738
(8,004) 6,469 Accounts payable and accrued liabilities......
(2,467) 2,204 (11,810) (16,046) Deferred revenue.......... (11,592)
(6,183) (24,029) (25,613) Other assets.............. 682 1,012
1,857 1,334 --------------------- ---------- ---------- Net cash
provided by operating activities....... 32,468 39,843 36,970 64,656
Cash flows from investing activities: Additions of capital
assets-net............... (4,099) 1,793 (11,764) (2,094) Purchase
of Vignette Corporation, net of cash acquired................. - -
(90,600) - Purchase of Captaris Inc., net of cash acquired..... -
(101,033) - (101,033) Purchase of eMotion LLC, net of cash
acquired..... (556) - (556) (3,635) Purchase of a division of
Spicer Corporation....... - - - (10,836) Purchase consideration for
prior period acquisitions (3,439) (9,073) (8,240) (12,366)
Investments in marketable securities............... - - - (3,608)
Maturity of short-term investments.............. 11,354 - 38,525 -
--------------------- ---------- ---------- Net cash used in
investing activities................. 3,260 (108,313) (72,635)
(133,572) Cash flow from financing activities: Excess tax benefits
on share-based compensation expense.................. 6 24 697
6,653 Proceeds from issuance of Common Shares............ 1,665 497
6,142 6,039 Repayment of long-term debt..................... (870)
(854) (1,734) (1,721) Debt issuance costs....... - - (1,024) -
--------------------- ---------- ---------- Net cash provided by
financing activities....... 801 (333) 4,081 10,971 Foreign exchange
gain (loss) on cash held in foreign currencies (1,089) (8,460)
3,395 (24,101) Decrease in cash and cash equivalents during the
period..................... 35,440 (77,263) (28,189) (82,046) Cash
and cash equivalents at beginning of the period.... 212,190 250,133
275,819 254,916 --------------------- ---------- ---------- Cash
and cash equivalents at end of the period.......... $ 247,630 $
172,870 $ 247,630 $ 172,870 --------------------- ----------
---------- --------------------- ---------- ---------- DATASOURCE:
Open Text Corporation CONTACT: Paul McFeeters, Chief Financial
Officer, Open Text Corporation, (905) 762-6121, ; Greg Secord, Vice
President, Investor Relations, Open Text Corporation, (519)
888-7111 ext.2408,
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