WATERLOO, ON, April 29 /PRNewswire-FirstCall/ — Open Text(TM) Corporation (TSX:OTC), a leading provider of Enterprise Content Management (ECM) software, today announced unaudited financial results for its third quarter that ended March 31, 2008.(1)
Total revenue for the third quarter was $178.8 million, up 15% compared to $156.1 million for the same period in the prior fiscal year. License revenue in the third quarter was $51.5 million, up 20% compared to $43.0 million in the third quarter of the prior fiscal year.
Adjusted net income in the quarter was $25.4 million or $0.48 per share on a diluted basis, up 45% compared to $17.5 million or $0.34 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 $7.3 million or $0.14 per share on a diluted basis, up 87% compared to $3.9 million or $0.08 per share on a diluted basis for the same period in the prior fiscal year.(2)
Operating cash flow in the third quarter of fiscal 2008 was $50 million, up 22% compared to $41 million in the third quarter of the prior fiscal year and up 28% compared to $39 million in the previous quarter.
“I am very pleased with our performance in the quarter, generating strong cash flow from operations and meeting our profitability targets,” said John Shackleton, President and CEO of Open Text. “We are experiencing continued strength in our European sales.”
The cash, cash equivalents and short-term investments balance as of March 31, 2008 was $215.8 million compared to $150.0 million at June 30, 2007. Accounts receivable as of March 31, 2008, totaled $135.7 million, compared to $128.8 million as of June 30, 2007, and Days Sales Outstanding (DSO) was 68 days at the end of the third quarter of fiscal 2008, compared to 66 days at June 30, 2007.
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.
“With the success of Hummingbird evident, we are focusing on new solutions like Enterprise Connect,” said John Shackleton. “This enables workers to utilize their business environment to access content from across the enterprise including our competitor’s repositories as well as from major enterprise ERP applications such as SAP.”
Teleconference Call
Open Text will host a conference call on April 29, 2008 at 5:00 p.m. ET to discuss the final financial results for its third quarter.
Date: Tuesday, April 29, 2008
Time: 5:00 p.m. ET/2:00 p.m. PT
Length: 60 minutes
Where: 416-640-1907
Please dial-in approximately 10 minutes before the teleconference is scheduled to begin. A replay of the call will be available beginning April 29, 2008 at 7:00 p.m. ET through 11:59 p.m. on May 13, 2008 and can be accessed by dialing 416-640-1917 and using pass code 21268405 followed by the number sign.
For more information or to listen to the call via Web cast, please use the following link: .
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 .
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; 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 June 30, 2007 and Form 10-Q for the quarter ended December 31, 2007. 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 historic 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 Non- US 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 unaudited condensed 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, other income (expense), share-based compensation 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 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 quarters ended March 31, 2008
and 2007:
————————————————————————-
Three months ended Three months ended
March 31, 2008 March 31, 2007
GAAP based “Net Income” $ 7.3 $ 3.9
Special Charges/(recovery) 0.0 0.9
Amortization of intangibles 18.5 17.8
Other (Income)/Expense 6.8 0.1
Share-based compensation 1.1 1.3
Tax Impact on Above (8.3) (6.5)
——————– ——————–
Non-GAAP based “Adjusted Net
Income” $ 25.4 $ 17.5
——————– ——————–
——————– ——————–
Reconciliation of (unaudited) US GAAP based EPS to non-US GAAP based EPS
(calculated on a diluted basis) for the quarters ended March 31 2008 and
2007:
————————————————————————-
Three months ended Three months ended
March 31, 2008 March 31, 2007
GAAP based “Net Income” $ 0.14 $ 0.08
Special Charges/(recovery) - 0.02
Amortization of intangibles 0.35 0.35
Other (Income)/Expense 0.13 -
Share-based compensation 0.02 0.03
Tax Impact on Above (0.16) (0.14)
——————– ——————–
Non-GAAP based “Adjusted
Net Income” $ 0.48 $ 0.34
——————– ——————–
——————– ——————–
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars, except share data)
(Unaudited)
March 31, June 30,
2008 2007
——————– ——————–
ASSETS
Current assets:
Cash and cash equivalents…. $ 215,762 $ 149,979
Accounts receivable trade,
net of allowance for
doubtful accounts of $3,629
as of March 31, 2008 and
$2,089 as of June 30, 2007.. 135,715 128,781
Income taxes recoverable….. 15,273 31,060
Prepaid expenses and other
current assets………….. 12,377 10,368
Deferred tax assets………. 31,081 30,248
——————– ——————–
Total current assets……… 410,208 350,436
Capital assets…………….. 41,951 43,614
Goodwill………………….. 567,418 528,312
Acquired intangible assets….. 300,368 343,324
Deferred tax assets………… 24,950 42,078
Other assets………………. 10,691 9,524
Long-term income taxes
recoverable………………. 38,789 9,557
——————– ——————–
$ 1,394,375 $ 1,326,845
——————– ——————–
——————– ——————–
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued
liabilities…………….. $ 94,117 $ 100,211
Current portion of long-term
debt…………………… 3,473 4,048
Deferred revenues………… 179,273 143,097
Income taxes payable……… 3,839 33,705
Deferred tax liabilities….. 1,039 1,601
——————– ——————–
Total current liabilities…. 281,741 282,662
Long-term liabilities:
Accrued liabilities………. 21,120 22,516
Long-term debt…………… 304,980 366,765
Deferred revenues………… 2,665 3,840
Long-term income taxes
payable………………… 42,661 -
Deferred tax liabilities….. 98,147 120,019
——————– ——————–
Total long-term liabilities.. 469,573 513,140
Minority interest 8,158 6,975
Shareholders’ equity:
Share capital 51,094,919 and
50,180,118 Common Shares
issued and outstanding at
March 31, 2008 and June 30,
2007, respectively;
Authorized Common Shares:
unlimited………………. 437,771 426,188
Additional paid-in capital… 38,973 35,311
Accumulated other
comprehensive income…….. 137,872 68,034
Retained earnings (deficit).. 20,287 (5,465)
——————– ——————–
Total shareholders’ equity… 634,903 524,068
——————– ——————–
$ 1,394,375 $ 1,326,845
——————– ——————–
——————– ——————–
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,
———————- ———————-
2008 2007 2008 2007
———- ———- ———- ———-
Revenues:
License…………….. $ 51,534 $ 43,032 $ 150,952 $ 123,282
Customer support…….. 91,606 79,042 268,524 205,352
Service…………….. 35,622 33,978 105,787 91,834
———- ———- ———- ———-
Total revenues…….. 178,762 156,052 525,263 420,468
Cost of revenues:
License…………….. 3,093 3,515 11,296 9,637
Customer support…….. 14,292 12,431 41,081 32,077
Service…………….. 28,856 28,042 86,552 77,450
Amortization of
acquired technology-
based intangible
assets…………….. 10,440 10,433 30,900 25,675
———- ———- ———- ———-
Total cost of
revenues…………. 56,681 54,421 169,829 144,839
———- ———- ———- ———-
122,081 101,631 355,434 275,629
———- ———- ———- ———-
Operating expenses:
Research and
development………… 27,711 21,176 77,367 57,989
Sales and marketing….. 41,586 39,069 122,219 107,765
General and
administrative……… 18,268 15,947 52,233 42,640
Depreciation………… 2,909 3,626 9,645 10,525
Amortization of
acquired customer-
based intangible
assets…………….. 8,077 7,396 23,006 17,147
Special charges
(recoveries)……….. (14) 878 (122) 5,253
———- ———- ———- ———-
Total operating
expenses…………. 98,537 88,092 284,348 241,319
———- ———- ———- ———-
Income from operations…. 23,544 13,539 71,086 34,310
Other income (expense)…. (6,831) (98) (12,341) 604
Interest income
(expense), net……….. (6,684) (7,550) (22,123) (14,670)
———- ———- ———- ———-
Income before income
taxes……………….. 10,029 5,891 36,622 20,244
Provision for income
taxes……………….. 2,594 1,914 10,448 6,421
———- ———- ———- ———-
Net income before
minority interest…….. 7,435 3,977 26,174 13,823
Minority interest……… 168 124 422 392
———- ———- ———- ———-
Net income for the
period………………. $ 7,267 $ 3,853 $ 25,752 $ 13,431
———- ———- ———- ———-
———- ———- ———- ———-
Net income per
share-basic………….. $ 0.14 $ 0.08 $ 0.51 $ 0.27
———- ———- ———- ———-
———- ———- ———- ———-
Net income per
share-diluted………… $ 0.14 $ 0.08 $ 0.49 $ 0.26
———- ———- ———- ———-
———- ———- ———- ———-
Weighted average
number of Common………
Shares outstanding-
basic……………….. 50,979 49,490 50,666 49,203
———- ———- ———- ———-
———- ———- ———- ———-
Weighted average number
of Common Shares
outstanding-diluted…… 52,789 51,134 52,424 50,703
———- ———- ———- ———-
———- ———- ———- ———-
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. Dollars)
(Unaudited)
Three months ended Nine months ended
March 31, March 31,
———————- ———————-
2008 2007 2008 2007
———- ———- ———- ———-
Cash flows from operating
activities:
Net income for the
period………………. $ 7,267 $ 3,853 $ 25,752 $ 13,431
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization……… 21,426 21,455 63,551 53,347
In-process research
and development…… - - 500 -
Share-based
compensation
expense………….. 1,077 1,261 2,795 3,861
Employee long-term
incentive plan……. 733 - 1,490 -
Excess tax benefits
from share-based
compensation……… (101) (381) (867) (1,122)
Undistributed earnings
related to minority
interest…………. 168 124 422 392
Amortization of debt
issuance costs……. 293 274 1,004 531
Unrealized loss on
financial
instrument……….. 2,728 364 5,579 576
Deferred taxes…….. (506) (14,270) (4,619) (23,194)
Changes in operating
assets and liabilities:
Accounts receivable… (14,597) 3,550 (7,018) 27,047
Prepaid expenses and
other current
assets…………… (1,811) (212) (2,008) 682
Income taxes………. (2,662) 1,554 5,892 (2,259)
Accounts payable and
accrued liabilities.. (9,321) (4,777) (7,849) (9,690)
Deferred revenues….. 44,938 28,326 36,055 14,889
Other assets………. 176 221 686 3,916
———- ———- ———- ———-
Net cash provided by
operating activities….. 49,808 41,342 121,365 82,407
———- ———- ———- ———-
Cash flows from investing
activities:
Acquisitions of
capital assets……… (2,028) (729) (5,414) (4,620)
Additional purchase
consideration for prior
period acquisitions…. (12) (4,295) (451) (6,018)
Purchase of Hummingbird,
net of cash acquired… - - - (384,761)
Purchase of an asset
group constituting
a business…………. - - (2,209) -
Investments in
marketable securities.. - - - (829)
Acquisition related
costs……………… (3,065) (8,049) (14,907) (28,249)
———- ———- ———- ———-
Net cash used in investing
activities…………… (5,105) (13,073) (22,981) (424,477)
———- ———- ———- ———-
Cash flows from financing
activities:
Excess tax benefits
from share-based
compensation……….. 101 381 867 1,122
Proceeds from issuance
of Common Shares……. 2,198 6,365 11,415 8,829
Repayment of long-term
debt………………. (869) (1,071) (62,746) (2,244)
Proceeds from long-term
debt………………. - - - 390,000
Debt issuance costs….. - - (349) (7,433)
———- ———- ———- ———-
Net cash provided by
(used in) financing
activities…………… 1,430 5,675 (50,813) 390,274
———- ———- ———- ———-
Foreign exchange gain on
cash held in foreign
currencies…………… 9,920 1,338 18,212 4,125
———- ———- ———- ———-
Increase in cash and cash
equivalents during the
period………………. 56,053 35,282 65,783 52,329
Cash and cash equivalents
at beginning of period… 159,709 124,401 149,979 107,354
———- ———- ———- ———-
Cash and cash equivalents
at end of period……… $ 215,762 $ 159,683 $ 215,762 $ 159,683
———- ———- ———- ———-
———- ———- ———- ———-
Open Text Corporation
