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Press release from CNW Group

OpenText Reports Fourth Quarter and Fiscal Year 2012 Financial Results

Thursday, August 09, 2012

OpenText Reports Fourth Quarter and Fiscal Year 2012 Financial Results16:01 EDT Thursday, August 09, 2012WATERLOO, ON, Aug. 9, 2012 /CNW/ - Open Text(TM) Corporation (NASDAQ: OTEX) (TSX: OTC), announced today its financial results for the fourth quarter and year ended June 30, 2012.Financial Highlights for Q4 FY12Total revenue for the period was $305.6 million  up 7% Y/YLicense revenue was $78.0 million, down 2% Y/YGAAP-based EPS, diluted was $0.14 compared to $0.49 Y/Y; Non-GAAP-based EPS, diluted was $1.17 compared to $1.05 Y/Y up 11% Y/Y (2)GAAP-based income from operations was $39.7 million and 13.0% of revenues; Non-GAAP-based operating income was $84.8 million and 27.7% of revenues(2)Operating cash flow was $79.8 million compared to $52.0 million up 53% Y/Y, with an ending cash balance of $559.7 million.Financial Highlights for FY12Total revenue for the period was $1,207.5 million up 17% Y/YLicense revenue was $293.7 million, up 9% Y/YGAAP-based EPS, diluted was $2.13 compared to $2.11 Y/Y; Non-GAAP-based EPS, diluted was $4.60 compared to $4.07 Y/Y up 13% Y/Y (2)GAAP-based income from operations was $149.4 million and 12.4% of revenues; Non-GAAP-based operating income was $329.9 million and 27.3% of revenues(2)Operating cash flow was $266.5 million compared to $223.2 million up 19% Y/Y"In fiscal year 2012 OpenText delivered its best revenue and non-GAAP earnings in our 20 year history. With revenue up 17% and non-GAAP earnings up 13%, we have consistently grown revenue and non-GAAP earnings year-over-year for the last 7 fiscal years," said OpenText CEO Mark J. Barrenechea.Mr. Barrenechea continued, "During the fiscal year, we rebuilt the leadership team, better organized the company and positioned ourselves to grow market share in the $13 billion Enterprise Information Management (EIM) market. We see increasing demand for our EIM solutions as customers are turning their attention to a single source of truth for all of their unstructured information."(5)Business HighlightsEIM expanded market opportunityEasyLink acquisition closed July 2, 2012Announcement of OpenText CloudTechnology, services, financial and public sector industries saw the most demandOrganizational changes complete8 deals over $1 million and 12 deals between $500K and $1 million in the fourth quarterCustomer successes in the fourth quarter include McCain Foods Limited, Capricorn Investment Holdings, Bendigo Bank of Australia, The Polytechnic University of Hong Kong, News International Limited, Mosaic, JP Morgan, U.S. Department of the Interior and the National Olympic Photo Pool.OpenText solutions help UK national press photographers showcase visual story of the Olympicshttp://www.opentext.com/2/global/press-release-details.html?id=FD0360263C1A42748753AE2D358038EAU.S. Department of the Interior deploys OpenText cloud-based ECM solutionhttp://www.opentext.com/2/global/press-release-details.html?id=D7D55237959549F89FA6445E7898C9A4Summary of Quarterly Results        Q4 FY12Q3 FY12Q4 FY11% Change (Q/Q)   % Change (Y/Y)   Revenue (million)$305.6$292.3$285.54.6% 7.0% GAAP-based gross margin65.8%63.6%66.7%220bps(90)bpsGAAP-based operating income margin13.0%9.3%13.0%370bps—bpsGAAP-based EPS, diluted$0.14$0.59$0.49(76.3%) (71.4%) Non-GAAP-based gross margin (2)72.9%71.0%73.2%190bps(30)bpsNon-GAAP-based operating margin(2)27.7%25.2%25.8%250bps190bpsNon-GAAP-based EPS, diluted (2)$1.17$1.01$1.0515.8% 11.4% Summary of Year to Date Results      FY12Q3 YTD FY12FY11% Change (Y/Y)   Revenue (million)$1,207.5$901.8$1,033.316.9% GAAP-based gross margin65.4%65.2%67.0%(160)bpsGAAP-based operating income margin12.4%12.2%14.6%(220)bpsGAAP-based EPS, diluted$2.13$2.00$2.110.95% Non-GAAP-based gross margin (2)72.5%72.3%73.6%(110)bpsNon-GAAP-based operating margin (2)27.3%27.2%27.5%(20)bpsNon-GAAP-based EPS, diluted (2)$4.60$3.43$4.0713.0%       Conference Call InformationThe public is invited to listen to the earnings conference call at 5:00 p.m. ET (2:00 p.m. PT) by dialing 877-974-0446 (toll-free) or 416-644-3417 (international). Please dial-in 15 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the earnings conference call will be available on the Investor Relations section of the Company's website at http://www.opentext.com/2/global/ex_event.html?evtype=events&id=701D0000000VS0qIAG .An audio replay of the conference call will also be made available approximately two hours after the conclusion of the call. The audio replay will remain available until 11:59 p.m. on August  23, 2012 and can be accessed by dialing 877-289-8525 (toll-free) or 416-640-1917 (international) and entering the confirmation code: 4549967 followed by the number sign.Please see below note (2) for a reconciliation of non-US GAAP based financial measures used in this press release, to US GAAP based financial measures.About OpenTextOpenText is the largest independent software provider of Enterprise Information Management (EIM). For more information please visit www.opentext.com.Cautionary Statement Regarding Forward Looking StatementsCertain statements in this press release, including statements about the financial conditions, and results of operations and earnings for Open Text Corporation ("OpenText" 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 OpenText; (ii) the ability of OpenText 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 EIM market; (vi) the Company's competitive position in the EIM 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 EIM marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (ii) the possibility that the Company may be unable to meet its future reporting requirements under the Securities Exchange Act of 1934, as amended, and the rules promulgated there under; (iii) the risks associated with bringing new products to market; (iv) fluctuations in currency exchange rates; (v) delays in the purchasing decisions of the Company's customers; (vi) the competition the Company faces in its industry and/or marketplace; (vii) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (viii) the continuous commitment of the Company's customers; and (ix) demand for the Company's products.For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the SEC and other securities regulators. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.Copyright © 2012 by Open Text Corporation. "OPENTEXT", "OPENTEXT EVERYWHERE" and the "OPENTEXT ECM SUITE" are trademarks or registered trademarks of Open Text Corporation in the United States of America, Canada, the European Union and/or other countries. This list of trademarks is not exhaustive. Other trademarks, registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text Corporation or other respective owners.OPEN TEXT CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share data)  June 30, 2012June 30, 2011   ASSETS  Cash and cash equivalents$559,747 $284,140 Accounts receivable trade, net of allowance for doubtful accounts of $5,655 asof June 30, 2012 and $5,424 as of June 30, 2011 (note 3)163,664 154,568 Income taxes recoverable17,849 18,911 Prepaid expenses and other current assets44,011 29,678 Deferred tax assets4,003 27,861  Total current assets789,274 515,158 Property and equipment81,157 77,825 Goodwill1,040,234 832,481 Acquired intangible assets312,563 344,995 Deferred tax assets80,226 42,737 Other assets23,739 19,359 Deferred charges68,653 54,989 Long-term income taxes recoverable48,447 44,819  Total assets$2,444,293 $1,932,363 LIABILITIES AND SHAREHOLDERS' EQUITY  Current liabilities:   Accounts payable and accrued liabilities$131,734 $126,249  Current portion of long-term debt41,374 15,545  Deferred revenues273,987 254,531  Income taxes payable27,806 18,424  Deferred tax liabilities1,612 624  Total current liabilities476,513 415,373 Long-term liabilities:   Accrued liabilities14,247 13,727  Deferred credits10,086 6,878  Pension liability22,074 18,478  Long-term debt555,000 282,033  Deferred revenues12,653 11,466  Long-term income taxes payable147,623 101,434  Deferred tax liabilities26,705 43,529  Total long-term liabilities788,388 477,545 Shareholders' equity:   Share capital   58,358,990 and 57,301,812 Common Shares issued and outstandingat June 30, 2012 and June 30, 2011, respectively; Authorized Common Shares: unlimited635,321 614,279  Additional paid-in capital95,026 74,301  Accumulated other comprehensive income44,364 60,470  Retained earnings442,068 316,894  Treasury stock, at cost (793,494 shares at June 30, 2012 and572,413 shares at June 30, 2011, respectively)(37,387) (26,499) Total shareholders' equity1,179,392 1,039,445  Total liabilities and shareholders' equity$2,444,293 $1,932,363                 OPEN TEXT CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands of U.S. dollars, except share and per share data)   Year Ended June 30, 201220112010Revenues:    License$293,719 $269,202 $238,074  Customer support656,568 560,541 507,452  Service and other257,186 203,560 166,497  Total revenues1,207,473 1,033,303 912,023 Cost of revenues:    License18,033 18,284 16,922  Customer support110,504 86,834 83,741  Service and other204,909 167,854 135,396  Amortization of acquired technology-based intangible assets84,572 68,048 60,472  Total cost of revenues418,018 341,020 296,531 Gross profit789,455 692,283 615,492 Operating expenses:    Research and development169,043 145,992 129,378  Sales and marketing274,544 232,332 198,208  General and administrative97,072 86,696 83,295  Depreciation21,587 22,116 17,425  Amortization of acquired customer-based intangible assets53,326 38,966 35,940  Special charges24,523 15,576 42,008  Total operating expenses640,095 541,678 506,254 Income from operations149,360 150,605 109,238 Other income (expense), net3,549 (6,019) (9,293) Interest expense, net(15,564) (8,452) (8,798) Income before income taxes137,345 136,134 91,147 Provision for income taxes12,171 12,931 1,935 Net income for the period$125,174 $123,203 $89,212 Net income per share-basic$2.16 $2.16 $1.59 Net income per share-diluted$2.13 $2.11 $1.55 Weighted average number of Common Shares outstanding-basic57,890 57,077 56,280 Weighted average number of Common Shares outstanding-diluted58,734 58,260 57,385        OPEN TEXT CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands of U.S. dollars, except share and per share data)   Three Months Ended June 30, 20122011Revenues:   License$78,031 $79,558  Customer support163,128 150,956  Service and other64,465 54,939  Total revenues305,624 285,453 Cost of revenues:   License4,116 5,547  Customer support27,780 23,237  Service and other51,358 47,753  Amortization of acquired technology-based intangible assets21,265 18,524  Total cost of revenues104,519 95,061 Gross profit201,105 190,392 Operating expenses:   Research and development41,195 39,437  Sales and marketing71,641 68,417  General and administrative24,186 24,085  Depreciation5,268 6,066  Amortization of acquired customer-based intangible assets13,378 10,807  Special charges5,747 4,483  Total operating expenses161,415 153,295 Income from operations39,690 37,097 Other expense, net(6,596) (5,359) Interest expense, net(4,410) (2,090) Income before income taxes28,684 29,648 Provision for income taxes20,713 1,056 Net income for the period$7,971 $28,592 Net income per share-basic$0.14 $0.50 Net income per share-diluted$0.14 $0.49 Weighted average number of Common Shares outstanding-basic58,270 57,276 Weighted average number of Common Shares outstanding-diluted58,847 58,581      OPEN TEXT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars)  Year Ended June 30, 201220112010Cash flows from operating activities:    Net income for the period$125,174 $123,203 $89,212  Adjustments to reconcile net income to net cash provided by operating activities:    Depreciation and amortization of intangible assets159,485 129,130 113,837  Share-based compensation expense18,097 11,308 9,765  Excess tax benefits on share-based compensation expense(2,723) (1,888) (1,143)  Pension expense543 552 211  Amortization of debt issuance costs1,703 1,359 1,390  Amortization on deferred charges and credits11,579 8,519 —  Unrealized gain on financial instruments— — (878)  Loss on sale and write down of property and equipment203 12 136  Release of unrealized gain on marketable securities to income— — (4,353)  Deferred taxes(78,792) (17,779) (24,219)  Impairment and other non cash charges1,389 (482) (1,081)  Changes in operating assets and liabilities:    Accounts receivable5,319 200 24,521  Prepaid expenses and other current assets(2,079) 1,833 (814)  Income taxes68,601 9,444 5,066  Deferred charges and credits(22,035) (29,071) —  Accounts payable and accrued liabilities(17,812) (21,197) (11,340)  Deferred revenue(4,581) 10,738 3,077  Other assets2,419 (2,660) (23,196) Net cash provided by operating activities266,490 223,221 180,191 Cash flows from investing activities:    Additions of property and equipment(25,828) (36,662) (19,314)  Purchase of Patents(193) — —  Purchase of System Solutions Australia Pty Limited (Message Manager), net of cash acquired(1,738) — —  Purchase of Operitel Corporation, net of cash acquired(7,014) — —  Purchase of Global 360 Holding Corp., net of cash acquired(245,653) — —  Purchase of Stream Serve Inc., net of cash acquired— (57,221) —  Purchase of weComm Limited, net of cash acquired— (20,198) —  Purchase of Metastorm Inc., net of cash acquired— (168,657) —  Purchase of Burntsand Inc., net of cash acquired— — (8,163)  Purchase of Nstein Technologies Inc., net of cash acquired— — (20,370)  Purchase of New Generation Consulting Inc— (471) (3,500)  Purchase of Vignette Corporation, net of cash acquired— — (90,600)  Purchase of eMotion LLC, net of cash acquired— — (556)  Purchase consideration for prior period acquisitions(1,113) (4,577) (12,843)  Investments in marketable securities— 518 —  Maturity of short-term investments— — 45,525 Net cash used in investing activities(281,539) (287,268) (109,821) Cash flow from financing activities:    Excess tax benefits on share-based compensation expense2,723 1,888 1,143  Proceeds from issuance of Common Shares21,270 11,512 9,971  Purchase of Treasury Stock(10,888) (12,499) (14,000)  Proceeds from long-term debt and revolver648,500 — —  Repayment of long term debt and revolver(349,187) (3,575) (3,485)  Debt issuance costs(9,834) (29) (1,024) Net cash provided by (used in) financing activities302,584 (2,703) (7,395) Foreign exchange gain (loss) on cash held in foreign currencies(11,928) 24,698 (12,602) Increase in cash and cash equivalents during the period275,607 (42,052) 50,373 Cash and cash equivalents at beginning of the period284,140 326,192 275,819 Cash and cash equivalents at end of the period$559,747 $284,140 $326,192           OPEN TEXT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars)  Three Months Ended June 30, 20122011Cash flows from operating activities:   Net income for the period$7,971 $28,592  Adjustments to reconcile net income to net cash provided by operating activities:   Depreciation and amortization of intangible assets39,911 35,397  Share-based compensation expense4,691 2,877  Excess tax benefits on share-based compensation expense(13) (311)  Pension expense66 165  Amortization of debt issuance costs537 347  Amortization on deferred charges and credits3,122 1,873  Unrealized gain on financial instruments— —  Loss on sale and write down of property and equipment— —  Release of unrealized gain on marketable securities to income— —  Deferred taxes(57,700) (6,990)  Impairment and other non cash charges44 (482)  Changes in operating assets and liabilities:   Accounts receivable14,583 (4,338)  Prepaid expenses and other current assets1,028 1,709  Income taxes69,551 (5,730)  Deferred charges and credits2,043 101  Accounts payable and accrued liabilities3,540 825  Deferred revenue(13,078) (2,075)  Other assets3,550 (3) Net cash provided by operating activities79,846 51,957 Cash flows from investing activities:   Additions of property and equipment(4,447) (10,126)  Purchase of Patents— —  Purchase of System Solutions Australia Pty Limited (Message Manager), net of cash acquired— —  Purchase of Operitel Corporation, net of cash acquired(623) —  Purchase of Global 360 Holding Corp., net of cash acquired— —  Purchase of Stream Serve Inc., net of cash acquired— —  Purchase of weComm Limited, net of cash acquired— —  Purchase of Metastorm Inc., net of cash acquired— —  Purchase of Burntsand Inc., net of cash acquired— —  Purchase of Nstein Technologies Inc., net of cash acquired— —  Purchase of New Generation Consulting Inc— (471)  Purchase of Vignette Corporation, net of cash acquired— —  Purchase of eMotion LLC, net of cash acquired— —  Purchase consideration for prior period acquisitions(187) (371)  Investments in marketable securities— 1,186  Maturity of short-term investments— — Net cash used in investing activities(5,257) (9,782) Cash flow from financing activities:   Excess tax benefits on share-based compensation expense13 311  Proceeds from issuance of Common Shares2,934 2,128  Purchase of Treasury Stock(10,888) —  Proceeds from long-term debt and revolver— —  Repayment of long term debt and revolver(7,667) (914)  Debt issuance costs— — Net cash provided by (used in) financing activities(15,608) 1,525 Foreign exchange gain (loss) on cash held in foreign currencies(8,140) 2,693 Increase in cash and cash equivalents during the period50,841 46,393 Cash and cash equivalents at beginning of the period508,906 237,747 Cash and cash equivalents at end of the period$559,747 $284,140        Notes(1) All dollar amounts in this press release are in U.S. Dollars unless otherwise indicated. (2) Use of 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 non-US GAAP net income and non-US GAAP 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 non-US GAAP EPS and non-US GAAP net income to supplement the information provided in its consolidated financial statements, which are presented in accordance with US GAAP. The presentation of non-US GAAP net income and non-US GAAP 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. OpenText 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. Non-US GAAP net income and non-US GAAP 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 non-US GAAP net income and non-US GAAP 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 (unaudited) reconciliations of US GAAP based financial measures to non-US GAAP based financial measures for the following periods presented:  Reconciliation of selected GAAP-based measures to Non-GAAP based measures for the three months ended June 30, 2012.($ in thousands except for per share amounts)  Three Months Ended June 30, 2012 GAAP-basedMeasuresAdjustmentsNoteNon-GAAP-basedMeasures  Cost of revenues    Customer Support27,780 (58) (1) 27,722 Service and Other51,358 (239) (1) 51,119 Amortization of acquired technology-based intangible assets21,265 (21,265) (2) — GAAP-based gross profit/ Non-GAAP-based gross profit201,105 21,562  222,667 Operating Expenses    Research and development41,195 (1,066) (1) 40,129 Sales and marketing71,641 (2,771) (1) 68,870 General and administrative24,186 (557) (1) 23,629 Amortization of acquired customer-based intangible assets13,378 (13,378) (2) — Special charges5,747 (5,747) (3) — GAAP-based income from operations/ Non-GAAP-based operating income39,690 45,081  84,771 Other income, net(6,596) 6,596 (4) — Provision for (recovery of) income taxes20,713 (9,462) (5) 11,251 GAAP-based net income for the period/ Non-GAAP-based net income7,971 61,139 (6) 69,110 GAAP-based earnings per share/ Non GAAP-based earnings per share-diluted$0.14 $1.03 (6) $1.17 (1) Adjustment relates to the exclusion of share based compensation expense from our non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.(2) Adjustment relates to the exclusion of amortization expense from our non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.(3) Adjustment relates to the exclusion of Special charges from our non-GAAP-based operating expenses as Special charges are generally incurred in the aftermath of acquisitions and are not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(4) Adjustment relates to the exclusion of Other income (expense) from our non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and are generally not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(5) Adjustment relates to differences between the GAAP-based tax provision of approximately 72% and a non-GAAP-based tax rate of 14%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating non-GAAP-based adjusted net income.(6) Reconciliation of non-GAAP-based adjusted net income to GAAP-based net income:        Three Months EndedJune 30, 2012  Per share  Non-GAAP-based net income69,110 1.17 Less:  Amortization34,643 0.58 Share-based compensation4,691 0.08 Special charges5,747 0.10 Other (income) expense6,596 0.11 GAAP-based provision for income tax20,713 0.35 Tax on non-GAAP-based provision(11,251) (0.19) GAAP-based net income7,971 0.14      Reconciliation of selected GAAP-based measures to Non-GAAP based measures for the year ended June 30, 2012.($ in thousands except for per share amounts)  Year EndedJune 30, 2012 GAAP-basedMeasures  AdjustmentsNoteNon-GAAP-basedMeasures  Cost of revenues    Customer Support110,504 (169) (1) 110,335 Service and Other204,909 (647) (1) 204,262 Amortization of acquired technology-based intangible assets84,572 (84,572) (2) — GAAP-based gross profit/ Non-GAAP-based gross profit789,455 85,388  874,843 Operating Expenses    Research and development169,043 (3,939) (1) 165,104 Sales and marketing274,544 (8,811) (1) 265,733 General and administrative97,072 (4,531) (1) 92,541 Amortization of acquired customer-based intangible assets53,326 (53,326) (2) — Special charges24,523 (24,523) (3) — GAAP-based income from operations/ Non-GAAP-based operating income149,360 180,518  329,878 Other income, net3,549 (3,549) (4) — Provision for income taxes12,171 31,833 (5) 44,004 GAAP-based net income for the period/ Non-GAAP-based net income125,174 145,136 (6) 270,310 GAAP-based earnings per share/ Non GAAP-based earnings per share-diluted$2.13 $2.47 (6) $4.60 (1) Adjustment relates to the exclusion of share based compensation expense from our non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.(2) Adjustment relates to the exclusion of amortization expense from our non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.(3) Adjustment relates to the exclusion of Special charges from our non-GAAP-based operating expenses as Special charges are generally incurred in the aftermath of acquisitions and are not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(4) Adjustment relates to the exclusion of Other income (expense) from our non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and are generally not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(5) Adjustment relates to differences between the GAAP-based tax provision of approximately 9% and a non-GAAP-based tax rate of 14%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating non-GAAP-based adjusted net income.(6) Reconciliation of non-GAAP-based adjusted net income to GAAP-based net income:     Year EndedJune 30, 2012  Per shareNon-GAAP-based net income270,310 4.60 Less:  Amortization137,898 2.35 Share-based compensation18,097 0.31 Special charges24,523 0.42 Other (income) expense(3,549) (0.06) GAAP-based provision for income tax12,171 0.21 Tax on non-GAAP-based provision(44,004) (0.76) GAAP-based net income125,174 2.13      Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the three months ended March 31, 2012.($ in thousands except for per share amounts)  Three Months EndedMarch 31, 2012 GAAP-basedmeasures  Adjustments  NoteNon-GAAP-basedmeasures  Cost of Revenues:    Customer Support27,987 (53) (1) 27,934 Service and Other52,596 (203) (1) 52,393 Amortization of acquired technology-based intangible assets21,264 (21,264) (2) — GAAP-based gross profit/ Non-GAAP-based gross profit185,951 21,520  207,471 Operating Expenses    Research and development41,738 (1,028) (1) 40,710 Sales and marketing69,572 (2,594) (1) 66,978 General and administrative21,999 (1,287) (1) 20,712 Amortization of acquired customer-based intangible assets13,462 (13,462) (2) — Special charges6,450 (6,450) (3) — GAAP-based income from operations/ Non-GAAP-based operating income27,303 46,341  73,644 Other expense, net(1,804) 1,804 (4) — Provision for income taxes(14,036) 23,680 (5) 9,644 GAAP-based net income for the period/ Non-GAAP-based net income34,774 24,465 (6) 59,239 GAAP-based earnings per share/ Non GAAP-based earnings per share-diluted$0.59 $0.42 (6) $1.01 (1) Adjustment relates to the exclusion of share based compensation expense from our non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.(2) Adjustment relates to the exclusion of amortization expense from our non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.(3) Adjustment relates to the exclusion of Special charges from our non-GAAP-based operating expenses as Special charges are generally incurred in the aftermath of acquisitions and are not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(4) Adjustment relates to the exclusion of Other income (expense) from our non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and are generally not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(5) Adjustment relates to differences between the GAAP-based tax recovery of approximately 68% and a non-GAAP-based tax rate of 14%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating non-GAAP-based adjusted net income. The GAAP-based tax recovery is primarily due to tax benefits relating to ongoing internal reorganizations and mergers of international subsidiaries acquired; these reorganizations and mergers cause a change in the tax status of these subsidiaries resulting in a reduction in deferred tax liabilities recorded upon the acquisition of these subsidiaries, and a corresponding reduction in income tax expense.(6) Reconciliation of non-GAAP-based adjusted net income to GAAP-based net income:      Three Months EndedMarch 31, 2012  Per shareNon-GAAP-based net income59,239 1.01 Less:  Amortization34,726 0.59 Share-based compensation5,165 0.09 Special charges6,450 0.11 Other (income) expense1,804 0.03 GAAP-based provision for (recovery of) income tax(14,036) (0.24) Tax on non-GAAP-based provision(9,644) (0.16) GAAP-based net income34,774 0.59      Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the nine months ended March 31, 2012.($ in thousands except for per share amounts)  Nine Months EndedMarch 31, 2012 GAAP-basedmeasures  Adjustments  NoteNon-GAAP-basedmeasures  Cost of Revenues:    Customer Support82,724 (112) (1) 82,612 Service and Other153,551 (408) (1) 153,143 Amortization of acquired technology-based intangible assets63,307 (63,307) (2) — GAAP-based gross profit/ Non-GAAP-based gross profit588,350 63,827  652,177 Operating Expenses    Research and development127,848 (2,872) (1) 124,976 Sales and marketing202,903 (6,040) (1) 196,863 General and administrative72,886 (3,974) (1) 68,912 Amortization of acquired customer-based intangible assets39,948 (39,948) (2) — Special charges18,776 (18,776) (3) — GAAP-based income from operations/ Non-GAAP-based operating income109,670 135,437  245,107 Other expense, net10,145 (10,145) (4) — Provision for (recovery of) income taxes(8,542) 41,295 (5) 32,753 GAAP-based net income for the period/ Non-GAAP-based net income117,203 83,997 (6) 201,200 GAAP-based earnings per share/ Non GAAP-based earnings per share-diluted$2.00 $1.43 (6) $3.43 (1) Adjustment relates to the exclusion of share based compensation expense from our non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.(2) Adjustment relates to the exclusion of amortization expense from our non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.(3) Adjustment relates to the exclusion of Special charges from our non-GAAP-based operating expenses as Special charges are generally incurred in the aftermath of acquisitions and are not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(4) Adjustment relates to the exclusion of Other income (expense) from our non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and are generally not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(5) Adjustment relates to differences between the GAAP-based tax recovery of approximately 8% and a non-GAAP-based tax rate of 14%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating non-GAAP-based adjusted net income. The GAAP-based tax recovery is primarily due to tax benefits relating to ongoing internal reorganizations and mergers of international subsidiaries acquired; these reorganizations and mergers cause a change in the tax status of these subsidiaries resulting in a reduction in deferred tax liabilities recorded upon the acquisition of these subsidiaries, and a corresponding reduction in income tax expense.(6) Reconciliation of non-GAAP-based adjusted net income to GAAP-based net income:      Nine Months EndedMarch 31, 2012  Per shareNon-GAAP-based net income201,200 3.43 Less:  Amortization103,255 1.76 Share-based compensation13,406 0.23 Special charges18,776 0.32 Other (income) expense(10,145) (0.17) GAAP-based provision for (recovery of) income tax(8,542) (0.15) Tax on non-GAAP-based provision(32,753) (0.56) GAAP-based net income117,203 2.00      Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the three months ended June 30, 2011.($ in thousands except for per share amounts)  Three Months EndedJune 30, 2011 GAAP-basedmeasures  Adjustments  NoteNon-GAAP-basedmeasures  Cost of Revenues:    Customer Support23,237 (13) (1) 23,224 Service and Other47,753 (109) (1) 47,644 Amortization of acquired technology-based intangible assets18,524 (18,524) (2) — GAAP-based gross profit/ Non-GAAP-based gross profit190,392 18,646  209,038 Operating Expenses    Research and development39,437 (695) (1) 38,742 Sales and marketing68,417 (1,340) (1) 67,077 General and administrative24,085 (720) (1) 23,365 Amortization of acquired customer-based intangible assets10,807 (10,807) (2) — Special charges4,483 (4,483) (3) — GAAP-based income from operations/ Non-GAAP-based operating income37,097 36,691  73,788 Other expense, net(5,359) 5,359 (4) — Provision for (recovery of) income taxes1,056 8,982 (5) 10,038 GAAP-based net income for the period/ Non-GAAP-based net income28,592 33,068 (6) 61,660 GAAP-based earnings per share/ Non GAAP-based earnings per share-diluted$0.49 $0.56 (6) $1.05 (1) Adjustment relates to the exclusion of share based compensation expense from our non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.(2) Adjustment relates to the exclusion of amortization expense from our non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.(3) Adjustment relates to the exclusion of Special charges from our non-GAAP-based operating expenses as Special charges are generally incurred in the aftermath of acquisitions and are not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(4) Adjustment relates to the exclusion of Other income (expense) from our non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and are generally not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(5) Adjustment relates to differences between the GAAP-based tax provision of approximately 4% and a non-GAAP-based tax rate of 14%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating non-GAAP-based adjusted net income.(6) Reconciliation of non-GAAP-based adjusted net income to GAAP-based net income:    Three Months EndedJune 30, 2011  Per share  Non-GAAP-based net income61,660 1.05 Less:  Amortization29,331 0.50 Share-based compensation2,877 0.05 Special charges4,483 0.08 Other (income) expense5,359 0.09 GAAP-based provision for income tax1,056 0.02 Tax on non-GAAP-based provision(10,038) (0.18) GAAP-based net income28,592 0.49 Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the year ended June 30, 2011.($ in thousands except for per share amounts)  Year Ended June 30, 2011 GAAP-basedmeasures  Adjustments  NoteNon-GAAP-basedmeasures  Cost of Revenues:    Customer Support86,834 (47) (1) 86,787 Service and Other167,854 (432) (1) 167,422 Amortization of acquired technology-based intangible assets68,048 (68,048) (2) — GAAP-based gross profit/ Non-GAAP-based gross profit692,283 68,527  760,810 Operating Expenses    Research and development145,992 (2,614) (1) 143,378 Sales and marketing232,332 (5,568) (1) 226,764 General and administrative86,696 (2,648) (1) 84,048 Amortization of acquired customer-based intangible assets38,966 (38,966) (2) — Special charges15,576 (15,576) (3) — GAAP-based income from operations/ Non-GAAP-based operating income150,605 133,899  284,504 Other expense, net(6,019) 6,019 (4) — Provision for income taxes12,931 25,716 (5) 38,647 GAAP-based net income for the period/ Non-GAAP-based net income123,203 114,202 (6) 237,405 GAAP-based earnings per share/ Non GAAP-based earnings per share-diluted$2.11 $1.96 (6) $4.07 (1) Adjustment relates to the exclusion of share based compensation expense from our non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.(2) Adjustment relates to the exclusion of amortization expense from our non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.(3) Adjustment relates to the exclusion of Special charges from our non-GAAP-based operating expenses as Special charges are generally incurred in the aftermath of acquisitions and are not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(4) Adjustment relates to the exclusion of Other income (expense) from our non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and are generally not indicative or related to continuing operations and are hence excluded from our internal analysis of operating results.(5) Adjustment relates to differences between the GAAP-based tax rate of approximately 10% and a non-GAAP-based tax rate of 14%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating non-GAAP-based adjusted net income.(6) Reconciliation of non-GAAP-based adjusted net income to GAAP-based net income:    Year Ended June 30, 2011  Per share  Non-GAAP-based net income237,405 4.07 Less:  Amortization107,014 1.84 Share-based compensation11,309 0.19 Special charges15,576 0.27 Other (income) expense6,019 0.10 GAAP-based provision for income tax12,931 0.22 Tax on non-GAAP-based provision(38,647) (0.66) GAAP-based net income123,203 2.11   (3)The following table provides a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three months and year ended June 30, 2012: Three Months EndedJune 30, 2012Currencies % of Revenue  % of Expenses*  EURO27 %18 %GBP8 %9 %CAD7 %19 %USD48 %40 %Other10 %14 %Total100 %100 % Year Ended June 30, 2012Currencies % of Revenue  % of Expenses*  EURO29 %18 %GBP8 %9 %CAD7 %19 %USD47 %40 %Other9 %14 %Total100 %100 %*Expenses include all cost of revenues and operating expenses included within the Consolidated Statements of Income, except for amortization of intangible assets, share-based compensation and Special charges.  (4) The following table provides details of our adjustment related to deferred maintenance revenue, on account of purchase price accounting, for the three months ended June 30, 2012 and for future quarters:  In '000s USD Total  Q4 Fiscal Year 2012326  Total Fiscal Year 2013 and beyond272  (5)   ECM, BPM: Gartner Forecast Enterprise Software Markets, 2009-2016 1Q12 Update InfoExchange: Research and Markets, Computer-based Fax Markets, 2010-2015, Gartner Enterprise Software  Markets, 2009-2016 1Q12 Update, Davidson Consulting, Fax Server Industry Forecast, 2011-2016 CEM: Gartner Magic Quadrant for Web Content Management, 10 Nov. 2011 Discovery: Gartner Market Trends: Expect Disruption and Divergence in the E-Discovery Software Market, 16 Dec. 2011   SOURCE: Open Text CorporationFor further information: Greg Secord  Vice President, Investor Relations Open Text Corporation 519-888-7111 ext.2408gsecord@opentext.com