The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from PR Newswire

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, 2012 WATERLOO, ON, Aug. 9, 2012 /PRNewswire/ - 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 FY12 Total revenue for the period was $305.6 million  up 7% Y/Y License revenue was $78.0 million, down 2% Y/Y GAAP-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 FY12 Total revenue for the period was $1,207.5 million up 17% Y/Y License revenue was $293.7 million, up 9% Y/Y GAAP-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 Highlights EIM expanded market opportunity EasyLink acquisition closed July 2, 2012 Announcement of OpenText Cloud Technology, services, financial and public sector industries saw the most demand Organizational changes complete 8 deals over $1 million and 12 deals between $500K and $1 million in the fourth quarter Customer 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 Olympics http://www.opentext.com/2/global/press-release-details.html?id=FD0360263C1A42748753AE2D358038EA U.S. Department of the Interior deploys OpenText cloud-based ECM solution http://www.opentext.com/2/global/press-release-details.html?id=D7D55237959549F89FA6445E7898C9A4 Summary of Quarterly Results                 Q4 FY12 Q3 FY12 Q4 FY11 % Change (Q/Q)     % Change (Y/Y)     Revenue (million) $305.6 $292.3 $285.5 4.6%   7.0%   GAAP-based gross margin 65.8% 63.6% 66.7% 220 bps (90) bps GAAP-based operating income margin 13.0% 9.3% 13.0% 370 bps ? bps GAAP-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% 190 bps (30) bps Non-GAAP-based operating margin(2) 27.7% 25.2% 25.8% 250 bps 190 bps Non-GAAP-based EPS, diluted (2) $1.17 $1.01 $1.05 15.8%   11.4%   Summary of Year to Date Results             FY12 Q3 YTD FY12 FY11 % Change (Y/Y)     Revenue (million) $1,207.5 $901.8 $1,033.3 16.9%   GAAP-based gross margin 65.4% 65.2% 67.0% (160) bps GAAP-based operating income margin 12.4% 12.2% 14.6% (220) bps GAAP-based EPS, diluted $2.13 $2.00 $2.11 0.95%   Non-GAAP-based gross margin (2) 72.5% 72.3% 73.6% (110) bps Non-GAAP-based operating margin (2) 27.3% 27.2% 27.5% (20) bps Non-GAAP-based EPS, diluted (2) $4.60 $3.43 $4.07 13.0%               Conference Call Information The 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 OpenText OpenText is the largest independent software provider of Enterprise Information Management (EIM). For more information please visit www.opentext.com. Cautionary Statement Regarding Forward Looking Statements Certain 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, 2012 June 30, 2011       ASSETS     Cash and cash equivalents $ 559,747   $ 284,140   Accounts receivable trade, net of allowance for doubtful accounts of $5,655 as of June 30, 2012 and $5,424 as of June 30, 2011 (note 3) 163,664   154,568   Income taxes recoverable 17,849   18,911   Prepaid expenses and other current assets 44,011   29,678   Deferred tax assets 4,003   27,861     Total current assets 789,274   515,158   Property and equipment 81,157   77,825   Goodwill 1,040,234   832,481   Acquired intangible assets 312,563   344,995   Deferred tax assets 80,226   42,737   Other assets 23,739   19,359   Deferred charges 68,653   54,989   Long-term income taxes recoverable 48,447   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 debt 41,374   15,545     Deferred revenues 273,987   254,531     Income taxes payable 27,806   18,424     Deferred tax liabilities 1,612   624     Total current liabilities 476,513   415,373   Long-term liabilities:       Accrued liabilities 14,247   13,727     Deferred credits 10,086   6,878     Pension liability 22,074   18,478     Long-term debt 555,000   282,033     Deferred revenues 12,653   11,466     Long-term income taxes payable 147,623   101,434     Deferred tax liabilities 26,705   43,529     Total long-term liabilities 788,388   477,545   Shareholders' equity:       Share capital       58,358,990 and 57,301,812 Common Shares issued and outstanding at June 30, 2012 and June 30, 2011, respectively; Authorized Common Shares: unlimited 635,321   614,279     Additional paid-in capital 95,026   74,301     Accumulated other comprehensive income 44,364   60,470     Retained earnings 442,068   316,894     Treasury stock, at cost (793,494 shares at June 30, 2012 and 572,413 shares at June 30, 2011, respectively) (37,387)   (26,499)   Total shareholders' equity 1,179,392   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,   2012 2011 2010 Revenues:         License $ 293,719   $ 269,202   $ 238,074     Customer support 656,568   560,541   507,452     Service and other 257,186   203,560   166,497     Total revenues 1,207,473   1,033,303   912,023   Cost of revenues:         License 18,033   18,284   16,922     Customer support 110,504   86,834   83,741     Service and other 204,909   167,854   135,396     Amortization of acquired technology-based intangible assets 84,572   68,048   60,472     Total cost of revenues 418,018   341,020   296,531   Gross profit 789,455   692,283   615,492   Operating expenses:         Research and development 169,043   145,992   129,378     Sales and marketing 274,544   232,332   198,208     General and administrative 97,072   86,696   83,295     Depreciation 21,587   22,116   17,425     Amortization of acquired customer-based intangible assets 53,326   38,966   35,940     Special charges 24,523   15,576   42,008     Total operating expenses 640,095   541,678   506,254   Income from operations 149,360   150,605   109,238   Other income (expense), net 3,549   (6,019)   (9,293)   Interest expense, net (15,564)   (8,452)   (8,798)   Income before income taxes 137,345   136,134   91,147   Provision for income taxes 12,171   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-basic 57,890   57,077   56,280   Weighted average number of Common Shares outstanding-diluted 58,734   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,   2012 2011 Revenues:       License $ 78,031   $ 79,558     Customer support 163,128   150,956     Service and other 64,465   54,939     Total revenues 305,624   285,453   Cost of revenues:       License 4,116   5,547     Customer support 27,780   23,237     Service and other 51,358   47,753     Amortization of acquired technology-based intangible assets 21,265   18,524     Total cost of revenues 104,519   95,061   Gross profit 201,105   190,392   Operating expenses:       Research and development 41,195   39,437     Sales and marketing 71,641   68,417     General and administrative 24,186   24,085     Depreciation 5,268   6,066     Amortization of acquired customer-based intangible assets 13,378   10,807     Special charges 5,747   4,483     Total operating expenses 161,415   153,295   Income from operations 39,690   37,097   Other expense, net (6,596)   (5,359)   Interest expense, net (4,410)   (2,090)   Income before income taxes 28,684   29,648   Provision for income taxes 20,713   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-basic 58,270   57,276   Weighted average number of Common Shares outstanding-diluted 58,847   58,581             OPEN TEXT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars)   Year Ended June 30,   2012 2011 2010 Cash 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 assets 159,485   129,130   113,837     Share-based compensation expense 18,097   11,308   9,765     Excess tax benefits on share-based compensation expense (2,723)   (1,888)   (1,143)     Pension expense 543   552   211     Amortization of debt issuance costs 1,703   1,359   1,390     Amortization on deferred charges and credits 11,579   8,519   ?     Unrealized gain on financial instruments ?   ?   (878)     Loss on sale and write down of property and equipment 203   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 charges 1,389   (482)   (1,081)     Changes in operating assets and liabilities:         Accounts receivable 5,319   200   24,521     Prepaid expenses and other current assets (2,079)   1,833   (814)     Income taxes 68,601   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 assets 2,419   (2,660)   (23,196)   Net cash provided by operating activities 266,490   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 expense 2,723   1,888   1,143     Proceeds from issuance of Common Shares 21,270   11,512   9,971     Purchase of Treasury Stock (10,888)   (12,499)   (14,000)     Proceeds from long-term debt and revolver 648,500   ?   ?     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 activities 302,584   (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 period 275,607   (42,052)   50,373   Cash and cash equivalents at beginning of the period 284,140   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,   2012 2011 Cash 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 assets 39,911   35,397     Share-based compensation expense 4,691   2,877     Excess tax benefits on share-based compensation expense (13)   (311)     Pension expense 66   165     Amortization of debt issuance costs 537   347     Amortization on deferred charges and credits 3,122   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 charges 44   (482)     Changes in operating assets and liabilities:       Accounts receivable 14,583   (4,338)     Prepaid expenses and other current assets 1,028   1,709     Income taxes 69,551   (5,730)     Deferred charges and credits 2,043   101     Accounts payable and accrued liabilities 3,540   825     Deferred revenue (13,078)   (2,075)     Other assets 3,550   (3)   Net cash provided by operating activities 79,846   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 expense 13   311     Proceeds from issuance of Common Shares 2,934   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 period 50,841   46,393   Cash and cash equivalents at beginning of the period 508,906   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-based Measures Adjustments Note Non-GAAP-based Measures   Cost of revenues         Customer Support 27,780   (58)   (1)   27,722   Service and Other 51,358   (239)   (1)   51,119   Amortization of acquired technology-based intangible assets 21,265   (21,265)   (2)   ?   GAAP-based gross profit/ Non-GAAP-based gross profit 201,105   21,562     222,667   Operating Expenses         Research and development 41,195   (1,066)   (1)   40,129   Sales and marketing 71,641   (2,771)   (1)   68,870   General and administrative 24,186   (557)   (1)   23,629   Amortization of acquired customer-based intangible assets 13,378   (13,378)   (2)   ?   Special charges 5,747   (5,747)   (3)   ?   GAAP-based income from operations/ Non-GAAP-based operating income 39,690   45,081     84,771   Other income, net (6,596)   6,596   (4)   ?   Provision for (recovery of) income taxes 20,713   (9,462)   (5)   11,251   GAAP-based net income for the period/ Non-GAAP-based net income 7,971   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 Ended June 30, 2012     Per share   Non-GAAP-based net income 69,110   1.17   Less:     Amortization 34,643   0.58   Share-based compensation 4,691   0.08   Special charges 5,747   0.10   Other (income) expense 6,596   0.11   GAAP-based provision for income tax 20,713   0.35   Tax on non-GAAP-based provision (11,251)   (0.19)   GAAP-based net income 7,971   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 Ended June 30, 2012   GAAP-based Measures   Adjustments Note Non-GAAP-based Measures   Cost of revenues         Customer Support 110,504   (169)   (1)   110,335   Service and Other 204,909   (647)   (1)   204,262   Amortization of acquired technology-based intangible assets 84,572   (84,572)   (2)   ?   GAAP-based gross profit/ Non-GAAP-based gross profit 789,455   85,388     874,843   Operating Expenses         Research and development 169,043   (3,939)   (1)   165,104   Sales and marketing 274,544   (8,811)   (1)   265,733   General and administrative 97,072   (4,531)   (1)   92,541   Amortization of acquired customer-based intangible assets 53,326   (53,326)   (2)   ?   Special charges 24,523   (24,523)   (3)   ?   GAAP-based income from operations/ Non-GAAP-based operating income 149,360   180,518     329,878   Other income, net 3,549   (3,549)   (4)   ?   Provision for income taxes 12,171   31,833   (5)   44,004   GAAP-based net income for the period/ Non-GAAP-based net income 125,174   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 Ended June 30, 2012     Per share Non-GAAP-based net income 270,310   4.60   Less:     Amortization 137,898   2.35   Share-based compensation 18,097   0.31   Special charges 24,523   0.42   Other (income) expense (3,549)   (0.06)   GAAP-based provision for income tax 12,171   0.21   Tax on non-GAAP-based provision (44,004)   (0.76)   GAAP-based net income 125,174   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 Ended March 31, 2012   GAAP-based measures   Adjustments   Note Non-GAAP-based measures   Cost of Revenues:         Customer Support 27,987   (53)   (1)   27,934   Service and Other 52,596   (203)   (1)   52,393   Amortization of acquired technology-based intangible assets 21,264   (21,264)   (2)   ?   GAAP-based gross profit/ Non-GAAP-based gross profit 185,951   21,520     207,471   Operating Expenses         Research and development 41,738   (1,028)   (1)   40,710   Sales and marketing 69,572   (2,594)   (1)   66,978   General and administrative 21,999   (1,287)   (1)   20,712   Amortization of acquired customer-based intangible assets 13,462   (13,462)   (2)   ?   Special charges 6,450   (6,450)   (3)   ?   GAAP-based income from operations/ Non-GAAP-based operating income 27,303   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 income 34,774   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 Ended March 31, 2012     Per share Non-GAAP-based net income 59,239   1.01   Less:     Amortization 34,726   0.59   Share-based compensation 5,165   0.09   Special charges 6,450   0.11   Other (income) expense 1,804   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 income 34,774   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 Ended March 31, 2012   GAAP-based measures   Adjustments   Note Non-GAAP-based measures   Cost of Revenues:         Customer Support 82,724   (112)   (1)   82,612   Service and Other 153,551   (408)   (1)   153,143   Amortization of acquired technology-based intangible assets 63,307   (63,307)   (2)   ?   GAAP-based gross profit/ Non-GAAP-based gross profit 588,350   63,827     652,177   Operating Expenses         Research and development 127,848   (2,872)   (1)   124,976   Sales and marketing 202,903   (6,040)   (1)   196,863   General and administrative 72,886   (3,974)   (1)   68,912   Amortization of acquired customer-based intangible assets 39,948   (39,948)   (2)   ?   Special charges 18,776   (18,776)   (3)   ?   GAAP-based income from operations/ Non-GAAP-based operating income 109,670   135,437     245,107   Other expense, net 10,145   (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 income 117,203   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 Ended March 31, 2012     Per share Non-GAAP-based net income 201,200   3.43   Less:     Amortization 103,255   1.76   Share-based compensation 13,406   0.23   Special charges 18,776   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 income 117,203   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 Ended June 30, 2011   GAAP-based measures   Adjustments   Note Non-GAAP-based measures   Cost of Revenues:         Customer Support 23,237   (13)   (1)   23,224   Service and Other 47,753   (109)   (1)   47,644   Amortization of acquired technology-based intangible assets 18,524   (18,524)   (2)   ?   GAAP-based gross profit/ Non-GAAP-based gross profit 190,392   18,646     209,038   Operating Expenses         Research and development 39,437   (695)   (1)   38,742   Sales and marketing 68,417   (1,340)   (1)   67,077   General and administrative 24,085   (720)   (1)   23,365   Amortization of acquired customer-based intangible assets 10,807   (10,807)   (2)   ?   Special charges 4,483   (4,483)   (3)   ?   GAAP-based income from operations/ Non-GAAP-based operating income 37,097   36,691     73,788   Other expense, net (5,359)   5,359   (4)   ?   Provision for (recovery of) income taxes 1,056   8,982   (5)   10,038   GAAP-based net income for the period/ Non-GAAP-based net income 28,592   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 Ended June 30, 2011     Per share   Non-GAAP-based net income 61,660   1.05   Less:     Amortization 29,331   0.50   Share-based compensation 2,877   0.05   Special charges 4,483   0.08   Other (income) expense 5,359   0.09   GAAP-based provision for income tax 1,056   0.02   Tax on non-GAAP-based provision (10,038)   (0.18)   GAAP-based net income 28,592   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-based measures   Adjustments   Note Non-GAAP-based measures   Cost of Revenues:         Customer Support 86,834   (47)   (1)   86,787   Service and Other 167,854   (432)   (1)   167,422   Amortization of acquired technology-based intangible assets 68,048   (68,048)   (2)   ?   GAAP-based gross profit/ Non-GAAP-based gross profit 692,283   68,527     760,810   Operating Expenses         Research and development 145,992   (2,614)   (1)   143,378   Sales and marketing 232,332   (5,568)   (1)   226,764   General and administrative 86,696   (2,648)   (1)   84,048   Amortization of acquired customer-based intangible assets 38,966   (38,966)   (2)   ?   Special charges 15,576   (15,576)   (3)   ?   GAAP-based income from operations/ Non-GAAP-based operating income 150,605   133,899     284,504   Other expense, net (6,019)   6,019   (4)   ?   Provision for income taxes 12,931   25,716   (5)   38,647   GAAP-based net income for the period/ Non-GAAP-based net income 123,203   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 income 237,405   4.07   Less:     Amortization 107,014   1.84   Share-based compensation 11,309   0.19   Special charges 15,576   0.27   Other (income) expense 6,019   0.10   GAAP-based provision for income tax 12,931   0.22   Tax on non-GAAP-based provision (38,647)   (0.66)   GAAP-based net income 123,203   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 Ended June 30, 2012 Currencies  % of Revenue   % of Expenses*   EURO 27 % 18 % GBP 8 % 9 % CAD 7 % 19 % USD 48 % 40 % Other 10 % 14 % Total 100 % 100 %   Year Ended June 30, 2012 Currencies  % of Revenue   % of Expenses*   EURO 29 % 18 % GBP 8 % 9 % CAD 7 % 19 % USD 47 % 40 % Other 9 % 14 % 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, 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 2012 326     Total Fiscal Year 2013 and beyond 272     (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: <p> <b>Greg Secord </b> </p> <p> Vice President, Investor Relations<br/> Open Text Corporation<br/> 519-888-7111 ext.2408<br/> <u><a href="mailto:gsecord@opentext.com">gsecord@opentext.com</a></u> </p>