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Press release from PR Newswire

Open Text Reports Third Quarter Fiscal Year 2013 Financial Results and Announces Quarterly Dividend Program

Wednesday, April 24, 2013

Open Text Reports Third Quarter Fiscal Year 2013 Financial Results and Announces Quarterly Dividend Program

16:01 EDT Wednesday, April 24, 2013

WATERLOO, ON, April 24, 2013 /PRNewswire/ - Open Text(TM) Corporation (NASDAQ:OTEX) (TSX: OTC), announced today its financial results for the third quarter ended March 31, 2013.

Financial Highlights for Q3 FY13 (1)

  • Total revenue for the period was $337.7 million, up 16% Y/Y
  • License revenue was $69.0 million, up 13% Y/Y
  • Cloud services revenue was $44.4 million
  • Non-GAAP-based EPS, diluted was $1.26 compared to $1.01 Y/Y, up 25% Y/Y; GAAP-based EPS, diluted was $0.44 compared to $0.59 Y/Y (2)
  • Non-GAAP-based income from operations was $90.4 million and 27% of revenues; GAAP-based income from operations was $40.9 million and 12% of revenues (2)
  • Operating cash flow was $116.8 million compared to $96.6 million Y/Y, up 21% Y/Y, with an ending cash balance of $446.9 million.

"We are committed to delivering value to our stockholders through technology innovation, strategic acquisitions and now through a dividend," said OpenText CEO Mark J. Barrenechea. "We generated $333.1 million in operating cash flow over the last twelve months and we are running our business at record operating margins. We have always been committed to rewarding our stockholders' investments in OpenText and the Board has decided that it is the right time to declare a dividend for our stockholders."

Business Highlights

  • Services, technology and consumer goods industries saw the most demand
  • 8 license transactions over $1 million and 13 license transactions between $500K and $1 million
  • Customer successes in the third quarter include Enbridge, The Planning Inspectorate, Freescale, RS Components, Toray, Hydro Quebec, YPTO, CGI, SSE plc, Volvo and Hoffmann-La Roche
  • OpenText announces 7 new products: OpenText InfoFusion 1.0, StreamServe 5.6, OpenText SecureiX, Employee File Management (EFM) software for use with SAP® solutions, OpenText Smart Process Applications, OpenText Archive, OpenText Media Management 7.2
  • OpenText acquires Resonate Knowledge Technologies
  • OpenText appoints Kevin Cochrane as Chief Marketing Officer
  • Gartner recognizes OpenText in Business Process Management suites report
  • Independent research firm highlights OpenText's BPM capabilities
  • OpenText honored as 2013 SAP® Pinnacle Award recipient

Dividend Program Highlights

The Company also announced today that it has adopted a policy to declare non-cumulative quarterly dividends to holders of its common shares. The Board of Directors has declared an initial dividend of $0.30 per share, payable on June 21, 2013, to shareholders of the Company of record on May 31, 2013.

The dividends to be paid on June 21, 2013 are designated as "eligible dividends" for the purpose of section 89 of the Income Tax Act (Canada).

                                       
Summary of Quarterly Results                                      
        Q3 FY13     Q2 FY13     Q3 FY12     % Change (Q/Q)       % Change (Y/Y)    
Revenue (million)       $337.7     $352.2     $292.3     (4.1)%       15.5%    
GAAP-based gross margin       64.2%     65.2%     63.6%     (100)   bps   60   bps
GAAP-based operating income margin       12.1%     19.1%     9.3%     (700)   bps   280   bps
GAAP-based EPS, diluted       $0.44     $1.04     $0.59     (57.7)%       (25.4)%    
Non-GAAP-based gross margin (2)       71.2%     71.8%     71.0%     (60)   bps   20   bps
Non-GAAP-based operating margin (2)       26.8%     32.1%     25.2%     (530)   bps   160   bps
Non-GAAP-based EPS, diluted (2)       $1.26     $1.58     $1.01     (20.3)%       24.8%    
                                       

                               
Summary of Year to Date Results                              
        Q3 FY13     Q2 FY13     Q3 FY12     % Change (Y/Y) (bps)    
Revenue (million)       $1,016.1     $678.4     $901.8     12.7%    
GAAP-based gross margin       64.2%     64.1%     65.2%     (100)   bps
GAAP-based operating income margin       14.6%     15.8%     12.2%     240   bps
GAAP-based EPS, diluted       $1.80     $1.37     $2.00     (10.0)%    
Non-GAAP-based gross margin (2)       71.2%     71.1%     72.3%     (110)   bps
Non-GAAP-based operating margin (2)       29.2%     30.5%     27.2%     200   bps
Non-GAAP-based EPS, diluted (2)       $4.14     $2.89     $3.43     20.7%    

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 800-814-4859 (toll-free) or 416-644-3414 (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=701D0000000VqoUIAS.

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 May 8, 2013 and can be accessed by dialing 877-289-8525 (toll-free) or 416-640-1917 (international) and entering the confirmation code: 4610979 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"), and declaration of quarterly dividends, 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 prove 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; (viii) the demand for the Company's product and the extent of deployment of the company's products in the EIM marketplace; and (ix) the Company's financial condition and capital requirements. 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 ©2013 Open Text Corporation. OpenText is a trademark or registered trademark of Open Text SA and/or Open Text ULC. The list of trademarks is not exhaustive of other trademarks, registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text SA or other respective owners. All rights reserved. For more information, visit: http://www.opentext.com/2/global/site-copyright.html_SKU.

OPEN TEXT CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share data)
  March 31, 2013     June 30, 2012
  (unaudited)        
ASSETS            
Cash and cash equivalents $ 446,911     $ 559,747
Accounts receivable trade, net of allowance for doubtful accounts of $5,858 as of March 31, 2013 and $5,655 as of June 30, 2012   174,563       163,664
Income taxes recoverable   23,977       17,849
Prepaid expenses and other current assets   47,787       44,011
Deferred tax assets   15,727       4,003
    Total current assets   708,965       789,274
Property and equipment   83,776       81,157
Goodwill   1,241,960       1,040,234
Acquired intangible assets   397,154       312,563
Deferred tax assets   141,501       115,128
Other assets   21,528       23,739
Deferred charges   58,598       68,653
Long-term income taxes recoverable   11,840       13,545
  Total assets $ 2,665,322     $ 2,444,293
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities:            
  Accounts payable and accrued liabilities $ 199,501     $ 131,734
  Current portion of long-term debt   48,475       41,374
  Deferred revenues   297,130       273,987
  Income taxes payable   6,323       27,806
  Deferred tax liabilities   1,188       1,612
    Total current liabilities   552,617       476,513
Long-term liabilities:            
  Accrued liabilities   19,109       14,247
  Deferred credits   12,232       10,086
  Pension liability   24,429       22,074
  Long-term debt   525,000       555,000
  Deferred revenues   10,824       12,653
  Long-term income taxes payable   151,643       147,623
  Deferred tax liabilities   71,972       26,705
    Total long-term liabilities   815,209       788,388
Shareholders' equity:            
  Share capital            
  58,607,036 and 58,358,990 Common Shares issued and outstanding at March 31, 2013 and June 30, 2012, respectively; Authorized Common Shares: unlimited   643,296       635,321
  Additional paid-in capital   96,159       95,026
  Accumulated other comprehensive income   38,699       44,364
  Retained earnings   548,416       442,068
  Treasury stock, at cost (610,878 and 793,494 shares at March 31, 2013 and at June 30, 2012, respectively)   (29,074)       (37,387)
Total shareholders' equity   1,297,496       1,179,392
  Total liabilities and shareholders' equity $ 2,665,322     $ 2,444,293
               

OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands of U.S. dollars, except share and per share data) (unaudited)
           
    Three Months Ended March 31,     Nine Months Ended March 31,
    2013     2012     2013     2012
Revenues:                              
  License   $ 69,035     $ 60,957     $ 200,816     $ 215,688
  Cloud Services     44,437       ?       135,472       ?
  Customer support     166,573       166,057       493,327       493,440
  Professional service and other     57,650       65,333       186,454       192,721
    Total revenues     337,695       292,347       1,016,069       901,849
Cost of revenues:                              
  License     3,079       4,549       12,578       13,917
  Cloud services     18,891       ?       55,435       ?
  Customer support     27,497       27,987       81,597       82,724
  Professional service and other     48,252       52,596       144,498       153,551
  Amortization of acquired technology-based intangible assets     23,058       21,264       70,031       63,307
    Total cost of revenues     120,777       106,396       364,139       313,499
Gross profit     216,918       185,951       651,930       588,350
Operating expenses:                              
  Research and development     43,003       41,738       121,627       127,848
  Sales and marketing     77,327       69,572       209,819       202,903
  General and administrative     27,061       21,999       85,199       72,886
  Depreciation     6,064       5,427       18,278       16,319
  Amortization of acquired customer-based intangible assets     17,149       13,462       51,548       39,948
  Special charges     5,444       6,450       17,267       18,776
    Total operating expenses     176,048       158,648       503,738       478,680
Income from operations     40,870       27,303       148,192       109,670
Other income (expense), net     237       (1,804)       1,707       10,145
Interest expense, net     (4,109)       (4,761)       (12,992)       (11,154)
Income before income taxes     36,998       20,738       136,907       108,661
Provision for (recovery of) income taxes     11,187       (14,036)       30,559       (8,542)
Net income for the period   $ 25,811     $ 34,774     $ 106,348     $ 117,203
Earnings per share?basic   $ 0.44     $ 0.60     $ 1.82     $ 2.03
Earnings per share?diluted   $ 0.44     $ 0.59     $ 1.80     $ 2.00
Weighted average number of Common Shares outstanding?basic     58,596       58,038       58,514       57,765
Weighted average number of Common Shares outstanding?diluted     59,077       58,821       59,001       58,697
                               

OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands of U.S. dollars) (unaudited)
                                 
      Three Months Ended March 31,     Nine Months Ended March 31,
      2013     2012     2013     2012
Net income for the period     $ 25,811     $ 34,774     $ 106,348     $ 117,203
Other comprehensive income?net of tax:                                
  Net foreign currency translation adjustments       (3,325)       845       (4,790)       (11,127)
  Net unrealized gain (loss) on cash flow hedges       (833)       1,738       (342)       (332)
  Net actuarial gain (loss) relating to defined benefit pension plans       196       (3,316)       (533)       (3,522)
Total other comprehensive income (loss), net, for the period     $ (3,962)     $ (733)     $ (5,665)     $ (14,981)
Total comprehensive income     $ 21,849     $ 34,041     $ 100,683     $ 102,222
                                 
                                 

OPEN TEXT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) (unaudited)
             
      Three Months Ended March 31,     Nine Months Ended March 31,
      2013     2012     2013     2012
Cash flows from operating activities:                            
Net income for the period     $ 25,811     $ 34,774     $ 106,348     $ 117,203
Adjustments to reconcile net income to net cash provided by operating activities:                                
  Depreciation and amortization of intangible assets       46,271       40,153       139,857       119,574
  Share-based compensation expense       3,877       5,165       10,153       13,406
  Excess tax benefits on share-based compensation expense       (1)       (2,215)       (612)       (2,710)
  Pension expense       222       171       692       477
  Amortization of debt issuance costs       519       588       1,591       1,166
  Amortization of deferred charges and credits       2,762       3,078       8,620       8,457
  Loss on sale and write down of property and equipment       ?       ?       24       203
  Deferred taxes       (6,210)       (14,134)       (7,362)       (21,092)
  Impairment and other non cash charges       ?       ?       ?       1,345
Changes in operating assets and liabilities:                                
  Accounts receivable       (5,019)       (9,237)       15,387       (9,264)
  Prepaid expenses and other current assets       (3,445)       (11,148)       (2,061)       (3,107)
  Income taxes       (1,019)       (3,833)       (14,907)       (950)
  Deferred charges and credits       4,016       (9,425)       3,580       (24,078)
  Accounts payable and accrued liabilities       (6,556)       (4,553)       (27,176)       (21,352)
  Deferred revenue       54,930       66,303       18,192       8,497
  Other assets       670       911       959       (1,131)
Net cash provided by operating activities       116,828       96,598       253,285       186,644
Cash flows from investing activities:                                
  Additions of property and equipment       (5,875)       (4,694)       (15,792)       (21,381)
  Purchase of patents       ?       ?       ?       (193)
  Purchase of System Solutions Australia Pty Limited, net of cash acquired       ?       (214)       (516)       (1,738)
  Purchase of Operitel Corporation, net of cash acquired       ?       (131)       ?       (6,391)
  Purchase of Global 360 Holding Corp., net of cash acquired       ?       ?       ?       (245,653)
  Purchase of EasyLink Services International Corporation, net of cash acquired       ?       ?       (315,331)       ?
  Purchase of Resonate KT Limited, net of cash acquired       (19,366)       ?       (19,366)       ?
  Purchase consideration for prior period acquisitions       (222)       (317)       (653)       (926)
Net cash used in investing activities       (25,463)       (5,356)       (351,658)       (276,282)
  Cash flows from financing activities:                                
  Excess tax benefits on share-based compensation expense       1       2,215       612       2,710
  Proceeds from issuance of Common Shares       1,128       7,075       7,530       18,336
  Proceeds from long-term debt and revolver       ?       ?       ?       648,500
  Repayment of long-term debt and revolver       (7,670)       (7,664)       (23,008)       (341,520)
  Debt issuance costs       ?       (525)       ?       (9,834)
Net cash provided by (used in) financing activities       (6,541)       1,101       (14,866)       318,192
Foreign exchange gain (loss) on cash held in foreign currencies       (5,171)       2,652       403       (3,788)
Increase (decrease) in cash and cash equivalents during the period       79,653       94,995       (112,836)       224,766
Cash and cash equivalents at beginning of the period       367,258       413,911       559,747       284,140
Cash and cash equivalents at end of the period     $ 446,911     $ 508,906     $ 446,911     $ 508,906
                                 

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 future 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 March 31, 2013. ($ in thousands except for per share amounts)

      Three Months Ended March 31, 2013
      GAAP-based Measures     Adjustments     Note     Non-GAAP-based Measures
Cost of revenues                              
Cloud services       18,891       (50)     (1)       18,841
Customer Support       27,497       (130)     (1)       27,367
Professional Service and Other       48,252       (295)     (1)       47,957
Amortization of acquired technology-based intangible assets       23,058       (23,058)     (2)       ?
GAAP-based gross profit/ Non-GAAP-based gross profit       216,918       23,533             240,451
Operating Expenses                              
Research and development       43,003       (498)     (1)       42,505
Sales and marketing       77,327       (2,634)     (1)       74,693
General and administrative       27,061       (270)     (1)       26,791
Amortization of acquired customer-based intangible assets       17,149       (17,149)     (2)       ?
Special charges       5,444       (5,444)     (3)       ?
GAAP-based income from operations / Non-GAAP-based income from operations       40,870       49,528             90,398
Other income (expense), net       237       (237)     (4)       ?
Provision for income taxes       11,187       893     (5)     12,080
GAAP-based net income / Non-GAAP-based net income       25,811       48,398     (6)       74,209
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted     $ 0.44     $ 0.82     (6)     $ 1.26
                               

(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 30% 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 March 31, 2013
                Per share
Non-GAAP-based net income       $ 74,209     $ 1.26
Less:                  
Amortization         40,207       0.68
Share-based compensation         3,877       0.07
Special charges         5,444       0.09
Other (income) expense, net         (237)       ?
GAAP-based provision for income taxes         11,187       0.19
Non-GAAP-based provision for income taxes         (12,080)       (0.21)
GAAP-based net income       $ 25,811     $ 0.44
                   

Reconciliation of selected GAAP-based measures to Non-GAAP based measures for the nine months ended March 31, 2013. ($ in thousands except for per share amounts)

                                 
        Nine Months Ended March 31, 2013
        GAAP-based Measures     Adjustments     Note     Non-GAAP-based Measures
Cost of revenues                                
Cloud services         55,435       (80)     (1)       55,355
Customer Support         81,597       (275)     (1)       81,322
Professional Service and Other         144,498       (660)     (1)       143,838
Amortization of acquired technology-based intangible assets         70,031       (70,031)     (2)       ?
GAAP-based gross profit/ Non-GAAP-based gross profit         651,930       71,046             722,976
Operating Expenses                                
Research and development         121,627       (1,167)     (1)       120,460
Sales and marketing         209,819       (5,953)     (1)       203,866
General and administrative         85,199       (2,018)     (1)       83,181
Amortization of acquired customer-based intangible assets         51,548       (51,548)     (2)       ?
Special charges         17,267       (17,267)     (3)       ?
GAAP-based income from operations / Non-GAAP-based income from operations         148,192       148,999             297,191
Other income (expense), net         1,707       (1,707)     (4)       ?
Provision for income taxes         30,559       9,229     (5)       39,788
GAAP-based net income / Non-GAAP-based net income         106,348       138,063     (6)       244,411
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted       $ 1.80     $ 2.34     (6)     $ 4.14
                                 

(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 22% 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: 
     

        Nine Months Ended March 31, 2013
              Per share
Non-GAAP-based net income       $ 244,411   $ 4.14
Less:                
Amortization         121,579     2.06
Share-based compensation         10,153     0.17
Special charges         17,267     0.29
Other (income) expense, net         (1,707)     (0.03)
GAAP-based provision for income taxes         30,559     0.52
Non-GAAP-based provision for income taxes         (39,788)     (0.67)
GAAP-based net income       $ 106,348   $ 1.80
                 

Reconciliation of selected GAAP-based measures to Non-GAAP based measures for the three months ended December 31, 2012. ($ in thousands except for per share amounts)

                                 
        Three Months Ended December 31, 2012
        GAAP-based Measures     Adjustments     Note       Non-GAAP-based Measures
Cost of revenues                                
Cloud services         18,261       (30)     (1)       18,231
Customer Support         28,277       (107)     (1)       28,170
Professional Service and Other         47,664       (188)     (1)       47,476
Amortization of acquired technology-based intangible assets         23,191       (23,191)     (2)       ?
GAAP-based gross profit/ Non-GAAP-based gross profit         229,456       23,516             252,972
Operating Expenses                                
Research and development         38,718       (331)     (1)       38,387
Sales and marketing         67,977       (1,653)     (1)       66,324
General and administrative         30,005       (865)     (1)       29,140
Amortization of acquired customer-based intangible assets         17,147       (17,147)     (2)       ?
Special charges         2,269       (2,269)     (3)       ?
GAAP-based income from operations / Non-GAAP-based income from operations         67,235       45,781             113,016
Other income (expense), net         1,541       (1,541)     (4)       ?
Provision for income taxes         3,153       12,037     (5)       15,190
GAAP-based net income / Non-GAAP-based net income         61,108       32,203     (6)       93,311
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted       $ 1.04     $ 0.54     (6)     $ 1.58
                                 

(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 5% 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 December 31, 2012
                Per share  
Non-GAAP-based net income       $ 93,311     $ 1.58
Less:                  
Amortization         40,338       0.68
Share-based compensation         3,174       0.05
Special charges         2,269       0.04
Other (income) expense, net         (1,541)       (0.03)
GAAP-based provision for income taxes         3,153       0.05
Non-GAAP-based provision for income taxes         (15,190)       (0.25)
GAAP-based net income       $ 61,108     $ 1.04
                   

Reconciliation of selected GAAP-based measures to Non-GAAP based measures for the six months ended December 31, 2012. ($ in thousands except for per share amounts)

                                 
        Six Months Ended December 31, 2012
        GAAP-based Measures     Adjustments     Note     Non-GAAP-based Measures
Cost of revenues                                
Cloud services         36,544       (30)     (1)       36,514
Customer Support         54,100       (145)     (1)       53,955
Professional Service and Other         96,246       (365)     (1)       95,881
Amortization of acquired technology-based intangible assets         46,973       (46,973)     (2)       ?
GAAP-based gross profit/ Non-GAAP-based gross profit         435,012       47,513             482,525
Operating Expenses                                
Research and development         78,624       (669)     (1)       77,955
Sales and marketing         132,492       (3,319)     (1)       129,173
General and administrative         58,138       (1,748)     (1)       56,390
Amortization of acquired customer-based intangible assets         34,399       (34,399)     (2)       ?
Special charges         11,823       (11,823)     (3)       ?
GAAP-based income from operations / Non-GAAP-based income from operations         107,322       99,471             206,793
Other income (expense), net         1,470       (1,470)     (4)       ?
Provision for income taxes         19,372       8,335     (5)       27,707
GAAP-based net income / Non-GAAP-based net income         80,537       89,666     (6)       170,203
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted       $ 1.37     $ 1.52     (6)     $ 2.89
                                 
(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 19% 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:
     

  Six Months Ended December 31, 2012
    Per share
Non-GAAP-based net income $ 170,203 $ 2.89
Less:    
Amortization 81,372 1.38
Share-based compensation 6,276 0.11
Special charges 11,823 0.20
Other (income) expense, net (1,470) (0.02)
GAAP-based provision for income taxes 19,372 0.33
Non-GAAP-based provision for income taxes (27,707) (0.48)
GAAP-based net income $ 80,537  $ 1.37

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
Professional 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 income from operations 27,303 46,341   73,644
Other income (expense), net (1,804) 1,804 (4) ?
Provision for (recovery of) income taxes (14,036) 23,680 (5) 9,644
GAAP-based net income / 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.
(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, net 1,804 0.03
GAAP-based provision for (recovery of) income taxes (14,036) (0.24)
Non-GAAP-based provision for income taxes (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
Professional 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 income from operations 109,670 135,437     245,107
Other income (expense), net 10,145 (10,145) (4) ?
Provision for (recovery of) income taxes (8,542) 41,295 (5) 32,753
GAAP-based net income / 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.
(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, net (10,145) (0.17)
GAAP-based provision for (recovery of) income taxes (8,542) (0.15)
Non-GAAP-based provision for income taxes (32,753) (0.56)
GAAP-based net income $ 117,203 $ 2.00

(3) The following table provides a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three and nine months ended March 31, 2013: 

  Three Months Ended March 31, 2013  
Currencies  % of Revenue   % of Expenses*  
EURO 29 % 17 %
GBP 8 % 8 %
CAD 6 % 19 %
USD 47 % 42 %
Other 10 % 14 %
Total 100 % 100 %

  Nine Months Ended March 31, 2013  
Currencies  % of Revenue   % of Expenses*  
EURO 26 % 17 %
GBP 8 % 8 %
CAD 6 % 18 %
USD 49 % 43 %
Other 11 % 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.

 

 

 

 

 

 

SOURCE Open Text Corporation

For further information: <p> </p> <p> <b>United States:</b> </p> <p> <b>Greg Secord</b><br/> Vice President, Investor Relations<br/> Open Text Corporation<br/> San Francisco: (415) 963-0825<br/> New York: (646) 843-5621<br/> <u><a href="mailto:gsecord@opentext.com">gsecord@opentext.com</a></u> </p> <p> <b>Canada:</b> </p> <p> <b>Sonya Mehan</b><br/> Senior Manager, Investor Relations<br/> Open Text Corporation<br/> 519-888-7111 ext. 2446<br/> <u><a href="mailto:smehan@opentext.com">smehan@opentext.com</a></u> </p>

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