Open Text Reports Second Quarter Fiscal 2010 Financial Results

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Republic of Portugal 1.95% 15jun2029	EU:OTEX	Euronext	Bond

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WATERLOO, ON, Feb. 3 /PRNewswire-FirstCall/ -- Open Text(TM) Corporation (NASDAQ:OTEX) (TSX:OTC), a leading provider of Enterprise Content Management (ECM) software, today announced unaudited financial results for its second quarter ended December 31, 2009.(1) Total revenue for the second quarter of fiscal 2010 was $247.8 million, up 19% compared to $207.7 million for the same period in the prior fiscal year. License revenue in the second quarter was $72.7 million, up 12% compared to $64.9 million in the second quarter of the prior fiscal year. Adjusted net income in the quarter was $50.1 million or $0.87 per share on a diluted basis, up 47% compared to $34.0 million or $0.64 per share on a diluted basis for the same period in the prior fiscal year. Net income in accordance with U.S. generally accepted accounting principles ("US GAAP") was $21.2 million or $0.37 per share on a diluted basis, compared to $0.8 million or $0.01 per share on a diluted basis for the same period in the prior fiscal year.(2) The cash and cash equivalents balance as of December 31, 2009 was $247.6 million, compared to $275.8 million as of June 30, 2009. During the six months that ended December 31, 2009, the net cash paid for the Vignette acquisition was $90.6 million. Accounts receivable as of December 31, 2009, totaled $143.4 million, compared to $115.8 million as of June 30, 2009, and Days Sales Outstanding (DSO) was 52 days in the second quarter of fiscal 2010, compared to 53 days in the second quarter of fiscal 2009. "We had a very good quarter across the board - in all geographies and verticals," said John Shackleton, President and Chief Executive Officer of Open Text. "Our strong license revenue growth has brought us to where we expected to be on a year to date basis." "We are also pleased with our profitability this quarter, generating a pre-tax adjusted operating margin of 28.8%," said Shackleton. "The integration of Vignette is progressing well and we are very encouraged by the synergies we see from the combined businesses."(4) Please see note (2) below for a reconciliation of non-US GAAP based financial measures used in this press release, to US GAAP based financial measures. Teleconference Call Open Text will host a conference call on February 3, 2010 at 5:00 p.m. ET to discuss the financial results of its second quarter. Date: Wednesday, February 3, 2010 Time: 5:00 p.m. ET/2:00 p.m. PT Length: 60 minutes Where: 416-644-3414 800-814-4859 (Toll Free) Please dial-in approximately 10 minutes before the teleconference is scheduled to begin. A replay of the call will be available beginning February 3, 2010 at 7:00 p.m. ET through 11:59 p.m. on February 17, 2010 and can be accessed by dialing 416-640-1917 and using pass code 4198863 followed by the number sign. For more information or to listen to the call via Web cast, please use the following link: http://www.opentext.com/events/wa-event.html?id=7736136 About Open Text Open Text(TM) is the world's largest independent provider of Enterprise Content Management software. The company's solutions manage information for all types of business, compliance and industry requirements in large companies, government agencies and professional service firms. Open Text supports approximately 46,000 customers in 114 countries and 12 languages. For more information about Open Text, visit http://www.opentext.com/. Certain statements in this press release, including statements about the financial conditions, and results of operations and earnings for Open Text Corporation ("Open Text" or "the Company"), may contain words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on the Company's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. The Company's assumptions, although considered reasonable by the Company at the date of this press release, may provide to be inaccurate and consequently the Company's actual results could differ materially from the expectations set out herein. Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) the future performance, financial and otherwise, of Open Text; (ii) the ability of Open Text to bring new products to market and to increase sales; (iii) the strength of the Company's product development pipeline; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the ECM market; (vi) the Company's competitive position in the ECM market and its ability to take advantage of future opportunities in this market; (vii) the benefits of the Company's products to be realized by customers; and (viii) the demand for the Company's product and the extent of deployment of the company's products in the ECM marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (ii) the possibility that the Company may be unable to meet its future reporting requirements under the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder; (iii) the risks associated with bringing new products to market; (iv) fluctuations in currency exchange rates; (v) delays in the purchasing decisions of the Company's customers; (vi) the competition the Company faces in its industry and/or marketplace; (vii) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (viii) the continuous commitment of the Company's customers; and (ix) demand for the Company's products. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the SEC and other securities regulators. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Notes (1) Based on comparison of historical revenue figures publicly disseminated by companies in the Enterprise Content Management ("ECM") sector. All dollar amounts in this press release are in US Dollars unless otherwise indicated. (2) Use of US Non-GAAP financial measures In addition to reporting financial results in accordance with US GAAP, the Company provides certain non-US GAAP financial measures in this press release that are not in accordance with US GAAP. These non-US GAAP financial measures have certain limitations in that they do not have a standardized meaning and thus the Company's definition may be different from similar non-US GAAP financial measures used by other companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company's financial performance to that of other companies. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of adjusted net income and adjusted EPS both in its reconciliation to the US GAAP financial measures of net income and EPS and its consolidated financial statements, all of which should be considered when evaluating the Company's results. The Company uses the financial measures adjusted EPS and adjusted net income to supplement the information provided in its consolidated financial statements, which are presented in accordance with US GAAP. The presentation of adjusted net income and adjusted EPS is not meant to be a substitute for net income or net income per share presented in accordance with US GAAP, but rather should be evaluated in conjunction with and as a supplement to such US GAAP measures. Open Text strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement the disclosure of the US GAAP measures with certain non-US GAAP measures for the reasons set forth below. Adjusted net income and adjusted EPS are calculated as net income or net income per share on a diluted basis, excluding, where applicable, the amortization of acquired intangible assets, other income (expense), share-based compensation, and restructuring, all net of tax. The Company's management believes that the presentation of adjusted net income and adjusted EPS provides useful information to investors because it excludes non-operational charges. The use of the term "non-operational charge" is defined by the Company as those that do not impact operating decisions taken by the Company's management and is based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports. In the course of such evaluation and for the purpose of making operating decisions, the Company's management excludes certain items from its analysis, such as amortization of acquired intangible assets, restructuring costs, share-based compensation, other income (expense) and the taxation impact of these items. These items are excluded based upon the manner in which management evaluates the business of the Company and are not excluded in the sense that they may be used under US GAAP. The Company believes the provision of supplemental non-US GAAP measures allows investors to evaluate the operational and financial performance of the Company's core business using the same evaluation measures that management uses, and is therefore a useful indication of Open Text's performance or expected performance of recurring operations and facilitates period-to-period comparison of operating performance. As a result, the Company considers it appropriate and reasonable to provide, in addition to US GAAP measures, supplementary non-US GAAP financial measures that exclude certain items from the presentation of its financial results in this press release. The following charts provide a reconciliation of (unaudited) US GAAP based financial measures to non-US GAAP based financial measures referred to in this press release: Reconciliation of (Unaudited) US GAAP based Net Income to Adjusted Net ---------------------------------------------------------------------- Income (in millions of US dollars) for the periods indicated: ------------------------------------------------------------- Three months ended Three months ended December 31, 2009 December 31, 2008 GAAP based "Net Income" $21.2 $0.8 Special charges 10.4 11.4 Amortization of intangibles 23.9 21.9 Other expense 1.7 12.5 Share-based compensation 1.2 1.1 Tax Impact on above (8.3) (13.7) ------------------------------------------------------------------------- Non-GAAP based "Adjusted Net Income" $50.1 $34.0 ------------------------------------------------------------------------- Reconciliation of (Unaudited) US GAAP based EPS to non-US GAAP based EPS ------------------------------------------------------------------------ (calculated on a diluted basis) for the periods indicated: ---------------------------------------------------------- Three months ended Three months ended December 31, 2009 December 31, 2008 GAAP based "Net Income" $0.37 $0.01 Special charges 0.18 0.21 Amortization of intangibles 0.41 0.41 Other expense 0.03 0.23 Share-based compensation 0.02 0.02 Tax Impact on Above (0.14) (0.24) ------------------------------------------------------------------------- Non-GAAP based "Adjusted Net Income" per share $0.87 $ 0.64 ------------------------------------------------------------------------- (3) The following table provides a composition of our major currencies for revenue and expenses, expressed as a percentage, for the second quarter of fiscal 2010: Currencies % of Revenue % of Expenses* --------------------------------------- ---------------- ---------------- EURO................................... 27% 23% GBP.................................... 9% 8% CHF.................................... 6% 3% CAD.................................... 7% 24% USD.................................... 43% 34% Others................................. 8% 8% ---------------- ---------------- Total.................................. 100% 100% ---------------- ---------------- ---------------- ---------------- * Expenses include all cost of revenues and operating expenses included within the Consolidated Statements of Income, except for amortization of intangible assets, depreciation, share-based compensation and special charges. (4) The following table sets forth our revenue type as a percentage of total revenue, certain operating expenses by function and certain operating expenses as a percentage of total revenue compared to our "forecasted" percentage range within our "operating model", as communicated in our investor relations presentation, posted on our corporate website at the following web address: http://www.opentext.com/2/global/company/investors.html Open Text (in '000s Three months ended Six months ended "operating of USD) December 31, 2009 December 31, 2009 model" ----------------------------------------------- Percentage Percentage Revenue: License $ 72,691 29.3% $ 120,020 26.1% 25-30% Customer Support 130,283 52.6% 253,932 55.3% 50-55% Service and Other 44,816 18.1% 85,260 18.6% 20-25% ----------- ----------- Total Revenue 247,790 459,212 ----------- ----------- ----------- ----------- Gross profit excluding amortization of acquired technology- based intangible assets 185,236 74.8% 339,280 73.9% 72-75% Operating expenses: Research and development 34,347 13.9% 65,889 14.3% 14-16% Sales and marketing 53,891 21.7% 104,581 22.8% 24-26% General and administrative 22,377* 9.0% 43,602** 9.5% 9-10% Depreciation 4,398 1.8% 8,545 1.9% 2% Pre-tax adjusted operating margin $ 71,383 28.8% $ 119,332 26.0% 22-27% * Includes share-based compensation of $1,160 ** Includes share-based compensation of $2,669 Reconciliation of (unaudited) pre-tax adjusted operating margin to ------------------------------------------------------------------ US GAAP-based net income: ------------------------- Three months ended Six months ended (in '000s of USD) December 31, 2009 December 31, 2009 Pre-tax adjusted operating margin $ 71,383 $ 119,332 Less: Amortization 23,887 46,946 Share-based compensation 1,160 2,669 Special charges 10,423 29,012 Other (income) expense, net 1,671 (1,769) Interest expense, net 2,716 5,762 Provision for income taxes 10,325 13,781 -------------------- -------------------- US GAAP-based net income for the period $ 21,201 $ 22,931 -------------------- -------------------- OPEN TEXT CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share data) December 31, June 30, 2009 2009 ------------- ------------- (unaudited) ASSETS Cash and cash equivalents..................... $ 247,630 $ 275,819 Short-term investments........................ 8,414 - Accounts receivable trade, net of allowance for doubtful accounts of $5,063 as of December 31, 2009 and $4,208 as of June 30, 2009......................................... 143,446 115,802 Income taxes recoverable...................... 7,555 4,496 Prepaid expenses and other current assets..... 26,255 18,172 Deferred tax assets........................... 18,940 20,621 ------------- ------------- Total current assets........................ 452,240 434,910 Investments in marketable securities.......... - 13,103 Capital assets................................ 55,884 45,165 Goodwill...................................... 712,967 576,111 Acquired intangible assets.................... 359,987 315,048 Deferred tax assets........................... 68,748 69,877 Other assets.................................. 17,809 13,064 Long-term income taxes recoverable............ 43,876 39,958 ------------- ------------- Total assets.................................. $ 1,711,511 $ 1,507,236 ------------- ------------- ------------- ------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities.... $ 122,660 $ 116,992 Current portion of long-term debt........... 3,508 3,449 Deferred revenues........................... 191,736 189,397 Income taxes payable........................ 7,023 10,356 Deferred tax liabilities.................... 2,216 508 ------------- ------------- Total current liabilities................. 327,143 320,702 Long-term liabilities: Accrued liabilities......................... 19,333 21,099 Pension liability........................... 16,188 15,803 Long-term debt.............................. 298,601 299,234 Deferred revenues........................... 12,132 7,914 Long-term income taxes payable.............. 53,770 47,131 Deferred tax liabilities.................... 126,626 108,889 ------------- ------------- Total long-term liabilities 526,650 500,070 Shareholders' equity: Share capital 56,444,939 and 52,716,751 Common Shares issued and outstanding at December 31, 2009 and June 30, 2009, respectively; Authorized Common Shares: unlimited...... 590,328 457,982 Additional paid-in capital.................. 57,233 52,152 Accumulated other comprehensive income...... 82,747 71,851 Retained earnings........................... 127,410 104,479 ------------- ------------- Total shareholders' equity.................... 857,718 686,464 ------------- ------------- Total liabilities and shareholders' equity.... $ 1,711,511 $ 1,507,236 ------------- ------------- ------------- ------------- OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands of U.S. dollars, except share and per share data) (Unaudited) Three months ended Six months ended December 31, December 31, --------------------- --------------------- 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Revenues: License.................... $ 72,691 $ 64,852 $ 120,020 $ 114,926 Customer support........... 130,283 100,438 253,932 198,867 Service and other.......... 44,816 42,361 85,260 76,481 ---------- ---------- ---------- ---------- Total revenues........... 247,790 207,651 459,212 390,274 ---------- ---------- ---------- ---------- Cost of revenues: License.................... 4,633 5,281 7,778 8,174 Customer support........... 21,493 17,356 42,432 32,923 Service and other.......... 36,428 31,881 69,722 59,610 Amortization of acquired technology-based intangible assets......... 15,152 11,799 29,294 22,546 ---------- ---------- ---------- ---------- Total cost of revenues... 77,706 66,317 149,226 123,253 ---------- ---------- ---------- ---------- Gross profit................. 170,084 141,334 309,986 267,021 ---------- ---------- ---------- ---------- Operating expenses: Research and development... 34,347 29,948 65,889 58,526 Sales and marketing........ 53,891 49,347 104,581 94,179 General and administrative. 22,377 18,280 43,602 36,667 Depreciation............... 4,398 2,920 8,545 5,618 Amortization of acquired customer-based intangible assets.................... 8,735 10,138 17,652 18,353 Special charges............ 10,423 11,446 29,012 11,446 ---------- ---------- ---------- ---------- Total operating expenses. 134,171 122,079 269,281 224,789 ---------- ---------- ---------- ---------- Income from operations....... 35,913 19,255 40,705 42,232 ---------- ---------- ---------- ---------- Other income (expense), net.. (1,671) (12,464) 1,769 (11,854) Interest expense, net........ (2,716) (5,347) (5,762) (8,341) ---------- ---------- ---------- ---------- Income before income taxes... 31,526 1,444 36,712 22,037 Provision for income taxes... 10,325 683 13,781 6,615 ---------- ---------- ---------- ---------- Net income for the period.... $ 21,201 $ 761 $ 22,931 $ 15,422 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income per share-basic... $ 0.38 $ 0.01 $ 0.41 $ 0.30 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net income per share-diluted. $ 0.37 $ 0.01 $ 0.40 $ 0.29 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average number of Common Shares outstanding- basic....................... 56,403 51,873 55,895 51,586 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average number of Common Shares outstanding- diluted..................... 57,448 53,242 56,964 52,955 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) (Unaudited) Three months ended Six months ended December 31, December 31, Cash flows from operating --------------------- --------------------- activities: 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Net income for the period.... $ 21,201 $ 761 $ 22,931 $ 15,422 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amorti- zation................... 28,285 24,857 55,491 46,517 In-process research and development.............. - 121 - 121 Share-based compensation expense.................. 1,943 1,110 5,449 2,533 Employee long-term incentive plan........... 2,971 1,746 5,646 2,805 Excess tax benefits on share-based compensation expense.................. (6) (24) (697) (6,653) Pension expense........... 218 906 410 906 Amortization of debt issuance costs........... 468 326 734 550 Unrealized (gain) loss on financial instruments.... (1,482) 1,529 (3,872) 807 Loss on sale and write down capital assets...... 453 269 453 269 Unrealized gain on marketable securities.... - - (4,353) - Deferred taxes............ 1,657 4,171 (1,300) 3,915 Changes in operating assets and liabilities: Accounts receivable....... (6,541) 4,844 1,387 32,790 Prepaid expenses and other current assets........... (105) 456 (3,323) (1,470) Income taxes.............. (3,217) 1,738 (8,004) 6,469 Accounts payable and accrued liabilities...... (2,467) 2,204 (11,810) (16,046) Deferred revenue.......... (11,592) (6,183) (24,029) (25,613) Other assets.............. 682 1,012 1,857 1,334 --------------------- ---------- ---------- Net cash provided by operating activities....... 32,468 39,843 36,970 64,656 Cash flows from investing activities: Additions of capital assets-net............... (4,099) 1,793 (11,764) (2,094) Purchase of Vignette Corporation, net of cash acquired................. - - (90,600) - Purchase of Captaris Inc., net of cash acquired..... - (101,033) - (101,033) Purchase of eMotion LLC, net of cash acquired..... (556) - (556) (3,635) Purchase of a division of Spicer Corporation....... - - - (10,836) Purchase consideration for prior period acquisitions (3,439) (9,073) (8,240) (12,366) Investments in marketable securities............... - - - (3,608) Maturity of short-term investments.............. 11,354 - 38,525 - --------------------- ---------- ---------- Net cash used in investing activities................. 3,260 (108,313) (72,635) (133,572) Cash flow from financing activities: Excess tax benefits on share-based compensation expense.................. 6 24 697 6,653 Proceeds from issuance of Common Shares............ 1,665 497 6,142 6,039 Repayment of long-term debt..................... (870) (854) (1,734) (1,721) Debt issuance costs....... - - (1,024) - --------------------- ---------- ---------- Net cash provided by financing activities....... 801 (333) 4,081 10,971 Foreign exchange gain (loss) on cash held in foreign currencies (1,089) (8,460) 3,395 (24,101) Decrease in cash and cash equivalents during the period..................... 35,440 (77,263) (28,189) (82,046) Cash and cash equivalents at beginning of the period.... 212,190 250,133 275,819 254,916 --------------------- ---------- ---------- Cash and cash equivalents at end of the period.......... $ 247,630 $ 172,870 $ 247,630 $ 172,870 --------------------- ---------- ---------- --------------------- ---------- ---------- DATASOURCE: Open Text Corporation CONTACT: Paul McFeeters, Chief Financial Officer, Open Text Corporation, (905) 762-6121, ; Greg Secord, Vice President, Investor Relations, Open Text Corporation, (519) 888-7111 ext.2408,

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OTEX Republic of Portugal 1.95% 15jun2029