OpenText Reports First Quarter Fiscal Year 2014 Financial Results

CNW Group

WATERLOO, Ontario , Oct. 30, 2013 /CNW/ - Open TextCorporation (OTEX) (OTC.TO) announced today its financial results for the first quarter ended September 30, 2013 .

Financial Highlights for Q1 FY14 (1)

  • Total revenue was $324.5 million , essentially flat Y/Y
  • License revenue was $55.3 million , essentially flat Y/Y
  • Customer Support revenue was $168.4 million , up 3.9% Y/Y
  • Non-GAAP-based EPS, diluted was $1.37 compared to $1.31 , up 4.6% Y/Y; GAAP-based EPS, diluted was $0.52 compared to $0.33 Y/Y (2)
  • Non-GAAP-based income from operations was $99.2 million and 31% of revenues; GAAP-based income from operations was $52.0 million and 16% of revenues (2)
  • Operating cash flow was $79.9 million , compared to $61.8 million Y/Y, up 29.4%Y/Y, with an ending cash balance of $491.1 million .

"Our Fiscal Year 2014 Q1 results demonstrated our Intelligent Growth strategy, with operating cash flow growth of 29.4%, adjusted operating margins of 30.6% and non-GAAP EPS growth of 4.6% - on essentially flat year over year revenues. We could not overcome the macro challenges towards the end of the quarter, predominantly driven by the US government shut down and its widespread effects on pausing customer spending decisions," said OpenText CEO Mark J. Barrenechea .

Barrenechea further added, "I am delighted that our customers are anticipating Red Oxygen, the biggest release of software in the Company's history which will further our EIM products and strategy."

Business Highlights

  • Services, financial and healthcare industries saw the most demand
  • 5 license transactions over $1 million and 8 license transactions between $500K and $1 million
  • Customer successes in the quarter include Bank of Hawaii , National Security Technologies LLC, Volkswagen India, NRI in Japan , and the Dangote Group
  • Completed the acquisition of Cordys to expand BPM and case management solutions
  • Positioned as a leader in the Gartner 2013 Magic Quadrant for Enterprise Content Management
  • OpenText positioned as an ECM leader by leading industry analyst firm (Forrester Research, Inc.)
  • Radicati Group names OpenText a "Top Player" in ECM market
  • OpenText leads the messaging services market (Davidson Consulting)
  • Introduced integrated transmittal management and secure managed file transfer solution
  • Announced new strategic partnership with ExactTarget
  • Named one of Canada's Top 100 Employers

Dividend Program Highlights

Pursuant to the previously announced policy to declare non-cumulative quarterly dividends to holders of the Company's Common Shares, the Board of Directors has declared a quarterly dividend of $0.30 per share with respect to outstanding Common Shares of the Company for the quarter ended September 30, 2013 . The quarterly dividend is payable on December 20, 2013 to shareholders of record on November 29, 2013 .

Summary of Quarterly Results


Q1 FY14

Q4 FY13

Q1 FY13

% Change

(Q/Q)


% Change

(Y/Y)


Revenue (million)

$

324.5

$

347.3

$

326.2

(6.6)%


(0.5)%


GAAP-based gross margin

67.2%

66.0%

62.7%

120

bps

450

bps

GAAP-based operating margin

16.0%

14.2%

12.3%

180

bps

370

bps

GAAP-based EPS, diluted

$

0.52

$

0.71

$

0.33

(26.8)%


57.6%


Non-GAAP-based gross margin (2)

73.9%

72.9%

70.0%

100

bps

390

bps

Non-GAAP-based operating margin (2)

30.6%

29.5%

28.7%

110

bps

190

bps

Non-GAAP-based EPS, diluted (2)

$

1.37

$

1.43

$

1.31

(4.2)%


4.6%


Conference Call Information

The public is invited to listen to the earnings conference call today at 5:00 p.m. ET (2:00 p.m. PT) by dialing 800-814-4860 (toll-free) or 416-644-3416 (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://investors.opentext.com/eventdetail.cfm?EventID=136033

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 November 5, 2013 and can be accessed by dialing 877-289-8525 (toll-free) or 416-640-1917 (international) and entering the confirmation code: 4643777 followed by the number sign.

Please see below note (2) for a reconciliation of non-U.S. GAAP-based financial measures used in this press release, to U.S. 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 focus of Open Text Corporation ("OpenText" or "the Company") in Fiscal 2014 on growth in earnings and cash flows, creating value through investments in broader EIM capabilities, distribution, the Company's presence in the cloud and in growth markets, its financial conditions, results of operations and earnings; declaration of quarterly dividends; and other matters, are considered forward-looking statements or information under applicable securities laws. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to, (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. 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. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For more information, please contact:

United States :

Greg Secord
Vice President, Investor Relations
Open Text Corporation
San Francisco : 415-963-0825
gsecord@opentext.com

Canada :

Sonya Mehan
Senior Manager, Investor Relations
Open Text Corporation
Waterloo : 519-888-7111 ext. 2446
smehan@opentext.com

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

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share data)



September 30, 2013


June 30, 2013


(Unaudited)



ASSETS




Cash and cash equivalents

$

491,147


$

470,445

Accounts receivable trade, net of allowance for doubtful accounts of $4,261 as of September 30, 2013 and $4,871 as of June 30, 2013

153,449


174,927

Income taxes recoverable

23,027


17,173

Prepaid expenses and other current assets

47,537


43,464

Deferred tax assets

10,365


11,082

Total current assets

725,525


717,091

Property and equipment

91,254


88,364

Goodwill

1,267,317


1,246,872

Acquired intangible assets

349,651


363,615

Deferred tax assets

135,226


135,695

Other assets

27,619


25,082

Deferred charges

63,819


67,633

Long-term income taxes recoverable

10,461


10,465

Total assets

$

2,670,872


$

2,654,817

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$

178,403


$

188,443

Current portion of long-term debt

55,473


51,742

Deferred revenues

268,020


282,387

Income taxes payable

17,535


4,184

Deferred tax liabilities

1,142


1,127

Total current liabilities

520,573


527,883

Long-term liabilities:




Accrued liabilities

20,322


17,849

Deferred credits

13,460


11,608

Pension liability

25,489


24,509

Long-term debt

502,500


513,750

Deferred revenues

13,750


11,830

Long-term income taxes payable

144,210


140,508

Deferred tax liabilities

71,021


69,672

Total long-term liabilities

790,752


789,726

Shareholders' equity:




Share capital




59,087,746 and 59,028,886 Common Shares issued and outstanding at September 30, 2013 and June 30, 2013, respectively; Authorized Common Shares: unlimited

653,886


651,642

Additional paid-in capital

106,550


101,865

Accumulated other comprehensive income

42,391


39,890

Retained earnings

585,794


572,885

Treasury stock, at cost (610,878 shares at September 30, 2013 and at June 30, 2013, respectively)

(29,074)


(29,074)

Total shareholders' equity

1,359,547


1,337,208

Total liabilities and shareholders' equity

$

2,670,872


$

2,654,817

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands of U.S. dollars, except share and per share data)

(unaudited)



Three Months Ended
September 30,


2013


2012

Revenues:




License

$

55,306


$

55,656

Cloud services

41,647


43,873

Customer support

168,440


162,096

Professional service and other

59,067


64,569

Total revenues

324,460


326,194

Cost of revenues:




License

3,036


4,168

Cloud services

14,265


17,982

Customer support

22,170


25,823

Professional service and other

45,435


50,052

Amortization of acquired technology-based intangible assets

21,530


23,782

Total cost of revenues

106,436


121,807

Gross profit

218,024


204,387

Operating expenses:




Research and development

40,216


39,906

Sales and marketing

69,413


64,515

General and administrative

28,886


26,964

Depreciation

6,458


6,109

Amortization of acquired customer-based intangible assets

17,277


17,252

Special charges

3,731


9,554

Total operating expenses

165,981


164,300

Income from operations

52,043


40,087

Other income (expense), net

1,926


(71)

Interest expense, net

(4,385)


(4,368)

Income before income taxes

49,584


35,648

Provision for (recovery of) income taxes

18,954


16,219

Net income for the period

$

30,630


$

19,429

Earnings per share—basic

$

0.52


$

0.33

Earnings per share—diluted

$

0.52


$

0.33

Weighted average number of Common Shares outstanding—basic

59,063


58,424

Weighted average number of Common Shares outstanding—diluted

59,378


58,919

Dividends declared per Common Share

$

0.30


$

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)

(unaudited)



Three Months Ended
September 30,


2013


2012

Net income for the period

$

30,630


$

19,429

Other comprehensive income—net of tax:




Net foreign currency translation adjustments

241


(476)

Unrealized gain (loss) on cash flow hedges




Unrealized gain

1,520


2,500

(Gain) loss reclassified into net income

584


(556)

Actuarial gain (loss) relating to defined benefit pension plans




Actuarial gain (loss)

83


(181)

Amortization of actuarial loss into net income

73


72

Total other comprehensive income, net, for the period

2,501


1,359

Total comprehensive income

$

33,131


$

20,788




OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)



Three Months Ended
September 30,


2013


2012

Cash flows from operating activities:




Net income for the period

$

30,630


$

19,429

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization of intangible assets

45,265


47,143

Share-based compensation expense

4,612


3,102

Excess tax benefits on share-based compensation expense

(73)


(352)

Pension expense

230


242

Amortization of debt issuance costs

525


537

Amortization of deferred charges and credits

2,967


2,929

Loss on sale and write down of property and equipment

21


2

Deferred taxes

(1,869)


861

Impairment and other non cash charges


Changes in operating assets and liabilities:




Accounts receivable

28,778


19,442

Prepaid expenses and other current assets

(3,432)


3,024

Income taxes

7,502


4,373

Deferred charges and credits

2,700


(436)

Accounts payable and accrued liabilities

(17,970)


(20,255)

Deferred revenue

(18,560)


(18,070)

Other assets

(1,402)


(208)

Net cash provided by operating activities

79,924


61,763

Cash flows from investing activities:




Additions of property and equipment

(8,315)


(5,038)

Purchase of EasyLink Services International Corporation, net of cash acquired


(315,331)

Purchase of Cordys Holding B.V., net of cash acquired

(30,588)


Purchase consideration for prior period acquisitions

(222)


(217)

Other investing activities

(1,500)


Net cash used in investing activities

(40,625)


(320,586)

Cash flows from financing activities:




Excess tax benefits on share-based compensation expense

73


352

Proceeds from issuance of Common Shares

1,823


3,993

Repayment of long-term debt

(7,668)


(7,667)

Payments of dividends to shareholders

(17,721)


Net cash provided by (used in) financing activities

(23,493)


(3,322)

Foreign exchange gain (loss) on cash held in foreign currencies

4,896


4,633

Increase (decrease) in cash and cash equivalents during the period

20,702


(257,512)

Cash and cash equivalents at beginning of the period

470,445


559,747

Cash and cash equivalents at end of the period

$

491,147


$

302,235



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 U.S. GAAP, the Company provides certain financial measures that are not in accordance with U.S. GAAP (non-GAAP).These non-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-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 these non-GAAP financial measures both in its reconciliation to the U.S. GAAP financial measures and its consolidated financial statements, all of which should be considered when evaluating the Company's results.




The Company uses these non-GAAP financial measures to supplement the information provided in its consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of non-GAAP financial measures are not meant to be a substitute for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a supplement to such U.S. 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 U.S. GAAP measures with certain non-GAAP measures defined below.




Non-GAAP-based net income and non-GAAP-based EPS are calculated as net income or net income per share on a diluted basis, excluding, the amortization of acquired intangible assets, other income (expense), share-based compensation, and special charges, all net of tax. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit and the amortization of acquired technology-based intangible assets. Non-GAAP-based gross margin is calculated as non-GAAP-based gross profit expressed as a percentage of revenue. Non-GAAP-based income from operations is calculated as income from operations, excluding, the amortization of acquired intangible assets, special charges, and share-based compensation. Non-GAAP-based operating margin is calculated as non-GAAP-based income from operations expressed as a percentage of revenue.




The Company's management believes that the presentation, of the above defined non-GAAP financial measures, provides useful information to investors because they portray the financial results of the Company before the impact of certain non-operational charges. The use of the term "non-operational charge" is defined for this purpose as an expense that does not impact the ongoing 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, including amortization of acquired intangible assets, special charges, 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 U.S. GAAP.




The Company believes the provision of supplemental non-GAAP measures allow 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 OpenText's performance or expected performance of future operations and facilitates period-to-period comparison of operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary non-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 U.S. GAAP-based financial measures to non-U.S. 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 September 30, 2013.

(In thousands except for per share amounts)


Three Months Ended

September 30, 2013


GAAP-based

Measures

GAAP-based Measures

% of Revenue

Adjustments

Note

Non-GAAP-based

Measures

Non-GAAP-
based Measures

% of Revenue

Cost of revenues







Cloud services

$

14,265


$

(38)

(1)

$

14,227


Customer support

22,170


(97)

(1)

22,073


Professional service and other

45,435


(170)

(1)

45,265


Amortization of acquired technology-based intangible assets

21,530


(21,530)

(2)


GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)

218,024

67.2%

21,835

(3)

239,859

73.9%

Operating expenses







Research and development

40,216


(728)

(1)

39,488


Sales and marketing

69,413


(2,353)

(1)

67,060


General and administrative

28,886


(1,226)

(1)

27,660


Amortization of acquired customer-based intangible assets

17,277


(17,277)

(2)


Special charges

3,731


(3,731)

(4)


GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)

52,043

16.0%

47,150

(5)

99,193

30.6%

Other income (expense), net

1,926


(1,926)

(6)


Provision for (recovery of) income taxes

18,954


(5,681)

(7)

13,273


GAAP-based net income / Non-GAAP-based net income

30,630


50,905

(8)

81,535


GAAP-based earnings per share /
Non GAAP-based earnings per share-diluted

$

0.52


$

0.85

(8)

$

1.37




(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)

GAAP-based and Non-GAAP-based gross profit stated in dollar, and gross margin stated as a percentage of revenue.

(4)

Adjustment relates to the exclusion of Special charges from our Non-GAAP-based operating expenses as Special charges are generally incurred in the periods following the relevant acquisitions and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.

(5)

GAAP-based and Non-GAAP-based income from operations stated in dollar, and operating margin stated as a percentage of revenue.

(6)

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 is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.

(7)

Adjustment relates to differences between the GAAP-based tax provision of approximately 38% 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.

(8)

Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income:



Three Months Ended
September 30, 2013



Per share diluted

Non-GAAP-based net income

$

81,535

$

1.37

Less:



Amortization

38,807

0.65

Share-based compensation

4,612

0.08

Special charges

3,731

0.06

Other (income) expense, net

(1,926)

(0.03)

GAAP-based provision for (recovery of) income taxes

18,954

0.32

Non-GAAP-based provision for income taxes

(13,273)

(0.23)

GAAP-based net income

$

30,630

$

0.52


Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended June 30, 2013.

(In thousands except for per share amounts)


Three Months Ended
June 30, 2013


GAAP-based

Measures

GAAP-based Measures

% of Revenue

Adjustments

Note

Non-GAAP-based

Measures

Non-GAAP-
based Measures

% of Revenue

Cost of revenues







Cloud services

$

17,696


$

(48)

(1)

$

17,648


Customer support

25,351


(159)

(1)

25,192


Professional service and other

47,879


(255)

(1)

47,624


Amortization of acquired technology-based intangible assets

23,579


(23,579)

(2)


GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)

229,233

66.0%

24,041

(3)

253,274

72.9%

Operating expenses







Research and development

42,383


(526)

(1)

41,857


Sales and marketing

79,338


(2,476)

(1)

76,862


General and administrative

27,857


(1,958)

(1)

25,899


Amortization of acquired customer-based intangible assets

17,197


(17,197)

(2)


Special charges

6,767


(6,767)

(4)


GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)

49,473

14.2%

52,965

(5)

102,438

29.5%

Other income (expense), net

(4,180)


4,180

(6)


Provision for (recovery of) income taxes

(869)


14,652

(7)

13,783


GAAP-based net income / Non-GAAP-based net income

42,172


42,493

(8)

84,665


GAAP-based earnings per share /
Non GAAP-based earnings per share-diluted

$

0.71


$

0.72

(8)

$

1.43




(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)

GAAP-based and Non-GAAP-based gross profit stated in dollar, and gross margin stated as a percentage of revenue.

(4)

Adjustment relates to the exclusion of Special charges from our Non-GAAP-based operating expenses as Special charges are generally incurred in the periods following the relevant acquisitions and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.

(5)

GAAP-based and Non-GAAP-based income from operations stated in dollar, and operating margin stated as a percentage of revenue.

(6)

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 is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.

(7)

Adjustment relates to differences between the GAAP-based tax recovery of approximately 2% 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.

(8)

Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income:



Three Months Ended
June 30, 2013



Per share diluted

Non-GAAP-based net income

$

84,665

$

1.43

Less:



Amortization

40,776

0.69

Share-based compensation

5,422

0.09

Special charges

6,767

0.11

Other (income) expense, net

4,180

0.07

GAAP-based provision for (recovery of) income taxes

(869)

(0.01)

Non-GAAP-based provision for income taxes

(13,783)

(0.23)

GAAP-based net income

$

42,172

$

0.71



Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the three months ended September 30, 2012.

(In thousands except for per share amounts)


Three Months Ended
September 30, 2012


GAAP-based

Measures

GAAP-based Measures

% of Revenue

Adjustments

Note

Non-GAAP-based

Measures

Non-GAAP-based Measures

% of Revenue

Cost of revenues:







Customer support

$

25,823


$

(38)

(1)

$

25,785


Professional service and other

50,052


(177)

(1)

49,875


Amortization of acquired technology-based intangible assets

23,782


(23,782)

(2)


GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)

204,387

62.7%

23,997

(3)

228,384

70.0%

Operating expenses







Research and development

39,906


(338)

(1)

39,568


Sales and marketing

64,515


(1,666)

(1)

62,849


General and administrative

26,964


(883)

(1)

26,081


Amortization of acquired customer-based intangible assets

17,252


(17,252)

(2)


Special charges

9,554


(9,554)

(4)


GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)

40,087

12.3%

53,690

(5)

93,777

28.7%

Other income (expense), net

(71)


71

(6)


Provision for (recovery of) income taxes

16,219


(3,702)

(7)

12,517


GAAP-based net income / Non-GAAP-based net income

19,429


57,463

(8)

76,892


GAAP-based earnings per share /
Non GAAP-based earnings per share-diluted

$

0.33


$

0.98

(8)

$

1.31




(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)

GAAP-based and Non-GAAP-based gross profit stated in dollar, and gross margin stated as a percentage of revenue.

(4)

Adjustment relates to the exclusion of Special charges from our Non-GAAP-based operating expenses as Special charges are generally incurred in the periods following the relevant acquisitions and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.

(5)

GAAP-based and Non-GAAP-based income from operations stated in dollar, and operating margin stated as a percentage of revenue.

(6)

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 is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.

(7)

Adjustment relates to differences between the GAAP-based tax provision of approximately 45% 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.

(8)

Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income:



Three Months Ended
September 30, 2012



Per share diluted

Non-GAAP-based net income

$

76,892

$

1.31

Less:



Amortization

41,034

0.70

Share-based compensation

3,102

0.05

Special charges

9,554

0.16

Other (income) expense, net

71

GAAP-based provision for (recovery of) income taxes

16,219

0.28

Non-GAAP-based provision for income taxes

(12,517)

(0.21)

GAAP-based net income

$

19,429

$

0.33



(3)

The following tables provide a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three months ended September 30, 2013 and 2012:


Three Months Ended
September 30, 2013


Three Months Ended
September 30, 2012

Currencies

% of Revenue

% of Expenses*


% of Revenue

% of Expenses*

EURO

27

%

17

%


23

%

16

%

GBP

8

%

9

%


9

%

9

%

CAD

5

%

17

%


6

%

17

%

USD

49

%

42

%


51

%

44

%

Other

11

%

15

%


11

%

14

%

Total

100

%

100

%


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

Contact:

http://www.opentext.com

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