EX-99.1 2 dex991.htm PRESS RELEASE

Press Release

Exhibit 99.1

Open Text Reports Fourth Quarter and Fiscal Year-End 2008 Financial Results

WATERLOO, ON, Aug. 19 /CNW/ - Open Text(TM) Corporation (NASDAQ:OTEX) (TSX:OTC), a leading provider of Enterprise Content Management (ECM) software, today announced unaudited financial results for its fourth quarter and fiscal year ended June 30, 2008. (1)

Total revenue for the fourth quarter was $200.3 million, up 14% compared to $175.2 million for the same period in the prior fiscal year. License revenue in the fourth quarter was $68.2 million, up 15% compared to $59.2 million in the fourth quarter of the prior fiscal year.

Adjusted net income in the quarter was $33.3 million or $0.63 per share on a diluted basis, up 25% compared to $26.7 million or $0.52 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 $27.3 million or $0.51 per share on a diluted basis, compared to $8.2 million or $0.16 per share on a diluted basis for the same period in the prior fiscal year. (2)

Total revenue for fiscal year 2008 was $725.5 million, up 22% compared to $595.7 million for the previous fiscal year. License revenue for fiscal year 2008 was $219.1 million, up 20% compared to $182.5 million in the previous fiscal year.

Adjusted net income for fiscal year 2008 was $107.0 million, or $2.03 per share on a diluted basis, up 44% compared to adjusted net income for the previous fiscal year of $74.3 million, or $1.46 per share on a diluted basis. Net income for fiscal year 2008 in accordance with US GAAP was $53.0 million, or $1.01 per share on a diluted basis, compared to the prior fiscal year’s net income of $21.7 million, or $0.43 per share on a diluted basis. (2)

Operating cash flow in the fourth quarter of fiscal 2008 was $44.6 million, compared to $28.5 million in the fourth quarter of the prior fiscal year. For the full 2008 fiscal year, Open Text generated $166.0 million in operating cash flow compared to $110.9 million in fiscal 2007.

The cash, cash equivalents and short-term investments balance as of June 30, 2008 was $254.9 million. Accounts receivable as of June 30, 2008, totaled $134.4 million, compared to $128.8 million as of June 30, 2007, and Days Sales Outstanding (DSO) was 60 days in the fourth quarter of fiscal 2008, compared to 66 days in the fourth quarter of fiscal 2007.

“I am very pleased with our performance in the quarter and for the full fiscal year,” said John Shackleton, President and Chief Executive Officer of Open Text. “We have achieved our goal of strong license growth, record profitability and exemplary cash flow accumulation. As we enter into fiscal 2009, we remain confident in our momentum and look forward to continued growth in the coming year.”

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 August 19, 2008 at 5:00 p.m. ET to discuss the final financial results of its fourth quarter and fiscal year-end 2008.

Date: Tuesday, August 19, 2008

Time: 5:00 p.m. ET/2:00 p.m. PT

Length: 60 minutes

Where: 416-640-1907

Please dial-in approximately 10 minutes before the teleconference is scheduled to begin. A replay of the call will be available beginning August 19, 2008 at 7:00 p.m. ET through 11:59 p.m. on September 2, 2008 and can be accessed by dialing 416-640-1917 and using pass code 21276674 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 (equal sign) 6789650.

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 www.opentext.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements, including statements about the financial conditions, and results of operations and earnings for Open Text Corporation (“Open Text” or “the Company”). Forward-looking statements in this press release are not promises or guarantees of future performance and are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from those anticipated. The Company cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The results included in this press release are unaudited and therefore are deemed to be forward-looking statements. Factors that may cause actual results or earnings to differ materially from such forward-looking statements include, among others, 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; (ix) demand for

the Company’s products; and (10) other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission (SEC), including the Company’s Annual Report on Form 10-K for the year ended June 30, 2007. Forward-looking statements are based on management’s beliefs and opinions at the time the statements are made, and the Company does not undertake any obligation to update forward-looking statements should circumstances or management’s beliefs or opinions change.

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) In addition to these GAAP and adjusted results the Company has provided financial information that adds back maintenance revenue eliminated due to the impact of purchase accounting entries on deferred revenue and the impact of interest expense. Management believes that the furnishing of these adjustments provides a consistent basis for comparison between quarters and help to more accurately reflect Open Text’s underlying operating results.

		Three months ended June 30, 2008
Adjusted Income		$	33.3
Net Interest Expense			0.7
Income tax effect			(0.2	)
Non-GAAP net income		$	33.8
Adjusted EPS Diluted		$	0.63
Non GAAP Adjustments (net of tax)
- Interest			0.01
Non-GAAP EPS		$	0.64
		Twelve months ended June 30, 2008
GAAP Revenue		$	725.5
Maintenance revenue adjustment for purchase accounting			1.6
Non-GAAP revenue		$	727.1
Adjusted Income		$	107.0
Maintenance revenue adjustment for purchase accounting			1.6
Net Interest Expense			22.9
Income tax effect			(7.4	)
Non-GAAP net income		$	124.1
Adjusted EPS Diluted		$	2.03
Non GAAP Adjustments (net of tax)
- Maintenance			0.02
- Interest			0.30
Non-GAAP EPS		$	2.35

(3) 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 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 (loss), 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 intangibles, restructuring costs, 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 reconciliation (unaudited) of US GAAP based financial measures to non-US GAAP based financial measures referred to in this press release:

Reconciliation (unaudited) of US GAAP based Net Income to Adjusted Net Income (in millions of US dollars) for the quarters ended June 30, 2008 and 2007:

		Three months ended June 30, 2008				Three months ended June 30, 2007
GAAP based “Net Income”		$	27.3			$	8.2
Special Charges/(recovery)			(0.3	)			7.7
Amortization of intangibles			18.4				18.0
Other (Income)/Expense			(11.3	)			(1.1	)
Share-based compensation			1.0				1.5
Tax Impact on Above			(1.8	)			(7.6	)
Non-GAAP based “Adjusted Net Income”		$	33.3			$	26.7
Reconciliation (unaudited) of US GAAP based EPS to non-US GAAP based EPS (calculated on a diluted basis) for the quarters ended June 30, 2008 and 2007:
		Three months ended June 30, 2008				Three months ended June 30, 2007
GAAP based “Net Income”		$	0.51			$	0.16
Special Charges/(recovery)			(0.01	)			0.15
Amortization of intangibles			0.35				0.35
Other (Income)/Expense			(0.21	)			(0.02	)
Share-based compensation			0.02				0.03
Tax Impact on Above			(0.03	)			(0.15	)
Non-GAAP based “Adjusted Net Income”		$	0.63			$	0.52
Reconciliation (unaudited) of US GAAP based Net Income to Adjusted Net Income (in millions of US dollars) for the fiscal years ended June 30, 2008 and 2007:
		Twelve months ended June 30, 2008				Twelve months ended June 30, 2007
GAAP based “Net Income”		$	53.0			$	21.7
Special Charges/(recovery)			(0.4	)			12.9
Amortization of intangibles			72.3				60.8
Other (Income)/Expense			1.0				(1.8	)
Share-based compensation			3.8				5.4
Tax Impact on Above			(22.7	)			(24.7	)
Non-GAAP based “Adjusted Net Income”		$	107.0			$	74.3

Reconciliation (unaudited) of US GAAP based EPS to non-US GAAP based EPS (calculated on a diluted basis) for the fiscal years ended June 30, 2008 and 2007:

		Twelve months ended June 30, 2008				Twelve months ended June 30, 2007
GAAP based “Net Income”		$	1.01			$	0.43
Special Charges/(recovery)			(0.01	)			0.25
Amortization of intangibles			1.37				1.19
Other (Income)/Expense			0.02				(0.03	)
Share-based compensation			0.07				0.11
Tax Impact on Above			(0.43	)			(0.49	)
Non-GAAP based “Adjusted Net Income”		$	2.03			$	1.46

OPEN TEXT CORPORATION

CONSOLIDATED BALANCE SHEETS

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

		June 30,
		2008			2007
		(unaudited)			(audited)
ASSETS
Current assets:
Cash and cash equivalents		$	254,916		$	149,979
Accounts receivable trade, net of allowance for doubtful accounts of $3,974 as of June 30, 2008 and $2,089 as of June 30, 2007			134,396			128,781
Income taxes recoverable			48,310			31,060
Prepaid expenses and other current assets			10,544			10,368
Deferred tax assets			13,455			30,248
Total current assets			461,621			350,436
Capital assets			43,582			43,614
Goodwill			564,648			528,312
Acquired intangible assets			281,824			343,324
Deferred tax assets			59,881			42,078
Other assets			10,491			9,524
Long-term income taxes recoverable			30,348			9,557
		$	1,452,395		$	1,326,845
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	99,035		$	100,211
Current portion of long-term debt			3,486			4,048
Deferred revenues			176,967			143,097
Income taxes payable			43,202			33,705
Deferred tax liabilities			4,876			1,601
Total current liabilities			327,566			282,662
Long-term liabilities:
Accrued liabilities			20,513			22,516
Long-term debt			304,301			366,765
Deferred revenues			2,573			3,840
Long-term income taxes payable			42,697			—
Deferred tax liabilities			109,912			120,019
Total long-term liabilities			479,996			513,140
Minority interest			8,672			6,975
Shareholders’ equity:
Share capital
51,151,666 and 50,180,118 Common Shares issued and outstanding at June 30, 2008 and June 30, 2007, respectively;
Authorized Common Shares: unlimited			438,471			426,188
Additional paid-in capital			39,330			35,311
Accumulated other comprehensive income			110,819			68,034
Retained earnings (deficit)			47,541			(5,465	)
Total shareholders’ equity			636,161			524,068
		$	1,452,395		$	1,326,845

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

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

		Year ended June 30,
		2008				2007				2006
		(unaudited)				(audited)				(audited)
Revenues:
License		$	219,103			$	182,507			$	122,520
Customer support			363,580				287,570				183,878
Service			142,849				125,587				103,164
Total revenues			725,532				595,664				409,562
Cost of revenues:
License			15,415				13,652				11,196
Customer support			58,764				46,433				28,908
Service			117,037				105,955				83,469
Amortization of acquired technology intangible assets			41,515				36,206				18,900
Total cost of revenues			232,731				202,246				142,473
			492,801				393,418				267,089
Operating expenses:
Research and development			105,894				79,102				58,469
Sales and marketing			174,185				150,958				104,225
General and administrative			69,985				61,092				44,960
Depreciation			12,017				13,846				11,103
Amortization of acquired intangible assets			30,759				24,586				9,199
Special charges (recoveries)			(418	)			12,908				26,182
Total operating expenses			392,422				342,492				254,138
Income from operations			100,379				50,926				12,951
Other income (expense), net			(1,023	)			1,742				(4,788	)
Interest income (expense), net			(22,859	)			(20,282	)			1,487
Income before income taxes			76,497				32,386				9,650
Provision for income taxes			22,993				10,334				4,093
Net income before minority interest			53,504				22,052				5,557
Minority interest			498				392				579
Net income for the year		$	53,006			$	21,660			$	4,978
Net income per share - basic		$	1.04			$	0.44			$	0.10
Net income per share - diluted		$	1.01			$	0.43			$	0.10
Weighted average number of Common Shares outstanding - basic			50,779,530				49,392,845				48,666,139
Weighted average number of Common Shares outstanding - diluted			52,604,115				50,907,897				49,949,593

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

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

(Unaudited)

		Three months ended June 30,
		2008				2007
Revenues:
License		$	68,151			$	59,225
Customer support			95,056				82,218
Service			37,062				33,753
Total revenues			200,269				175,196
Cost of revenues:
License			4,119				4,015
Customer support			17,683				14,356
Service			30,485				28,505
Amortization of acquired technology-based intangible assets			10,615				10,531
Total cost of revenues			62,902				57,407
			137,367				117,789
Operating expenses:
Research and development			28,527				21,113
Sales and marketing			51,966				43,193
General and administrative			17,752				18,452
Depreciation			2,372				3,321
Amortization of acquired customer-based intangible assets			7,753				7,439
Special charges (recoveries)			(296	)			7,655
Total operating expenses			108,074				101,173
Income from operations			29,293				16,616
Other income (expense), net			11,318				1,138
Interest income (expense), net			(736	)			(5,612	)
Income before income taxes			39,875				12,142
Provision for (recoveries from) income taxes			12,545				3,913
Net income before minority interest			27,330				8,229
Minority interest			76				—
Net income for the period		$	27,254			$	8,229
Net income per share - basic		$	0.53			$	0.16
Net income per share - diluted		$	0.51			$	0.16
Weighted average number of Common Shares outstanding - basic			51,124				49,964
Weighted average number of Common Shares outstanding - diluted			53,068				51,571

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. Dollars)

		Year ended June 30,
		2008				2007				2006
		(unaudited)				(audited)				(audited)
Cash flows from operating activities:
Net income for the year		$	53,006			$	21,660			$	4,978
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			84,291				74,638				39,202
In-process research and development			500				—				—
Share-based compensation expense			3,789				5,376				5,196
Employee long-term incentive plan			2,154				—				—
Excess tax benefits from share-based compensation			(1,079	)			(1,285	)			(865	)
Undistributed earnings related to minority interest			498				392				579
Amortization of debt issuance costs			1,220				805				—
Unrealized (gain) loss on financial instruments			3,178				(380	)			—
Deferred taxes			(27,136	)			(19,097	)			(4,314	)
Impairment of capital assets			—				—				3,819
Impairment of intangible assets			—				697				1,046
Changes in operating assets and liabilities:
Accounts receivable			(5,626	)			11,089				9,406
Prepaid expenses and other current assets			(168	)			1,425				(65	)
Income taxes			15,410				(8,313	)			(2,953	)
Accounts payable and accrued liabilities			914				6,195				(3,204	)
Deferred revenue			33,751				13,746				5,228
Other assets			1,274				3,916				2,745
Net cash provided by operating activities			165,976				110,864				60,798
Cash flows from investing activities:
Acquisition of capital assets			(6,895	)			(5,260	)			(19,278	)
Additional purchase consideration for prior period acquisitions			(1,065	)			(2,283	)			(8,410	)
Purchase of Hummingbird, net of cash acquired			—				(384,761	)			—
Purchase of Momentum, net of cash acquired			—				(4,076	)			—
Purchase of an asset group constituting a business			(2,209	)			—				—
Investments in marketable securities			—				(829	)			(20,241	)
Acquisition related costs			(18,248	)			(39,061	)			(6,798	)
Net cash used in investment activities			(28,417	)			(436,270	)			(54,727	)
Cash flow from financing activities:
Excess tax benefits on share-based compensation expense			1,079				1,285				865
Proceeds from issuance of Common Shares			12,272				11,734				4,569
Proceeds from long-term debt			—				390,000				12,928
Repayment of long-term debt			(63,616	)			(33,247	)			(160	)
Debt issuance costs			(349	)			(7,433	)			—
Net cash provided by (used in) financing activities			(50,614	)			362,339				18,202
Foreign exchange gain on cash held in foreign currencies			17,992				5,692				3,183
Increase (decrease) in cash and cash equivalents during the year			104,937				42,625				27,456
Cash and cash equivalents at beginning of the year			149,979				107,354				79,898
Cash and cash equivalents at end of the year		$	254,916			$	149,979			$	107,354

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. Dollars)

		For the three months ended June 30,
		2008				2007
Cash flows from operating activities:
Net income for the period		$	27,254			$	8,229
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			20,740				21,291
Share-based compensation expense			994				1,515
Employee long-term incentive plan			664				—
Excess tax benefits from share based compensation			(212	)			(163	)
Undistributed earnings related to minority interest			76				—
Amortization of debt issuance costs			216				274
Unrealized (gain) loss on financial instruments			(2,401	)			(956	)
Deferred taxes			(22,517	)			4,097
Impairment of intangible assets			—				697
Changes in operating assets and liabilities:
Accounts receivable			1,392				(15,958	)
Prepaid expenses and other current assets			1,840				743
Income taxes			9,518				(6,054	)
Accounts payable and accrued liabilities			8,763				15,885
Deferred revenue			(2,304	)			(1,143	)
Other assets			588				—
Net cash provided by operating activities			44,611				28,457
Cash flows from investing activities:
Acquisition of capital assets			(1,481	)			(640	)
Additional purchase consideration for prior period acquisitions			(614	)			(341	)
Acquisition related costs			(3,341	)			(10,812	)
Net cash used in investment activities			(5,436	)			(11,793	)
Cash flow from financing activities:
Excess tax benefits on share-based compensation expense			212				163
Proceeds from issuance of Common Shares			857				2,905
Repayment of long-term debt			(870	)			(31,003	)
Net cash provided by (used in) financing activities			199				(27,935	)
Foreign exchange gain (loss) on cash held in foreign currencies			(220	)			1,567
Increase (decrease) in cash and cash equivalents during the period			39,154				(9,704	)
Cash and cash equivalents at beginning of the period			215,762				159,683
Cash and cash equivalents at end of the period		$	254,916			$	149,979

/For further information: Paul McFeeters, Chief Financial Officer, Open Text Corporation, (905) 762-6121, pmcfeeters@opentext.com; Greg Secord, Vice-President, Investor Relations, Open Text Corporation, (519) 888-7111 ext.2408, gsecord@opentext.com/