OPEN TEXT CORPORATION Fiscal 2016
- Total revenue of $1.8 billion, down 1%; up 3% Y/Y in CC*
- Recurring revenue of $1.5 billion, down 1%; up 3% Y/Y in CC
- Cloud services and subscription revenue of $601 million, down 1%; up 2% Y/Y in CC
- License revenue of $284 million, down 4%; up 2% Y/Y in CC
- GAAP EPS, diluted was $2.33, up 22% Y/Y
- Non-GAAP-based EPS of $3.54, up 2% Y/Y
Q4 Fiscal 2016
- Total revenue of $484 million, up 0.2%; up 0.2% Y/Y in CC
- Recurring revenue of $398 million, up 3%; up 3% Y/Y in CC
- Cloud services and subscription revenue of $157 million, up 5%; up 5% Y/Y in CC
- License revenue of $86 million, down 11%; down 12% Y/Y in CC
- GAAP EPS, diluted was $0.71, up 27% Y/Y
- Non-GAAP-based EPS of $0.89, up 2% Y/Y
WATERLOO, Ontario, July 27, 2016 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX) (TSX: OTC) announced today its financial results for the fourth quarter and fiscal year ended June 30, 2016.
"Fiscal 2016 was a pivotal year for OpenText, in constant currency, we grew revenues 3% and created a more efficient business and expanded our adjusted operating margin by 240 bps. More importantly, we believe we have created the foundation for Fiscal 2017 to be a double-digit growth year led by M&A," said OpenText CEO & CTO Mark J. Barrenechea. "During our Fiscal 2016 fourth quarter we announced four acquisitions that will add revenue, operating income and cash flow."
Barrenechea further added, "In Fiscal 2017, we expect all of our revenue lines and adjusted operating income to grow double digit. We also have the balance sheet and bandwidth to continue acquiring businesses."
Barrenechea concluded, "With our recent acquisitions, Release 16, EP Series, our enhancement packs, and Magellan, our next generation cognitive platform, we expect to grow our market share in Fiscal 2017."
Financial Highlights for Fiscal 2016 with Year Over Year Comparisons (1)
-----------------------------------------------------------------------
Summary of Annual Results
-------------------------
FY16 FY15 $ Change % Change FY16 in CC* % Change in
CC*
(Y/Y)
Revenues: (in millions)
Cloud services and
subscriptions $601.0 $605.3 ($4.3) (0.7)% $620.4 2.5%
Customer support 746.4 731.8 14.6 2.0% 779.1 6.5%
Professional service and
other 193.1 220.5 (27.4) (12.4)% 205.6 (6.8)%
Total Recurring revenues $1,540.5 $1,557.6 ($17.1) (1.1)% $1,605.1 3.0%
License 283.7 294.3 (10.6) (3.6)% 298.8 1.5%
Total revenues $1,824.2 $1,851.9 ($27.7) (1.5)% $1,903.9 2.8%
GAAP-based operating margin 20.2% 18.8% n/a 140 bps
Non-GAAP-based operating
margin (2) 33.8% 30.9% n/a 290 bps 33.3% 240 bps
GAAP-based EPS, diluted $2.33 $1.91 $0.42 22.0%
Non-GAAP-based EPS,
diluted (2) $3.54 $3.46 $0.08 2.3% $3.66 5.8%
Operating cash flows (in
millions) $525.7 $523.0 $2.7 0.5%
------------------------ ------ ------ ---- ---
Note: Individual line items in
tables may be adjusted by
non-material amounts to
enable totals to align to
published financial
statements.
Summary of Quarterly Results
----------------------------
Q4 FY16 Q4 FY15 $ Change % Change Q4 FY16 in CC* % Change in
CC*
(Y/Y)
Revenues: (in millions)
Cloud services and
subscriptions $156.6 $149.0 $7.6 5.1% $156.8 5.2%
Customer support 193.0 184.2 8.8 4.7% 193.0 4.8%
Professional service and
other 48.1 52.4 (4.3) (8.2)% 48.4 (7.6)%
Total Recurring revenues $397.7 $385.6 $12.1 3.1% $398.2 3.3%
License 86.1 97.1 (11) (11.3)% 85.6 (11.8)%
Total revenues $483.8 $482.7 $1.1 0.2% $483.8 0.2%
GAAP-based operating margin 19.3% 17.1% n/a 220 bps
Non-GAAP-based operating
margin (2) 32.7% 30.8% n/a 190 bps 32.1% 130 bps
GAAP-based EPS, diluted $0.71 $0.56 $0.15 26.8%
Non-GAAP-based EPS,
diluted (2) $0.89 $0.87 $0.02 2.3% $0.87 -%
Operating cash flows (in
millions) $119.1 $131.8 ($12.7) (9.6)%
------------------------ ------ ------ ------ -----
Note: Individual line items in tables may be adjusted by non-
material amounts to enable totals to align to published
financial statements.
"In Fiscal 2016, we delivered solid operating cash flow. This
demonstrates our strong track record of performance achieving a
ten-year cumulative growth rate of 24% for both adjusted
operating income and operating cash flow," said OpenText CFO
John Doolittle. "Our balance sheet and liquidity position remain
very strong with approximately $1.3 billion of cash at the end
of the quarter. We also announced the reorganization of our
intellectual property to Canada with the view of continuing to
enhance operational and administrative efficiencies, among other
benefits, while preserving predictability in our future tax
rate."
*CC: Constant currency for this purpose is defined as the current
period reported revenues/expenses/earnings represented at the
prior comparative period's foreign exchange rate.
OpenText Quarterly Business Highlights
-- 20 customer transactions over $1 million, 10 OpenText Cloud contract
signings and 10 on-premises
-- Financial, services and technology industries saw the most demand in
cloud and license
-- New customers in the quarter included Red Hat Inc., s.Oliver, Nevada
State Controller's Office, Schwan Cosmetics, Kamehameha Schools, eMeter
Corporation, APA Group, State Of Iowa, KUKA, Miller Insurance Services
LLP, Kno2, Delta RM, Sanofi, Mount Sinai Health System, Inland Revenue
Department, HKSAR and Constellation Brands
-- OpenText signs definitive agreement to acquire Customer Communications
Management assets from HP Inc.
-- OpenText signs definitive agreement to acquire Recommind, Inc.
-- OpenText signs definitive agreement to acquire, and closes acquisition
of, ANXe Business Corporation
-- OpenText signs definitive agreement to acquire, and closes acquisition
of, certain customer experience software and services assets and
liabilities from HP Inc.
-- OpenText receives 2016 SAP® Pinnacle Award: Application Innovation
Partner of the Year
-- Thousands attend OpenText Enterprise World 2016
Dividend Program Highlights
Cash Dividend
As part of our quarterly, non cumulative cash dividend program the Board declared on July 26, 2016 a cash dividend of $0.23 per Common Share. The record date for this dividend is August 26, 2016 and the payment date is September 16, 2016. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of our Board of Directors.
Summary of Annual Results
-------------------------
FY16 FY15 % Change
Revenue (million) $1,824.2 $1,851.9 (1.5)%
GAAP-based gross margin 68.5% 67.7% 80 bps
GAAP-based operating
margin 20.2% 18.8% 140 bps
GAAP-based EPS, diluted $2.33 $1.91 22.0%
Non-GAAP-based gross
margin (2) 72.8% 72.2% 60 bps
Non-GAAP-based
operating margin (2) 33.8% 30.9% 290 bps
Non-GAAP-based EPS,
diluted (2) $3.54 $3.46 2.3%
------------------- ----- ----- ---
Summary of Quarterly Results
----------------------------
Q4 FY16 Q3 FY16 Q4 FY15 % Change % Change
(Q4 FY16 vs (Q4 FY16 vs
Q3 FY16) Q4 FY15)
Revenue
(million) $483.8 $440.5 $482.7 9.8% 0.2%
GAAP-
based
gross
margin 68.4% 67.9% 68.8% 50 bps (40) bps
GAAP-
based
operating
margin 19.3% 20.1% 17.1% (80) bps 220 bps
GAAP-
based
EPS,
diluted $0.71 $0.57 $0.56 24.6% 26.8%
Non-GAAP-
based
gross
margin
(2) 72.4% 72.0% 73.6% 40bps (120) bps
Non-GAAP-
based
operating
margin
(2) 32.7% 31.4% 30.8% 130bps 190 bps
Non-GAAP-
based
EPS,
diluted
(2) $0.89 $0.80 $0.87 11.3% 2.3%
--------- ----- ----- ----- ---- ---
Normal Course Issuer Bid
The Company also announced today the authorization of a new share repurchase plan and that it intends to purchase in open market transactions, from time to time over the next 12 months, if considered advisable, up to an aggregate of $200,000,000 of its common shares on NASDAQ Global Select Market, the Toronto Stock Exchange (the "TSX") and/or other exchanges and alternative trading systems in Canada and/or the United States, if eligible. The price that OpenText will pay for common shares in open market transactions will be the market price at the time of purchase or such other price as may be permitted by applicable law or stock exchange rules.
The share purchases will be effected in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934 and the TSX's normal course issuer bid rules, which contain restrictions on the number of shares that may be purchased on a single day (being 68,748 common shares in the case of the TSX) based on the average daily trading volumes of OpenText's common shares on the applicable exchange (being 274,991 common shares for the past six months in the case of the TSX), subject to certain exceptions for block purchases. The purchases over the TSX will be made pursuant to a normal course issuer bid ("NCIB"), which the TSX has accepted notice of. Under the NCIB, up to 5% of the Company's 121,443,442 common shares outstanding as of July 25, 2016, or 6,072,172 common shares, are permitted to be purchased commencing on August 6, 2016 until August 5, 2017. All common shares purchased by OpenText pursuant to the NCIB will be cancelled. During Fiscal 2016, OpenText repurchased and cancelled 1,476,248 common shares for approximately $65.5 million at a volume-weighted average price per share of $44.37 under its expiring share repurchase plan.
OpenText also announced that it has entered into an automatic share purchase plan pursuant to which its designated broker may undertake purchases of its common shares under the NCIB, subject to certain parameters, during pre-determined trading blackout periods when OpenText would not otherwise be permitted to purchase its common shares.
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 1-800-319-4610 (toll-free) or +1-604-638-5340 (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/events.cfm.
A replay of the call will be available beginning July 27, 2016 at 7:00 p.m. ET through 11:59 p.m. August 10, 2016 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 00617 followed by the number sign.
Please see below note (2) for a reconciliation of U.S. GAAP-based financial measures used in this press release, to non-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 our fiscal year ending June 30, 2017 (Fiscal 2017) on growth in earnings and cash flows, creating value through investments in broader Enterprise Information Management (EIM) capabilities, distribution, the Company's presence in the cloud and in growth markets, expected growth in our revenue lines, adjusted operating income and cash flow, its financial condition, results of operations and earnings, announced acquisitions, ongoing tax matters, purchases of common shares by OpenText pursuant to the NCIB, declaration of quarterly dividends, future tax rates, and other matters, may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", "might", "will" and variations of these words or similar expressions are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management's perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. 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 and services 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 and services to be realized by customers; (viii) the demand for the Company's products and services and the extent of deployment of the Company's products and services in the EIM marketplace; (ix) the Company's financial condition and capital requirements; and (x) statements about the impact of "Open Text Release 16" and other product releases. 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 potential for the incurrence of or assumption of debt in connection with acquisitions and the impact on the ratings or outlooks of rating agencies on the Company's outstanding debt securities; (iii) the possibility that the Company may be unable to meet its future reporting requirements under the U.S. Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder; (iv) the risks associated with bringing new products and services to market; (v) fluctuations in currency exchange rates; (vi) delays in the purchasing decisions of the Company's customers; (vii) the competition the Company faces in its industry and/or marketplace; (viii) the final determination of litigation, tax audits (including tax examinations in the United States and elsewhere) and other legal proceedings; (ix) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, U.S. or international tax regimes; (x) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (xi) the continuous commitment of the Company's customers; and (xii) demand for the Company's products and services. 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 Securities and Exchange Commission (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.
OTEX-F
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 ©2016 Open Text. OpenText is a trademark or registered trademark of Open Text. 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. 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)
June 30, 2016 June 30, 2015
------------- -------------
ASSETS
Cash and cash equivalents $1,283,757 $699,999
Short-term investments 11,839 11,166
Accounts receivable trade, net of
allowance for doubtful accounts
of $6,740 as of June 30, 2016 and
$5,987 as of June 30, 2015 285,904 284,131
Income taxes recoverable 31,752 21,151
Prepaid expenses and other current
assets 59,021 53,191
Total current assets 1,672,273 1,069,638
Property and equipment 183,660 160,419
Goodwill 2,325,586 2,161,592
Acquired intangible assets 646,240 679,479
Deferred tax assets 241,161 181,587
Other assets 53,697 54,946
Deferred charges 22,776 37,265
Long-term income taxes recoverable 8,751 8,404
Total assets $5,154,144 $4,353,330
========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $257,450 $241,370
Current portion of long-term debt 8,000 8,000
Deferred revenues 373,549 358,066
Income taxes payable 32,030 17,001
Total current liabilities 671,029 624,437
Long-term liabilities:
Accrued liabilities 29,848 34,682
Deferred credits 8,357 12,943
Pension liability 61,993 56,737
Long-term debt 2,137,987 1,549,370
Deferred revenues 37,461 28,223
Long-term income taxes payable 149,041 151,484
Deferred tax liabilities 79,231 65,647
------ ------
Total long-term liabilities 2,503,918 1,899,086
Shareholders' equity:
Share capital
121,404,677 and 122,293,986 Common
Shares issued and outstanding at
June 30, 2016 and June 30, 2015,
respectively; Authorized Common
Shares: unlimited 817,788 808,010
Additional paid-in capital 147,280 126,417
Accumulated other comprehensive
income 46,310 51,828
Retained earnings 992,546 863,015
Treasury stock, at cost (633,647
shares at June 30, 2016 and
625,725 at June 30, 2015,
respectively) (25,268) (19,986)
------- -------
Total OpenText shareholders'
equity 1,978,656 1,829,284
Non-controlling interests 541 523
--- ---
Total shareholders' equity 1,979,197 1,829,807
Total liabilities and
shareholders' equity $5,154,144 $4,353,330
========== ==========
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
Year Ended June 30,
-------------------
2016 2015 2014
---- ---- ----
Revenues:
License $283,710 $294,266 $305,846
Cloud services and
subscriptions 601,018 605,309 373,400
Customer support 746,409 731,797 707,024
Professional service and other 193,091 220,545 238,429
------- ------- -------
Total revenues 1,824,228 1,851,917 1,624,699
--------- --------- ---------
Cost of revenues:
License 10,296 12,899 13,161
Cloud services and
subscriptions 244,021 237,310 142,193
Customer support 89,861 94,456 96,068
Professional service and other 155,584 172,742 189,403
Amortization of acquired
technology-based intangible
assets 74,238 81,002 69,917
------ ------ ------
Total cost of revenues 574,000 598,409 510,742
------- ------- -------
Gross profit 1,250,228 1,253,508 1,113,957
--------- --------- ---------
Operating expenses:
Research and development 194,057 196,491 176,834
Sales and marketing 344,235 373,610 346,941
General and administrative 140,397 162,728 142,080
Depreciation 54,929 50,906 35,237
Amortization of acquired
customer-based intangible
assets 113,201 108,239 81,023
Special charges 34,846 12,823 31,314
------ ------ ------
Total operating expenses 881,665 904,797 813,429
------- ------- -------
Income from operations 368,563 348,711 300,528
------- ------- -------
Other income (expense), net (1,423) (28,047) 3,941
Interest and other related
expense, net (76,363) (54,620) (27,934)
------- ------- -------
Income before income taxes 290,777 266,044 276,535
Provision for income taxes 6,282 31,638 58,461
----- ------ ------
Net income for the period $284,495 $234,406 $218,074
-------- -------- --------
Net (income) loss attributable
to non-controlling interests (18) (79) 51
Net income attributable to
OpenText $284,477 $234,327 $218,125
======== ======== ========
Earnings per share-basic
attributable to OpenText $2.34 $1.92 $1.82
===== ===== =====
Earnings per share-diluted
attributable to OpenText $2.33 $1.91 $1.81
===== ===== =====
Weighted average number of
Common Shares outstanding-
basic 121,463 122,092 119,674
======= ======= =======
Weighted average number of
Common Shares outstanding-
diluted 122,038 122,957 120,576
======= ======= =======
Dividends declared per Common
Share $0.8300 $0.7175 $0.6225
======= ======= =======
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
Three Months Ended June 30,
---------------------------
2016 2015
---- ----
Revenues:
License $86,126 $97,129
Cloud
services
and
subscriptions 156,624 148,967
Customer
support 192,969 184,221
Professional
service and
other 48,084 52,391
------ ------
Total
revenues 483,803 482,708
------- -------
Cost of
revenues:
License 3,106 3,511
Cloud
services
and
subscriptions 64,889 58,424
Customer
support 25,237 23,578
Professional
service and
other 41,546 42,743
Amortization
of acquired
technology-
based
intangible
assets 17,994 22,454
------ ------
Total cost
of revenues 152,772 150,710
------- -------
Gross profit 331,031 331,998
------- -------
Operating
expenses:
Research and
development 53,747 52,357
Sales and
marketing 95,815 104,443
General and
administrative 33,330 41,766
Depreciation 14,931 13,390
Amortization
of acquired
customer-
based
intangible
assets 29,637 28,741
Special
charges 10,092 8,791
------ -----
Total
operating
expenses 237,552 249,488
------- -------
Income from
operations 93,479 82,510
------ ------
Other income
(expense),
net 409 690
Interest and
other
related
expense,
net (21,902) (18,194)
------- -------
Income
before
income
taxes 71,986 65,006
Recovery of
income
taxes (14,347) (3,763)
------- ------
Net income
for the
period $86,333 $68,769
------- -------
Net loss
attributable
to non-
controlling
interests 57 35
Net income
attributable
to OpenText $86,390 $68,804
======= =======
Earnings per
share-
basic
attributable
to OpenText $0.71 $0.56
===== =====
Earnings per
share-
diluted
attributable
to OpenText $0.71 $0.56
===== =====
Weighted
average
number of
Common
Shares
outstanding-
basic 121,324 122,245
======= =======
Weighted
average
number of
Common
Shares
outstanding-
diluted 122,020 122,888
======= =======
Dividends
declared
per Common
Share $0.2300 $0.2000
======= =======
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)
Year Ended June 30,
-------------------
2016 2015 2014
---- ---- ----
Net income for the period $284,495 $234,406 $218,074
Other comprehensive income-net
of tax:
Net foreign currency translation
adjustments (3,318) 15,690 (2,779)
Unrealized gain (loss) on cash
flow hedges:
Unrealized (loss) (2,574) (6,064) (357)
Loss reclassified into net
income 2,956 5,710 3,242
Actuarial gain (loss) relating
to defined benefit pension
plans:
Actuarial loss (3,374) (3,302) (841)
Amortization of actuarial loss
into net income 347 357 294
Unrealized net gain (loss) on
short-term investments 445 (12) -
Unrealized gain on marketable
securities (Actuate) - 1,906 -
Release of unrealized gain on
marketable securities (Actuate) - (1,906) -
--- ------ ---
Total other comprehensive income
(loss), net, for the period (5,518) 12,379 (441)
------ ------ ----
Total comprehensive income 278,977 246,785 217,633
Comprehensive (income) loss
attributable to non-
controlling interests (18) (79) 51
--- --- ---
Total comprehensive income
attributable to OpenText $278,959 $246,706 $217,684
======== ======== ========
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
Year Ended June 30,
-------------------
2016 2015 2014
---- ---- ----
Cash flows from operating
activities:
Net income for the period $284,495 $234,406 $218,074
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization of intangible
assets 242,368 240,147 186,177
Share-based compensation
expense 25,978 22,047 19,906
Excess tax benefits on
share-based compensation
expense (230) (1,675) (1,844)
Pension expense 4,577 4,796 3,232
Amortization of debt
issuance costs 4,678 4,556 3,191
Amortization of deferred
charges and credits 9,903 10,525 11,307
Loss on sale and write down
of property and equipment 1,108 1,368 15
Release of unrealized gain
on marketable securities
to income - (3,098) -
Write off of unamortized
debt issuance costs - 2,919 -
Deferred Taxes (54,461) (14,578) (12,334)
Changes in operating assets
and liabilities:
Accounts receivable 8,985 43,189 (17,186)
Prepaid expenses and other
current assets 316 (3,534) 11,146
Income taxes 6,294 2,933 11,308
Deferred charges and
credits - - 9,870
Accounts payable and
accrued liabilities (5,671) (22,714) (36,478)
Deferred revenue (4,781) 6,775 16,601
Other assets 2,163 (5,031) (5,858)
----- ------ ------
Net cash provided by
operating activities 525,722 523,031 417,127
------- ------- -------
Cash flows from investing
activities:
Additions of property and
equipment (70,009) (77,046) (42,268)
Proceeds from maturity of
short-term investments 11,297 17,017 -
Purchase of CEM Business (152,711) - -
Purchase of ANXe Business
Corporation (104,570) - -
Purchase of Daegis Inc.,
net of cash acquired (22,146) - -
Purchase of Actuate
Corporation, net of cash
acquired (8,153) (291,800) -
Purchase of Informative
Graphics Corporation, net
of cash acquired (3,464) (35,180) -
Purchase of GXS Group,
Inc., net of cash acquired - - (1,076,886)
Purchase of Cordys Holding
B.V., net of cash acquired - - (30,588)
Purchase of ICCM
Professional Services
Limited, net of cash
acquired (2,027) - -
Purchase of a division of
Spicer Corporation - (222) -
Purchase of Patents - - (192)
Purchase consideration for
prior period acquisitions - (590) (887)
Other investing activities (9,393) (10,574) (2,547)
------ ------- ------
Net cash used in investing
activities (361,176) (398,395) (1,153,368)
-------- -------- ----------
Cash flows from financing
activities:
Excess tax benefits on
share-based compensation
expense 230 1,675 1,844
Proceeds from issuance of
Common Shares 20,097 15,240 24,808
Proceeds from long-term
debt 600,000 800,000 800,000
Repayment of long-term
debt and revolver (8,000) (530,284) (45,911)
Debt issuance costs (6,765) (18,271) (16,685)
Equity issuance costs - - (144)
Common Shares repurchased (65,509) - -
Purchase of Treasury Stock (10,627) (10,126) (1,275)
Payments of dividends to
shareholders (99,262) (87,629) (74,693)
------- ------- -------
Net cash provided by
financing activities 430,164 170,605 687,944
------- ------- -------
Foreign exchange gain
(loss) on cash held in
foreign currencies (10,952) (23,132) 5,742
Increase (decrease) in cash
and cash equivalents
during the period 583,758 272,109 (42,555)
Cash and cash equivalents
at beginning of the period 699,999 427,890 470,445
------- ------- -------
Cash and cash equivalents
at end of the period $1,283,757 $699,999 $427,890
========== ======== ========
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
Three Months Ended June 30,
---------------------------
2016 2015
---- ----
Cash flows
from
operating
activities:
Net income
for the
period $86,333 $68,769
Adjustments
to
reconcile
net
income to
net cash
provided
by
operating
activities:
Depreciation
and
amortization
of
intangible
assets 62,562 64,585
Share-
based
compensation
expense 6,898 6,107
Excess tax
expense
(benefits)
on share-
based
compensation
expense 27 (64)
Pension
expense 1,118 1,194
Amortization
of debt
issuance
costs 1,208 1,146
Amortization
of
deferred
charges
and
credits 2,653 2,632
Loss on
sale and
write
down of
property
and
equipment - 1,250
Deferred
taxes (38,769) (10,541)
Changes in
operating
assets
and
liabilities:
Accounts
receivable (13,167) (33,371)
Prepaid
expenses
and other
current
assets 2,905 467
Income
taxes 3,004 1,579
Deferred
charges
and
credits - -
Accounts
payable
and
accrued
liabilities 21,763 31,033
Deferred
revenue (17,345) 70
Other
assets (70) (3,039)
--- ------
Net cash
provided
by
operating
activities 119,120 131,817
------- -------
Cash flows
from
investing
activities:
Additions
of
property
and
equipment (21,112) (16,460)
Proceeds
from
maturity
of short-
term
investments 2,058 9,925
Purchase
of CEM
Business (152,711)
Purchase
of ANXe
Business
Corporation (104,570)
Purchase
of
Actuate
Corporation,
net of
cash
acquired - (32)
Other
investing
activities (3,269) (1,659)
Net cash
used in
investing
activities (279,604) (8,226)
-------- ------
Cash flows
from
financing
activities:
Excess tax
(expense)
benefits
on share-
based
compensation
expense (27) 64
Proceeds
from
issuance
of Common
Shares 8,269 2,413
Proceeds
from
long-
term debt 600,000 -
Repayment
of long-
term debt
and
revolver (2,000) (9,799)
Debt
issuance
costs (6,765) (195)
Purchase
of
Treasury
stock - (8,875)
Payments
of
dividends
to
shareholders (27,635) (24,455)
------- -------
Net cash
provided
by (used
in)
financing
activities 571,842 (40,847)
------- -------
Foreign
exchange
gain
(loss) on
cash held
in
foreign
currencies (5,006) 4,078
Increase
in cash
and cash
equivalents
during
the
period 406,352 86,822
Cash and
cash
equivalents
at
beginning
of the
period 877,405 613,177
Cash and
cash
equivalents
at end of
the
period $1,283,757 $699,999
========== ========
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 earnings per share on
a diluted basis, excluding the
amortization of acquired intangible
assets, other income (expense),
share-based compensation, and
Special charges (recoveries), 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
and share-based compensation
within cost of sales. Non-GAAP-
based gross margin is calculated as
Non-GAAP-based gross profit
expressed as a percentage of total
revenue. Non-GAAP-based income
from operations is calculated as
income from operations, excluding
the amortization of acquired
intangible assets, Special charges
(recoveries), and share-based
compensation expense. Non-GAAP-
based operating margin is
calculated as Non-GAAP-based
income from operations expressed as
a percentage of total 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
(recoveries), 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 June 30, 2016.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended June 30, 2016
--------------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures based based
Measures % of Total Measures
Revenue Measures
% of Total
Revenue
--- -------
Cost of revenues
Cloud services and
subscriptions $64,889 $(312) (1) $64,577
Customer support 25,237 (269) (1) 24,968
Professional
service and other 41,546 (540) (1) 41,006
Amortization of
acquired
technology-based
intangible assets 17,994 (17,994) (2) -
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 331,031 68.4% 19,115 (3) 350,146 72.4%
Operating expenses
Research and
development 53,747 (836) (1) 52,911
Sales and marketing 95,815 (3,026) (1) 92,789
General and
administrative 33,330 (1,915) (1) 31,415
Amortization of
acquired customer-
based intangible
assets 29,637 (29,637) (2) -
Special charges
(recoveries) 10,092 (10,092) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 93,479 19.3% 64,621 (5) 158,100 32.7%
Other income
(expense), net 409 (409) (6) -
Provision for
(recovery of)
income taxes (14,347) 41,644 (7) 27,297
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 86,390 22,568 (8) 108,958
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $0.71 $0.18 (8) $0.89
(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.
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
(2) operating results.
(3) GAAP-based and Non-GAAP-based gross
profit stated in dollars, and gross
margin stated as a percentage of total
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) from our
Non-GAAP-based operating expenses as
Special charges (recoveries) are
generally incurred in the periods
following the relevant acquisitions,
include one-time non-recurring
charges or recoveries, 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 dollars, and
operating margin stated as a
percentage of total 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
rate of approximately 20% and a Non-
GAAP-based tax rate of 20%; 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. Such excluded expenses
include amortization, share-based
compensation, Special charges
(recoveries) and other income
(expense), net. Also excluded are tax
expense items unrelated to current
period income such as changes in
reserves for tax uncertainties and
valuation allowance reserves, tax
arising on internal reorganizations,
and "book to return" adjustments for
tax return filings and tax assessments
(in total "adjusted expenses"). In
arriving at our Non-GAAP-based tax
rate of 20%, we analyzed the
individual adjusted expenses and took
into consideration the impact of
statutory tax rates from local
jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net
income to Non-GAAP-based net income:
Three Months Ended June 30, 2016
--------------------------------
Per share
diluted
----------
GAAP-based net income,
attributable to OpenText $86,390 $0.71
Add:
Amortization 47,631 0.39
Share-based compensation 6,898 0.06
Special charges (recoveries) 10,092 0.08
Other (income) expense, net (409) -
GAAP-based provision for
(recovery of) income taxes (14,347) (0.12)
Non-GAAP based provision for
income taxes (27,297) (0.23)
Non-GAAP-based net income,
attributable to OpenText $108,958 $0.89
======== =====
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the year ended June 30, 2016.
(In thousands except for per share amounts)
------------------------------------------
Year Ended June 30, 2016
------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures based based
Measures % of Total Measures
Revenue Measures
% of Total
Revenue
--- -------
Cost of revenues
Cloud services and
subscriptions $244,021 $(953) (1) $243,068
Customer support 89,861 (900) (1) 88,961
Professional
service and other 155,584 (1,626) (1) 153,958
Amortization of
acquired
technology-based
intangible assets 74,238 (74,238) (2) -
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 1,250,228 68.5% 77,717 (3) 1,327,945 72.8%
Operating expenses
Research and
development 194,057 (2,824) (1) 191,233
Sales and marketing 344,235 (12,069) (1) 332,166
General and
administrative 140,397 (7,606) (1) 132,791
Amortization of
acquired customer-
based intangible
assets 113,201 (113,201) (2) -
Special charges
(recoveries) 34,846 (34,846) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 368,563 20.2% 248,263 (5) 616,826 33.8%
Other income
(expense), net (1,423) 1,423 (6) -
Provision for
(recovery of)
income taxes 6,282 101,793 (7) 108,075
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 284,477 147,893 (8) 432,370
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $2.33 $1.21 (8) $3.54
(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 dollars, and gross
margin stated as a percentage of total
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) from our
Non-GAAP-based operating expenses as
Special charges (recoveries) are
generally incurred in the periods
following the relevant acquisitions,
including one-time non-recurring
charges or recoveries, 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 dollars, and
operating margin stated as a
percentage of total 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
rate of approximately 2% and a Non-
GAAP-based tax rate of 20%; 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. Such excluded expenses
include amortization, share-based
compensation, Special charges
(recoveries) and other income
(expense), net. Also excluded are tax
expense items unrelated to current
period income such as changes in
reserves for tax uncertainties and
valuation allowance reserves, tax
arising on internal reorganizations,
and "book to return" adjustments for
tax return filings and tax assessments
(in total "adjusted expenses"). In
arriving at our Non-GAAP-based tax
rate of 20%, we analyzed the
individual adjusted expenses and took
into consideration the impact of
statutory tax rates from local
jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net
income to Non-GAAP-based net income:
Year Ended June 30, 2016
------------------------
Per share
diluted
----------
GAAP-based net income,
attributable to OpenText $284,477 $2.33
Add:
Amortization 187,439 1.54
Share-based compensation 25,978 0.21
Special charges (recoveries) 34,846 0.29
Other (income) expense, net 1,423 0.01
GAAP-based provision for
(recovery of) income taxes 6,282 0.05
Non-GAAP based provision for
income taxes (108,075) (0.89)
-------- -----
Non-GAAP-based net income,
attributable to OpenText $432,370 $3.54
======== =====
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended March 31, 2016.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended March 31, 2016
---------------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures based based
Measures % of Total Measures
Revenue Measures
% of Total
Revenue
--- -------
Cost of revenues
Cloud services and
subscriptions $61,298 $(202) (1) $61,096
Customer support 22,427 (215) (1) 22,212
Professional
service and other 37,599 (247) (1) 37,352
Amortization of
acquired
technology-based
intangible assets 17,630 (17,630) (2) -
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 299,109 67.9% 18,294 (3) 317,403 72.0%
Operating expenses
Research and
development 48,160 (500) (1) 47,660
Sales and marketing 84,600 (3,213) (1) 81,387
General and
administrative 37,731 (1,589) (1) 36,142
Amortization of
acquired customer-
based intangible
assets 27,966 (27,966) (2) -
Special charges
(recoveries) (1,671) 1,671 (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 88,569 20.1% 49,891 (5) 138,460 31.4%
Other income
(expense), net 2,120 (2,120) (6) -
Provision for
(recovery of)
income taxes 5,353 19,100 (7) 24,453
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 69,115 28,671 (8) 97,786
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $0.57 $0.23 (8) $0.80
(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 dollars, and gross
margin stated as a percentage of total
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) from our
Non-GAAP-based operating expenses as
Special charges (recoveries) are
generally incurred in the periods
following the relevant acquisitions,
including one-time non-recurring
charges or recoveries, 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 dollars, and
operating margin stated as a
percentage of total 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
rate of approximately 7% and a Non-
GAAP-based tax rate of 20%; 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. Such excluded expenses
include amortization, share-based
compensation, Special charges
(recoveries) and other income
(expense), net. Also excluded are tax
expense items unrelated to current
period income such as changes in
reserves for tax uncertainties and
valuation allowance reserves, tax
arising on internal reorganizations,
and "book to return" adjustments for
tax return filings and tax assessments
(in total "adjusted expenses"). In
arriving at our Non-GAAP-based tax
rate of 20%, we analyzed the
individual adjusted expenses and took
into consideration the impact of
statutory tax rates from local
jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net
income to Non-GAAP-based net income:
Three Months Ended March 31,
2016
-----------------------------
Per share
diluted
----------
GAAP-based net income,
attributable to OpenText $69,115 $0.57
Add:
Amortization 45,596 0.37
Share-based compensation 5,966 0.05
Special charges (recoveries) (1,671) (0.01)
Other (income) expense, net (2,120) (0.02)
GAAP-based provision for
(recovery of) income taxes 5,353 0.04
Non-GAAP based provision for
income taxes (24,453) (0.20)
------- -----
Non-GAAP-based net income,
attributable to OpenText $97,786 $0.80
======= =====
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended June 30, 2015.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended June 30, 2015
--------------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures based based
Measures % of Total Measures
Revenue Measures
% of Total
Revenue
--- -------
Cost of revenues
Cloud services and
subscriptions $58,424 $(252) (1) $58,172
Customer support 23,578 (200) (1) 23,378
Professional
service and other 42,743 (421) (1) 42,322
Amortization of
acquired
technology-based
intangible assets 22,454 (22,454) (2) -
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 331,998 68.8% 23,327 (3) 355,325 73.6%
Operating expenses
Research and
development 52,357 (665) (1) 51,692
Sales and marketing 104,443 (2,508) (1) 101,935
General and
administrative 41,766 (2,061) (1) 39,705
Amortization of
acquired customer-
based intangible
assets 28,741 (28,741) (2) -
Special charges
(recoveries) 8,791 (8,791) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 82,510 17.1% 66,093 (5) 148,603 30.8%
Other income
(expense), net 690 (690) (6) -
Provision for
(recovery of)
income taxes (3,763) 27,272 (7) 23,509
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 68,804 38,131 (8) 106,935
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $0.56 $0.31 (8) $0.87
(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 dollars, and gross
margin stated as a percentage of total
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) from our
Non-GAAP-based operating expenses as
Special charges (recoveries) are
generally incurred in the periods
following the relevant acquisitions,
including one-time non-recurring
charges or recoveries, 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 dollars, and
operating margin stated as a
percentage of total 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
rate of approximately 6% and a Non-
GAAP-based tax rate of 18%; 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. Such excluded expenses
include amortization, share-based
compensation, Special charges
(recoveries) and other income
(expense), net. Also excluded are tax
expense items unrelated to current
period income such as changes in
reserves for tax uncertainties and
valuation allowance reserves, tax
arising on internal reorganizations,
and "book to return" adjustments for
tax return filings and tax assessments
(in total "adjusted expenses"). In
arriving at our Non-GAAP-based tax
rate of 18%, we analyzed the
individual adjusted expenses and took
into consideration the impact of
statutory tax rates from local
jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net
income to Non-GAAP-based net income:
Three Months Ended June 30, 2015
--------------------------------
Per share
diluted
----------
GAAP-based net income,
attributable to OpenText $68,804 $0.56
Add:
Amortization 51,195 0.42
Share-based compensation 6,107 0.05
Special charges (recoveries) 8,791 0.07
Other (income) expense, net (690) (0.01)
GAAP-based provision for
(recovery of) income taxes (3,763) (0.03)
Non-GAAP based provision for
income taxes (23,509) (0.19)
------- -----
Non-GAAP-based net income,
attributable to OpenText $106,935 $0.87
======== =====
Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the year ended June 30, 2015.
(In thousands except for per share amounts)
------------------------------------------
Year Ended June 30, 2015
------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures based based
Measures % of Total Measures
Revenue Measures
% of Total
Revenue
--- -------
Cost of revenues:
Cloud services and
subscriptions $237,310 $(833) (1) $236,477
Customer support 94,456 (832) (1) 93,624
Professional
service and other 172,742 (1,335) (1) 171,407
Amortization of
acquired
technology-based
intangible assets 81,002 (81,002) (2) -
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 1,253,508 67.7% 84,002 (3) 1,337,510 72.2%
Operating expenses
Research and
development 196,491 (2,496) (1) 193,995
Sales and marketing 373,610 (9,095) (1) 364,515
General and
administrative 162,728 (7,456) (1) 155,272
Amortization of
acquired customer-
based intangible
assets 108,239 (108,239) (2) -
Special charges
(recoveries) 12,823 (12,823) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 348,711 18.8% 224,111 (5) 572,822 30.9%
Other income
(expense), net (28,047) 28,047 (6) -
Provision for
(recovery of)
income taxes 31,638 61,559 (7) 93,197
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 234,327 190,599 (8) 424,926
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $1.91 $1.55 (8) $3.46
(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 dollars, and gross
margin stated as a percentage of total
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) from our
Non-GAAP-based operating expenses as
Special charges (recoveries) are
generally incurred in the periods
following the relevant acquisitions,
including one-time non-recurring
charges or recoveries, 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 dollars, and
operating margin stated as a
percentage of total 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
rate of approximately 12% and a Non-
GAAP-based tax rate of 18%; 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. Such excluded expenses
include amortization, share-based
compensation, Special charges
(recoveries) and other income
(expense), net. Also excluded are tax
expense items unrelated to current
period income such as changes in
reserves for tax uncertainties and
valuation allowance reserves, tax
arising on internal reorganizations,
and "book to return" adjustments for
tax return filings and tax assessments
(in total "adjusted expenses"). In
arriving at our Non-GAAP-based tax
rate of 18%, we analyzed the
individual adjusted expenses and took
into consideration the impact of
statutory tax rates from local
jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net
income to Non-GAAP-based net income:
Year Ended June 30, 2015
------------------------
Per share
diluted
----------
GAAP-based net income,
attributable to OpenText $234,327 $1.91
Add:
Amortization 189,241 1.54
Share-based compensation 22,047 0.18
Special charges (recoveries) 12,823 0.10
Other (income) expense, net 28,047 0.23
GAAP-based provision for
(recovery of) income taxes 31,638 0.26
Non-GAAP based provision for
income taxes (93,197) (0.76)
------- -----
Non-GAAP-based net income,
attributable to OpenText $424,926 $3.46
======== =====
(3) The following tables provide a
composition of our major
currencies for revenue and
expenses, expressed as a
percentage, for the three
months and year ended June
30, 2016 and 2015:
Three Months Ended Three Months Ended
June 30, 2016 June 30, 2015
------------- -------------
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
------------ ------------- ------------ -------------
EURO 25% 15% 23% 14%
GBP 7% 7% 8% 8%
CAD 5% 12% 5% 14%
USD 54% 49% 52% 48%
Other 9% 17% 12% 16%
--- --- --- ---
Total 100% 100% 100% 100%
=== === === ===
Year Ended Year Ended
June 30, 2016 June 30, 2015
------------- -------------
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
------------ ------------- ------------ -------------
EURO 24% 15% 24% 14%
GBP 8% 7% 8% 8%
CAD 4% 12% 5% 13%
USD 54% 49% 51% 48%
Other 10% 17% 12% 17%
--- --- --- ---
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 (recoveries).
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/opentext-reports-fourth-quarter-and-fiscal-year-2016-financial-results-300305066.html
SOURCE Open Text Corporation
