OPEN TEXT CORPORATION Announces up to $200 Million Share Buyback and Update on IRS Tax Matters
Fiscal Year 2015
- Total revenue was $1.9 billion, up 14%; in CC*, up 19%
- Recurring revenue was $1.6 billion, up 18%; in CC up 23%
- Cloud services and subscriptions revenue was $605.3 million, up 62%; in CC, up 67%
- License revenue was $294.3 million, down 4%; in CC, up 3%
Q4 Fiscal 2015
- Total revenue was $482.7 million, down 2%; in CC, up 7%
- Recurring revenue was $385.6 million, down 2%; in CC up 6%
- Cloud services and subscriptions revenue was $149.0 million, down 2%; in CC, up 4%
- License revenue was $97.1 million, down 2%; in CC, up 10%
WATERLOO, Ontario, July 29, 2015 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX) (TSX: OTC) announced today its financial results for the fourth quarter and fiscal year ended June 30, 2015.
"OpenText is helping the world's leading brands digitize their business, both on- and off-premise, and our strategy is showing bright-line success supported by our strong fourth quarter performance. We ended fiscal year 2015 with total revenues of $1.9 billion, up 14% year-over-year, non-GAAP operating margin of 31% and operating cash flows of $523 million," said OpenText CEO Mark J. Barrenechea. "With a more directly aligned sales leadership team in place, our sales organization performed extremely well in Q4, closing 26 deals over $1 million (11 cloud and 15 license)."
Barrenechea further added, "Over the last four years, our non-GAAP operating margin has grown from 27% to 31%, and our cloud revenue from zero to 33%, all while maintaining consistent license revenue on an absolute basis. Our confidence continues into fiscal 2016 and we are raising our non-GAAP operating margin model range to 30% to 34% and raising our annual recurring revenue range to 82% to 86%."
In addition, Barrenechea added, "Today we announced a share buyback of up to $200 million and our quarterly dividend of 20 cents. We also re-affirm our intent to allocate $3 billion in capital to acquisitions in the coming years."
Financial Highlights for Fiscal 2015 with Year Over Year Comparisons (1)
-----------------------------------------------------------------------
Summary of Annual Results FY15 re-presented FX impact -
on a constant higher
currency basis (lower)
-------------------------
FY15 FY14 $ Change % Change
Revenues: (in millions)
----------------------
Cloud services and
subscriptions $605.3 $373.4 $231.9 62.1% $623.3 ($18.0)
Customer support 731.8 707.0 24.8 3.5% 765.5 (33.7)
Professional service and
other 220.5 238.4 (17.9) (7.5)% 232.7 (12.2)
Total Recurring revenues $1,557.7 $1,318.9 $238.8 18.1% $1,621.5 ($63.8)
License 294.3 305.8 (11.5) (3.8)% 314.5 (20.2)
Total revenues $1,851.9 $1,624.7 $227.2 14.0% $1,936.0 ($84.1)
Non-GAAP-based operating
margin (2) 30.9% 30.9% n/a - bps 31.0%
GAAP-based operating margin 18.8% 18.5% n/a 30 bps
Non-GAAP-based EPS,
diluted (2) $3.46 $3.37 $0.09 2.7% $3.64 ($0.18)
GAAP-based EPS, diluted $1.91 $1.81 $0.10 5.5%
Operating cash flows (in
millions) $523.0 $417.1 $105.9 25.4%
------------------------ ------ ------ ------ ----
Financial Highlights for Q4 FY15 with Year Over Year Comparisons (1)
-------------------------------------------------------------------
Q4 FY15 re- FX impact -
presented on higher
a constant (lower)
currency
Summary of Quarterly Results basis
----------------------------
Q4 FY15 Q4 FY14 $ Change % Change
Revenues: (in millions)
Cloud services and
subscriptions $149.0 $151.9 ($2.9) (1.9)% $158.2 ($9.2)
Customer support 184.2 183.9 0.3 0.2% 201.8 (17.6)
Professional service and
other 52.4 59.4 (7) (11.8)% 58.4 (6.0)
Total Recurring revenues $385.6 $395.2 ($9.6) (2.4)% $418.4 ($32.8)
License 97.1 98.9 (1.8) (1.8)% 109.1 (12.0)
Total revenues $482.7 $494.0 ($11.3) (2.3)% $527.5 ($44.8)
Non-GAAP-based operating
margin (2) 30.8% 32.8% n/a (200) bps 31.4%
GAAP-based operating margin 17.1% 21.8% n/a (470) bps
Non-GAAP-based EPS,
diluted (2) $0.87 $1.05 ($0.18) (17.1)% $0.98 ($0.11)
GAAP-based EPS, diluted $0.56 $0.72 ($0.16) (22.2)%
Operating cash flows (in
millions) $131.8 $134.9 ($3.1) (2.3)%
------------------------ ------ ------ ----- -----
"I am very pleased with our bottom line performance in the quarter and for fiscal year 2015, as we increased our operating cash flow by $106 million or 25% year-over-year," said OpenText CFO John Doolittle. "On an adjusted basis, we have delivered 7 year cumulative growth rates of 19% for non-GAAP EPS, 18% for operating cash flow and 22% for non-GAAP net income."
*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.
Quarterly Business Highlights
-- Q415: 26 customer transactions over $1 million, 11 cloud contract
signings in the OpenText Cloud and 15 on-premises
-- Q415: Financial, services and industrial goods industries saw the most
demand
-- Cloud customer successes in the quarter include athenahealth, Wacom Co,
SCL Health, Genpact, The Tennessee Valley Authority (TVA) and Local
Search Association
-- On-premises customer successes in the quarter include St. Lawrence
Seaway Management Corporation (SLSMC), European Central Bank (ECB), City
of Calgary, PriceSmart, U.S. Department of State, Haya Real Estate SI
and ASR Verzekeringen NV
-- OpenText CEO resumes full involvement in day-to-day operations
-- OpenText CEO Mark J. Barrenechea named Results-Oriented CEO of the Year,
by CEO World
-- OpenText awarded "Top Job" seal by the Institute for Leadership and HR
Management at the University Of St. Gallen
-- Released new version of xECM for SAP® with OpenText Business Center,
new SAP HANA® solutions and received its 8th SAP® Pinnacle award
Update on IRS Tax Matters
As we have previously disclosed in our public filings, the United States Internal Revenue Service ("IRS") is examining certain of our tax returns for Fiscal 2010 through Fiscal 2012, and in connection with those examinations is reviewing our internal reorganization in Fiscal 2010 to consolidate certain intellectual property ownership in Luxembourg and Canada and our integration of certain acquisitions into the resulting structure.
As part of these examinations, we received from the IRS a Notice of Proposed Adjustment ("NOPA") in draft form proposing a one-time approximately $280 million increase to our U.S. federal taxes arising from the reorganization in Fiscal 2010 and proposing penalties equal to 20% of the additional taxes, plus interest at the applicable statutory rate (which will continue to accrue until the matter is resolved and may be substantial). A NOPA is an IRS position and does not impose an obligation to pay tax. The draft NOPA may be changed before the final NOPA is issued, including because the IRS reserved the right in the draft NOPA to increase the adjustment. Based on our discussions with the IRS, we expect we will receive an additional NOPA proposing an approximately $80 million increase to our U.S. federal taxes for Fiscal 2012 arising from the integration of Global 360 Holding Corp. into the structure that resulted from the reorganization, accompanied by proposed penalties and interest (although there can be no assurance that this will be the amount reflected in the NOPA when received). Depending upon the outcome of these matters, additional state income taxes plus penalty and interest may be due.
We strongly disagree with the IRS' position and intend to vigorously contest the proposed adjustments to our taxable income. We have not recorded any material accruals in respect of these examinations in our Consolidated Financial Statements. See our Annual Report on Form 10-K filed today for additional information on these matters.
Normal Course Issuer Bid
The Company also announced today 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 Board believes that the proposed purchases are in the best interests of the Company and are a desirable use of corporate funds. 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 77,957 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 311,828 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 its 122,337,654 common shares outstanding as of July 27, 2015, or 6,116,882 common shares, are permitted to be purchased commencing on August 6, 2015 until August 5, 2016. All common shares purchased by OpenText pursuant to the NCIB will be cancelled.
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.
Dividend Program Highlights
Cash Dividend
As part of our quarterly, non cumulative cash dividend program the Board declared on July 28, 2015 a cash dividend of $0.20 per Common Share. The record date for this dividend is August 28, 2015 and the payment date is September 18, 2015. 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
-------------------------
FY15 FY14 % Change
Revenue (million) $1,851.9 $1,624.7 14.0%
GAAP-based gross margin 67.5% 68.5% (100) bps
GAAP-based operating
margin 18.8% 18.5% 30 bps
GAAP-based EPS, diluted $1.91 $1.81 5.5%
Non-GAAP-based gross
margin (2) 72.0% 72.9% (90) bps
Non-GAAP-based
operating margin (2) 30.9% 30.9% - bps
Non-GAAP-based EPS,
diluted (2) $3.46 $3.37 2.7%
------------------- ----- ----- ---
Summary of Quarterly Results
----------------------------
Q4 FY15 Q3 FY15 Q4 FY14 % Change % Change
(Q4 FY15 vs (Q4 FY15 vs
Q3 FY15) Q4 FY14)
Revenue
(million) $482.7 $447.6 $494.0 7.8% (2.3)%
GAAP-
based
gross
margin 68.7% 65.7% 69.1% 300 bps (40) bps
GAAP-
based
operating
margin 17.1% 11.8% 21.8% 530 bps (470) bps
GAAP-
based
EPS,
diluted $0.56 $0.22 $0.72 154.5% (22.2)%
Non-GAAP-
based
gross
margin
(2) 73.5% 70.8% 72.9% 270 bps 60 bps
Non-GAAP-
based
operating
margin
(2) 30.8% 25.7% 32.8% 510 bps (200) bps
Non-GAAP-
based
EPS,
diluted
(2) $0.87 $0.66 $1.05 31.8% (17.1)%
--------- ----- ----- ----- ---- ------
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 29, 2015 at 7:00 p.m. ET through 11:59 p.m. on August 12, 2015 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 1469 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 2016 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, its financial condition, results of operations and earnings, the update on IRS tax matters including statements concerning received and anticipated NOPAs, purchases of common shares by OpenText pursuant to the NCIB, declaration of quarterly dividends, 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; 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 and services 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 final determination of litigation, tax audits and other legal proceedings; (viii) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (ix) the continuous commitment of the Company's customers; and (x) 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 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 ©2015 Open Text Corporation. OpenText is a trademark or registered trademark of Open Text SA and/or Open Text ULC. The list of trademarks is not exhaustive of other trademarks, registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text SA or other respective owners. All rights reserved. For more information, visit: http://www.opentext.com/2/global/site-copyright.html_SKU.
OPEN TEXT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
June 30, 2015 June 30, 2014
------------- -------------
ASSETS
Cash and cash equivalents $699,999 $427,890
Short-term investments 11,166 -
Accounts receivable trade, net of
allowance for doubtful accounts
of $5,987 as of June 30, 2015 and
$4,727 as of June 30, 2014 284,131 292,929
Income taxes recoverable 21,151 24,648
Prepaid expenses and other current
assets 53,191 42,053
Deferred tax assets 30,711 28,215
------ ------
Total current assets 1,100,349 815,735
Property and equipment 160,419 142,261
Goodwill 2,161,592 1,940,082
Acquired intangible assets 679,479 725,318
Deferred tax assets 155,411 161,247
Other assets 85,576 52,041
Deferred charges 37,265 52,376
Long-term income taxes recoverable 8,404 10,638
Total assets $4,388,495 $3,899,698
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $241,370 $231,954
Current portion of long-term debt 8,000 62,582
Deferred revenues 358,066 332,664
Income taxes payable 17,001 12,948
Deferred tax liabilities 997 1,053
--- -----
Total current liabilities 625,434 641,201
Long-term liabilities:
Accrued liabilities 34,682 41,999
Deferred credits 12,943 17,529
Pension liability 56,737 60,300
Long-term debt 1,580,000 1,256,750
Deferred revenues 28,223 17,248
Long-term income taxes payable 151,484 162,131
Deferred tax liabilities 69,185 60,373
------ ------
Total long-term liabilities 1,933,254 1,616,330
Shareholders' equity:
Share capital
122,293,986 and 121,758,432 Common
Shares issued and outstanding at
June 30, 2015 and June 30, 2014,
respectively; Authorized Common
Shares: unlimited 808,010 792,834
Additional paid-in capital 126,417 112,398
Accumulated other comprehensive
income 51,828 39,449
Retained earnings 863,015 716,317
Treasury stock, at cost (625,725
shares at June 30, 2015 and
763,278 at June 30, 2014,
respectively) (19,986) (19,132)
------- -------
Total OpenText shareholders'
equity 1,829,284 1,641,866
Non-controlling interests 523 301
--- ---
Total shareholders' equity 1,829,807 1,642,167
Total liabilities and
shareholders' equity $4,388,495 $3,899,698
========== ==========
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
Year Ended June 30,
-------------------
2015 2014 2013
---- ---- ----
Revenues:
License $294,266 $305,846 $272,985
Cloud services and
subscriptions 605,309 373,400 180,412
Customer support 731,797 707,024 658,216
Professional service and other 220,545 238,429 251,723
------- ------- -------
Total revenues 1,851,917 1,624,699 1,363,336
--------- --------- ---------
Cost of revenues:
License 12,899 13,161 15,995
Cloud services and
subscriptions 239,719 142,666 73,464
Customer support 94,766 95,979 106,172
Professional service and other 173,399 189,947 196,663
Amortization of acquired
technology-based intangible
assets 81,002 69,917 93,610
------ ------ ------
Total cost of revenues 601,785 511,670 485,904
------- ------- -------
Gross profit 1,250,132 1,113,029 877,432
--------- --------- -------
Operating expenses:
Research and development 196,491 176,834 164,010
Sales and marketing 369,920 345,643 289,157
General and administrative 163,042 142,450 109,325
Depreciation 50,906 35,237 24,496
Amortization of acquired
customer-based intangible
assets 108,239 81,023 68,745
Special charges 12,823 31,314 24,034
------ ------ ------
Total operating expenses 901,421 812,501 679,767
------- ------- -------
Income from operations 348,711 300,528 197,665
------- ------- -------
Other income (expense), net (28,047) 3,941 (2,473)
Interest and other related
expense, net (54,620) (27,934) (16,982)
------- ------- -------
Income before income taxes 266,044 276,535 178,210
Provision for income taxes 31,638 58,461 29,690
------ ------ ------
Net income for the period $234,406 $218,074 $148,520
-------- -------- --------
Net (income) loss attributable
to non-controlling interests (79) 51 -
Net income attributable to
OpenText $234,327 $218,125 $148,520
======== ======== ========
Earnings per share-basic
attributable to OpenText $1.92 $1.82 $1.27
===== ===== =====
Earnings per share-diluted
attributable to OpenText $1.91 $1.81 $1.26
===== ===== =====
Weighted average number of
Common Shares outstanding-
basic 122,092 119,674 117,208
======= ======= =======
Weighted average number of
Common Shares outstanding-
diluted 122,957 120,576 118,124
======= ======= =======
Dividends declared per Common
Share $0.7175 $0.6225 $0.1500
======= ======= =======
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
Three Months Ended June 30,
---------------------------
2015 2014
---- ----
Revenues:
License $97,129 $98,863
Cloud services and subscriptions 148,967 151,877
Customer support 184,221 183,869
Professional service and other 52,391 59,369
------ ------
Total revenues 482,708 493,978
------- -------
Cost of revenues:
License 3,511 3,452
Cloud services and subscriptions 58,955 57,838
Customer support 23,514 24,196
Professional service and other 42,746 49,025
Amortization of acquired technology-
based intangible assets 22,454 18,205
------ ------
Total cost of revenues 151,180 152,716
------- -------
Gross profit 331,528 341,262
------- -------
Operating expenses:
Research and development 52,357 47,502
Sales and marketing 104,024 101,240
General and administrative 41,715 41,413
Depreciation 13,390 11,354
Amortization of acquired customer-
based intangible assets 28,741 26,635
Special charges 8,791 5,413
----- -----
Total operating expenses 249,018 233,557
------- -------
Income from operations 82,510 107,705
------ -------
Other income (expense), net 690 1,103
Interest and other related expense, net (18,194) (10,775)
------- -------
Income before income taxes 65,006 98,033
Provision for income taxes (3,763) 9,885
------ -----
Net income for the period $68,769 $88,148
------- -------
Net (income) loss attributable to non-
controlling interests 35 (37)
Net income attributable to OpenText $68,804 $88,111
======= =======
Earnings per share-basic attributable
to OpenText $0.56 $0.72
===== =====
Earnings per share-diluted
attributable to OpenText $0.56 $0.72
===== =====
Weighted average number of Common
Shares outstanding-basic 122,245 121,692
======= =======
Weighted average number of Common
Shares outstanding-diluted 122,888 122,511
======= =======
Dividends declared per Common Share $0.2000 $0.1725
======= =======
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)
Year Ended June 30,
-------------------
2015 2014 2013
---- ---- ----
Net income for the period $234,406 $218,074 $148,520
Other comprehensive income-net of tax:
Net foreign currency translation
adjustments 15,690 (2,779) (1,879)
Unrealized gain (loss) on cash flow
hedges:
Unrealized loss (6,064) (357) (1,054)
Loss (gain) reclassified into net income 5,710 3,242 (1,482)
Actuarial gain (loss) relating to defined
benefit pension plans:
Actuarial loss (3,302) (841) (351)
Amortization of actuarial loss into net
income 357 294 292
Unrealized gain on short-term investments (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 12,379 (441) (4,474)
Total comprehensive income 246,785 217,633 144,046
Comprehensive income attributable to non-
controlling interests (79) 51 -
--- --- ---
Total comprehensive income attributable
to OpenText $246,706 $217,684 $144,046
======== ======== ========
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
Year Ended June 30,
-------------------
2015 2014 2013
---- ---- ----
Cash flows from operating activities:
Net income for the period $234,406 $218,074 $148,520
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and
amortization of intangible
assets 240,147 186,177 186,851
Share-based compensation
expense 22,047 19,906 15,575
Excess tax benefits on
share-based compensation
expense (1,675) (1,844) (915)
Pension expense 4,796 3,232 1,448
Amortization of debt
issuance costs 4,556 3,191 2,123
Amortization of deferred
charges and credits 10,525 11,307 11,815
Loss on sale and write down
of property and equipment 1,368 15 24
Deferred taxes (14,578) (12,334) (5,796)
Release of unrealized gain
on marketable securities
to income (3,098) - -
Write off of unamortized
debt issuance costs 2,919 - -
Changes in operating assets and liabilities:
Accounts receivable 43,189 (17,186) 17,965
Prepaid expenses and other
current assets (3,534) 11,146 4,242
Income taxes 2,933 11,308 (17,053)
Deferred charges and
credits - 9,870 (9,274)
Accounts payable and
accrued liabilities (22,714) (36,478) (41,947)
Deferred revenue 6,775 16,601 5,418
Other assets (5,031) (5,858) (494)
------ ------ ----
Net cash provided by
operating activities 523,031 417,127 318,502
------- ------- -------
Cash flows from investing activities:
Additions of property and
equipment (77,046) (42,268) (23,107)
Proceeds from maturity of
short-term investments 17,017 - -
Purchase of patents - (192) (192)
Purchase of Actuate
Corporation, net of cash
acquired (291,800) - -
Purchase of Informative
Graphics Corporation, net
of cash acquired (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 EasyLink
Services International
Corporation, net of cash
acquired - - (315,331)
Purchase of Resonate KT
Limited, net of cash
acquired - - (19,366)
Purchase of ICCM
Professional Services
Limited, net of cash
acquired - - (11,257)
Purchase of System
Solutions Australia Pty
Limited, net of cash
acquired - - (516)
Purchase of a division of
Spicer Corporation (222) - -
Purchase consideration for
prior period acquisitions (590) (887) (875)
Other investing activities (10,574) (2,547) (3,750)
Net cash used in investing
activities (398,395) (1,153,368) (374,394)
-------- ---------- --------
Cash flows from financing activities:
Excess tax benefits on
share-based compensation
expense 1,675 1,844 915
Proceeds from issuance of
Common Shares 15,240 24,808 16,347
Equity issuance costs - (144) -
Purchase of Treasury Stock (10,126) (1,275) -
Proceeds from long-term
debt 800,000 800,000 -
Repayment of long-term debt (530,284) (45,911) (30,677)
Debt issuance costs (18,271) (16,685) -
Payments of dividends to
shareholders (87,629) (74,693) (17,703)
Net cash used in (provided
by) financing activities 170,605 687,944 (31,118)
------- ------- -------
Foreign exchange gain
(loss) on cash held in
foreign currencies (23,132) 5,742 (2,292)
Increase (decrease) in cash
and cash equivalents
during the period 272,109 (42,555) (89,302)
Cash and cash equivalents
at beginning of the period 427,890 470,445 559,747
Cash and cash equivalents
at end of the period $699,999 $427,890 $470,445
======== ======== ========
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
Three Months Ended June 30,
---------------------------
2015 2014
---- ----
Cash flows from operating
activities:
Net income
for the
period $68,769 $88,148
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation
and
amortization
of
intangible
assets 64,585 56,194
Share-
based
compensation
expense 6,107 4,199
Excess tax
benefits
on share-
based
compensation
expense (64) (169)
Pension
expense 1,194 1,268
Amortization
of debt
issuance
costs 1,146 1,131
Amortization
of
deferred
charges
and
credits 2,632 2,667
Loss on
sale and
write
down of
property
and
equipment 1,250 -
Deferred
taxes (10,541) (8,131)
Release of
unrealized
gain on
marketable
securities
to income - -
Write off
of
unamortized
debt
issuance
costs - -
Changes in operating assets
and liabilities:
Accounts
receivable (33,371) (36,315)
Prepaid
expenses
and other
current
assets 467 29,771
Income
taxes 1,579 5,730
Deferred
charges
and
credits - -
Accounts
payable
and
accrued
liabilities 31,033 (3,600)
Deferred
revenue 70 (3,421)
Other
assets (3,039) (2,558)
------ ------
Net cash
provided
by
operating
activities 131,817 134,914
------- -------
Cash flows from investing
activities:
Additions
of
property
and
equipment (16,460) (13,825)
Proceeds
from
maturity
of short-
term
investments 9,925 -
Purchase
of
Actuate
Corporation,
net of
cash
acquired (32) -
Purchase
of GXS
Group,
Inc., net
of cash
acquired - 785
Purchase
consideration
for prior
period
acquisitions - (222)
Other
investing
activities (1,659) -
Net cash
used in
investing
activities (8,226) (13,262)
------ -------
Cash flows from financing
activities:
Excess tax
benefits
on share-
based
compensation
expense 64 169
Proceeds
from
issuance
of Common
Shares 2,413 5,090
Purchase
of
Treasury
Stock (8,875) -
Repayment
of long-
term debt (9,799) (13,412)
Debt
issuance
costs (195) (653)
Payments
of
dividends
to
shareholders (24,455) (21,001)
Net cash
used in
(provided
by)
financing
activities (40,847) (29,807)
------- -------
Foreign
exchange
gain
(loss) on
cash held
in
foreign
currencies 4,078 (26)
Increase
in cash
and cash
equivalents
during
the
period 86,822 91,819
Cash and
cash
equivalents
at
beginning
of the
period 613,177 336,071
Cash and
cash
equivalents
at end of
the
period $699,999 $427,890
======== ========
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
(recoveries), 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
(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, 2015.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended June 30, 2015
--------------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP-based Non-GAAP-
Measures based
Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues
Cloud services and
subscriptions $58,955 $(252) (1) $58,703
Customer support 23,514 (200) (1) 23,314
Professional
service and other 42,746 (421) (1) 42,325
Amortization of
acquired
technology-based
intangible assets 22,454 (22,454) (2) -
GAAP-based gross
profit and gross
margin (%) / 331,528 68.7% 23,327 (3) 354,855 73.5%
Non-GAAP-based gross profit
and gross margin (%)
Operating expenses
Research and
development 52,357 (665) (1) 51,692
Sales and marketing 104,024 (2,508) (1) 101,516
General and
administrative 41,715 (2,061) (1) 39,654
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
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) 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 dollars, 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
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 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 Non-GAAP-based
adjusted net income to GAAP-based net
income:
Three Months Ended June 30, 2015
--------------------------------
Per share
diluted
----------
Non-GAAP-based net income,
attributable to OpenText $106,935 $0.87
Less:
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)
GAAP-based net income,
attributable to OpenText $68,804 $0.56
======= =====
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-based Non-GAAP-
Measures based
Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues
Cloud services and
subscriptions $239,719 $(833) (1) $238,886
Customer support 94,766 (832) (1) 93,934
Professional
service and other 173,399 (1,335) (1) 172,064
Amortization of
acquired
technology-based
intangible assets 81,002 (81,002) (2) -
GAAP-based gross
profit and gross
margin (%) / 1,250,132 67.5% 84,002 (3) 1,334,134 72.0%
Non-GAAP-based gross profit and
gross margin (%)
Operating expenses
Research and
development 196,491 (2,496) (1) 193,995
Sales and marketing 369,920 (9,095) (1) 360,825
General and
administrative 163,042 (7,456) (1) 155,586
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
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) 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 dollars, 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
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 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 Non-GAAP-based
adjusted net income to GAAP-based net
income:
Year Ended June 30, 2015
------------------------
Per share
diluted
----------
Non-GAAP-based net income,
attributable to OpenText $424,926 $3.46
Less:
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)
GAAP-based net income,
attributable to OpenText $234,327 $1.91
======== =====
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended March 31, 2015.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended March 31, 2015
---------------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP-based Non-GAAP-
Measures based
Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues
Cloud services and
subscriptions $61,950 $(182) (1) $61,768
Customer support 24,092 (224) (1) 23,868
Professional
service and other 42,403 (316) (1) 42,087
Amortization of
acquired
technology-based
intangible assets 22,136 (22,136) (2) -
GAAP-based gross
profit and gross
margin (%) / 294,016 65.7% 22,858 (3) 316,874 70.8%
Non-GAAP-based gross profit
and gross margin (%)
Operating expenses
Research and
development 53,222 (654) (1) 52,568
Sales and marketing 95,787 (1,919) (1) 93,868
General and
administrative 45,722 (3,267) (1) 42,455
Amortization of
acquired customer-
based intangible
assets 28,250 (28,250) (2) -
Special charges
(recoveries) 5,622 (5,622) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 52,604 11.8% 62,570 (5) 115,174 25.7%
Other income
(expense), net (9,550) 9,550 (6) -
Provision for
(recovery of)
income taxes (309) 18,122 (7) 17,813
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 26,610 53,998 (8) 80,608
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $0.22 $0.44 (8) $0.66
(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
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) 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 dollars, 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
rate of approximately 1% 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 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 Non-GAAP-based
adjusted net income to GAAP-based net
income:
Three Months Ended March 31,
2015
-----------------------------
Per share
diluted
----------
Non-GAAP-based net income,
attributable to OpenText $80,608 $0.66
Less:
Amortization 50,386 0.41
Share-based compensation 6,562 0.05
Special charges (recoveries) 5,622 0.05
Other (income) expense, net 9,550 0.08
GAAP-based provision for
(recovery of) income taxes (309) -
Non-GAAP based provision for
income taxes (17,813) (0.15)
------- -----
GAAP-based net income,
attributable to OpenText $26,610 $0.22
======= =====
Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the three months ended June 30, 2014.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended June 30, 2014
--------------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP-based Non-GAAP-
Measures based
Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues:
Cloud services and
subscriptions $57,838 $(197) (1) $57,641
Customer support 24,196 (207) (1) 23,989
Professional
service and other 49,025 (112) (1) 48,913
Amortization of
acquired
technology-based
intangible assets 18,205 (18,205) (2) -
GAAP-based gross
profit and gross
margin (%) / 341,262 69.1% 18,721 (3) 359,983 72.9%
Non-GAAP-based gross profit
and gross margin (%)
Operating expenses
Research and
development 47,502 (450) (1) 47,052
Sales and marketing 101,240 (1,112) (1) 100,128
General and
administrative 41,413 (2,121) (1) 39,292
Amortization of
acquired customer-
based intangible
assets 26,635 (26,635) (2) -
Special charges
(recoveries) 5,413 (5,413) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 107,705 21.8% 54,452 (5) 162,157 32.8%
Other income
(expense), net 1,103 (1,103) (6) -
Provision for
(recovery of)
income taxes 9,885 12,785 (7) 22,670
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 88,111 40,564 (8) 128,675
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $0.72 $0.33 (8) $1.05
(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
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) 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 dollars, 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
rate of approximately 10% and a non-
GAAP-based tax rate of 15%; 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 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 15%, 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 Non-GAAP-based
adjusted net income to GAAP-based net
income:
Three Months Ended June 30, 2014
--------------------------------
Per share
diluted
----------
Non-GAAP-based net income,
attributable to OpenText $128,675 $1.05
Less:
Amortization 44,840 0.37
Share-based compensation 4,199 0.03
Special charges (recoveries) 5,413 0.04
Other (income) expense, net (1,103) (0.01)
GAAP-based provision for
(recovery of) income taxes 9,885 0.08
Non-GAAP based provision for
income taxes (22,670) (0.18)
GAAP-based net income,
attributable to OpenText $88,111 $0.72
======= =====
Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the year ended June 30, 2014.
(In thousands except for per share amounts)
------------------------------------------
Year Ended June 30, 2014
------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP-based Non-GAAP-
Measures based
Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues:
Cloud services and
subscriptions $142,666 $(342) (1) $142,324
Customer support 95,979 (754) (1) 95,225
Professional
service and other 189,947 (855) (1) 189,092
Amortization of
acquired
technology-based
intangible assets 69,917 (69,917) (2) -
GAAP-based gross
profit and gross
margin (%) / 1,113,029 68.5% 71,868 (3) 1,184,897 72.9%
Non-GAAP-based gross profit and
gross margin (%)
Operating expenses
Research and
development 176,834 (2,356) (1) 174,478
Sales and marketing 345,643 (7,312) (1) 338,331
General and
administrative 142,450 (8,287) (1) 134,163
Amortization of
acquired customer-
based intangible
assets 81,023 (81,023) (2) -
Special charges
(recoveries) 31,314 (31,314) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 300,528 18.5% 202,160 (5) 502,688 30.9%
Other income
(expense), net 3,941 (3,941) (6) -
Provision for
(recovery of)
income taxes 58,461 9,569 (7) 68,030
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 218,125 188,650 (8) 406,775
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $1.81 $1.56 (8) $3.37
(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 dollars, and gross
margin stated as a percentage of
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) 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 dollars, 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
rate of approximately 21% and a non-
GAAP-based tax rate of 14.3%; 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 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 14.3%, 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 Non-GAAP-based
adjusted net income to GAAP-based net
income:
Year Ended June 30, 2014
------------------------
Per share
diluted
----------
Non-GAAP-based net income,
attributable to OpenText $406,775 $3.37
Less:
Amortization 150,940 1.25
Share-based compensation 19,906 0.17
Special charges (recoveries) 31,314 0.26
Other (income) expense, net (3,941) (0.03)
GAAP-based provision for
(recovery of) income taxes 58,461 0.48
Non-GAAP based provision for
income taxes (68,030) (0.57)
GAAP-based net income,
attributable to OpenText $218,125 $1.81
======== =====
(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, 2015 and 2014:
Three Months Ended Three Months Ended
June 30, 2015 June 30, 2014
------------- -------------
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
------------ ------------- ------------ -------------
EURO 23% 14% 25% 18%
GBP 8% 8% 9% 10%
CAD 5% 14% 5% 12%
USD 52% 48% 49% 42%
Other 12% 16% 12% 18%
--- --- --- ---
Total 100% 100% 100% 100%
=== === === ===
Year Ended Year Ended
June 30, 2015 June 30, 2014
------------- -------------
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
------------ ------------- ------------ -------------
EURO 24% 14% 27% 18%
GBP 8% 8% 9% 9%
CAD 5% 13% 5% 15%
USD 51% 48% 48% 42%
Other 12% 17% 11% 16%
--- --- --- ---
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
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/opentext-reports-fourth-quarter-and-fiscal-year-2015-financial-results-300120750.html
SOURCE Open Text Corporation
