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OpenText Reports Fourth Quarter and Fiscal Year 2011 Financial Results
Aug 10, 2011 (04:08 PM EDT)


Company Delivers 30% Year-Over-Year Increase in Adjusted EPS

WATERLOO, ON, Aug. 10, 2011 /PRNewswire/ - Open Text(TM) Corporation (NASDAQ:OTEX) (TSX: OTC), today announced financial results for its fourth quarter ended June 30, 2011. (1)

Total revenue for the fourth quarter of fiscal 2011 was $285.5 million, up 19.0% compared to $240.0 million for the same period in the prior fiscal year. License revenue for the fourth quarter of fiscal 2011 was $79.6 million, up 16.2% compared to $68.5 million for the same period in the prior fiscal year.

Adjusted net income for the fourth quarter of fiscal 2011 was $61.5 million or $1.05 per share on a diluted basis, up 12.0% compared to $54.9 million or $0.95 per share on a diluted basis for the same period in the prior fiscal year.  Net income in accordance with U.S. generally accepted accounting principles ("US GAAP") was $28.6 million or $0.49 per share on a diluted basis, compared to $53.2 million or $0.92 per share on a diluted basis for the same period in the prior fiscal year. (2)

Total revenue for fiscal 2011 was $1,033.3 million, up 13.3% compared to $912.0 million in the prior fiscal year. License revenue for fiscal 2011 was $269.2 million, up 13.1% compared to $238.1 million in the prior fiscal year.

Adjusted net income for fiscal 2011 was $234.5 million, up 31.7% compared to $178.0 million in the prior fiscal year.  Adjusted earnings per share for fiscal 2011 was $4.02 per share on a diluted basis, compared to $3.10 per share on a diluted basis, in the prior fiscal year. Net income for fiscal 2011 in accordance with US GAAP was $123.2 million, or $2.11 per share on a diluted basis, compared to $89.2 million, or $1.55 per share on a diluted basis, in the prior fiscal year. (2)

Operating cash flow in the fourth quarter of fiscal 2011 was $52.0 million, compared to $65.2 million for the same period in the prior fiscal year. For the full 2011 fiscal year, Open Text generated $223.2 million in operating cash flow compared to $180.2 million in fiscal 2010.

The cash and cash equivalents balance as of June 30, 2011 was $284.1 million. Accounts receivable as of June 30, 2011 totaled $154.6 million, compared to $132.1 million as of June 30, 2010 and Days Sales Outstanding (DSO) was 49 days in the fourth quarter of fiscal 2011, compared to 50 days in the fourth quarter of fiscal 2010.

"Fiscal 2011 was a strong year for both revenue and profits. With a 30 percent year-over-year increase in adjusted earnings per share, Open Text delivered strong value to its shareholders," said John Shackleton, President and Chief Executive Officer, Open Text. "With the addition of leading Business Process Management (BPM) products, Open Text is focused on distributing its integrated product suite to an even larger global market."

Please see note (2) below for a reconciliation of non-US GAAP based financial measures used in this press release, to US GAAP based financial measures.

Teleconference Call

OpenText will host a conference call on August 10, 2011 at 5:00 p.m. ET to discuss its financial results.

Date: Wednesday, August 10, 2011
Time: 5:00 p.m. ET/2:00 p.m. PT
Length: 60 minutes
Where: 416-644-3415
877-974-0445 (Toll Free)

Investors should dial in approximately 10 minutes before the teleconference is scheduled to begin. A replay of the call will be available beginning August 10, 2011 at 7:00 p.m. ET through 11:59 p.m. on August 24, 2011 and can be accessed by dialing 416-640-1917 and using passcode 4455445 followed by the number sign.

For more information or to listen to the call via web cast, please use the following link:

http://www.opentext.com/2/global/ex_event.html?evtype=events&id=701D0000000UtVeIAK

About OpenText

OpenText (TM) is the world's largest independent provider of Enterprise Content Management software. The company's solutions manage information for all types of business, compliance and industry requirements in large companies, government agencies and professional service firms. OpenText supports approximately 46,000 customers in 114 countries and 12 languages. For more information about OpenText, visit www.opentext.com.

Certain statements in this press release, including statements about the financial conditions, and results of operations and earnings for Open Text Corporation ("OpenText" or "the Company"),  may contain words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on the Company's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. The Company's assumptions, although considered reasonable by the Company at the date of this press release, may provide to be inaccurate and consequently the Company's actual results could differ materially from the expectations set out herein.

Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) the future performance, financial and otherwise, of OpenText; (ii) the ability of OpenText to bring new products to market and to increase sales; (iii) the strength of the Company's product development pipeline; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the ECM market; (vi) the Company's competitive position in the ECM market and its ability to take advantage of future opportunities in this market; (vii) the benefits of the Company's products to be realized by customers; and (viii) the demand for the Company's product and the extent of deployment of the company's products in the ECM marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (ii) the possibility that the Company may be unable to meet its future reporting requirements under the Securities Exchange Act of 1934, as amended, and the rules promulgated there under; (iii) the risks associated with bringing new products to market; (iv) fluctuations in currency exchange rates; (v) delays in the purchasing decisions of the Company's customers; (vi) the competition the Company faces in its industry and/or marketplace; (vii) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (viii) the continuous commitment of the Company's customers; and (ix) demand for the Company's products.

For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the SEC and other securities regulators. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Copyright © 2011 by Open Text Corporation. "OPENTEXT", "OPENTEXT EVERYWHERE" and the "OPENTEXT ECM SUITE" are trademarks or registered trademarks of Open Text Corporation in the United States of America, Canada, the European Union and/or other countries. This list of trademarks is not exhaustive. Other trademarks, registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text Corporation or other respective owners.

Notes

(1) Based on comparison of historical revenue figures publicly disseminated by companies in the Enterprise Content Management ("ECM") sector. All dollar amounts in this press release are in US Dollars unless otherwise indicated.

(2) Use of US Non-GAAP financial measures

In addition to reporting financial results in accordance with US GAAP, the Company provides certain non-US GAAP financial measures that are not in accordance with US GAAP. These non-US GAAP financial measures have certain limitations in that they do not have a standardized meaning and thus the Company's definition may be different from similar non-US GAAP financial measures used by other companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company's financial performance to that of other companies. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of adjusted net income and adjusted EPS both in its reconciliation to the US GAAP financial measures of net income and EPS and its consolidated financial statements, all of which should be considered when evaluating the Company's results. The Company uses the financial measures adjusted EPS and adjusted net income to supplement the information provided in its consolidated financial statements, which are presented in accordance with US GAAP. The presentation of adjusted net income and adjusted EPS is not meant to be a substitute for net income or net income per share presented in accordance with US GAAP, but rather should be evaluated in conjunction with and as a supplement to such US GAAP measures. 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 US GAAP measures with certain non-US GAAP measures for the reasons set forth below. Adjusted net income and adjusted EPS are calculated as net income or net income per share on a diluted basis, excluding, where applicable, the amortization of acquired intangible assets, other income (expense), share-based compensation, and restructuring, all net of tax. The Company's management believes that the presentation of adjusted net income and adjusted EPS provides useful information to investors because it excludes non-operational charges. The use of the term "non-operational charge" is defined by the Company as those that do not impact operating decisions taken by the Company's management and is based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports. In the course of such evaluation and for the purpose of making operating decisions, the Company's management excludes certain items from its analysis, such as amortization of acquired intangible assets, restructuring costs, share-based compensation, other income (expense) and the taxation impact of these items. These items are excluded based upon the manner in which management evaluates the business of the Company and are not excluded in the sense that they may be used under US GAAP. The Company believes the provision of supplemental non-US GAAP measures allows investors to evaluate the operational and financial performance of the Company's core business using the same evaluation measures that management uses, and is therefore a useful indication of OpenText's performance or expected performance of recurring operations and facilitates period-to-period comparison of operating performance. As a result, the Company considers it appropriate and reasonable to provide, in addition to US GAAP measures, supplementary non-US GAAP financial measures that exclude certain items from the presentation of its financial results in this press release.

The following charts provide (unaudited) reconciliations of US GAAP based financial measures to non-US GAAP based financial measures for the three months and year ended June 30, 2011, as referred to in this press release:

Non GAAP-based Adjusted Operating Margin and Adjusted Net income*:

In '000s of USD Three months ended June 30, 2011 Percentage Year ended June 30, 2011 Percentage OpenText Fiscal 2011
Target Model
Revenue:          
License………………………………................................   $             79,558 27.9% $           269,202 26.1% 25-30%
Customer Support…………………................................. 150,956 52.9% 560,541 54.2% 52-57%
Service and Other…………………................................. 54,939 19.2% 203,560 19.7% 18-23%
Total Revenue………………………............................... 285,453   1,033,303    
           
Cost of revenues (excluding amortization of
acquired technology-based intangible
assets)…………………………………….........................
76,537   272,972    
Gross profit (excluding amortization of
acquired technology-based intangible
assets)…………………………………….........................
208,916 73.2% 760,331 73.6% 73-75%
Operating expenses:          
Research & Development……………............................. 39,437 13.8% 145,992 14.1% 14-16%
Sales & Marketing…………………….............................. 68,417 24.0% 232,332 22.5% 21-23%
General & Administrative…………….............................. 24,085 8.4% 86,696 8.4% 8-10%
Depreciation…………………………................................ 6,066 2.1% 22,116 2.1% 2%
  138,005   487,136    
Gross profit less operating expenses… 70,911   273,195    
Add: Share -based compensation expense.................... 2,876   11,308    
Non GAAP-based Adjusted Operating Margin…………………………………............................. 73,787 25.8% 284,503 27.5% 25-30%
Less: Interest expense…………………........................... 2,253   11,838    
Sub-total……………………………….............................. 71,534   272,665    
Less: tax @ 14% 10,015   38,173    
Non GAAP-based Adjusted Net Income $              61,519   $          234,492    
           
Non GAAP-based Adjusted Net Income per share………………………………................................... $                  1.05   $                4.02    

Reconciliation of Non GAAP-based Adjusted Operating Margin to GAAP-based Net Income:

In '000s of USD Three months ended
June 30, 2011
  Year ended
June 30, 2011
 
Non GAAP-based Adjusted Operating Margin…………………………………...................................... $                      73,787   $                   284,503  
Less:        
Amortization……………………………...................................... 29,331   107,014  
Share-based compensation expense……............................... 2,876   11,308  
Special charges………………………....................................... 4,483   15,576  
Other expense, net…………................................................... 5,477   6,095  
Interest expense, net…………………….................................. 2,253   11,838  
GAAP-based provision for income taxes................................. 775   9,469  
GAAP-based net income for the period…...............................     $                    28,592   $                      123,203  
         
Reconciliation of  Non GAAP based Adjusted  Net income to GAAP-based Net Income:  
In '000s of USD (except per share data)   Per share   Per share
Non GAAP-based Adjusted Net Income $                     61,519       $  1.05 $                   234,492 $     4.02
Less:        
Amortization……………………………...................................... 29,331                 0.50 107,014 1.84
Share-based compensation expense……............................... 2,876                 0.05 11,308 0.19
Special charges…………………………................................... 4,483                 0.08 15,576 0.27
Other expense, net……………................................................ 5,477 0.09 6,095 0.10
GAAP-based provision for income taxes................................. 775 0.01 9,469 0.16
Tax provision on non GAAP-based
adjusted net income (per above), @14%……….…….............
                                      (10,015) (0.17) (38,173) (0.65)
GAAP-based net income for the period.................................. $                     28,592 $    0.49 $                     123,203 $    2.11
         

*Amounts may differ from those shown on the face of the financial statements due to non-material rounding adjustments.

The following tables present non GAAP-based measures and their (unaudited) reconciliation to GAAP, for the three months and year ended June 30, 2010:

Non GAAP-based Adjusted Operating Margin and Adjusted Net income*:

In '000s of USD Three months ended June 30,
2010
Percentage Year ended
June 30, 2010
Percentage OpenText
Fiscal 2010
Target Model
Revenue:          
License……………………………………………............................ $              68,527 28.5% $           238,074 26.1% 25-30%
Customer Support………………………………............................. 129,077 53.8% 507,452 55.6% 50-55%
Service and Other………………………………............................. 42,430 17.7% 166,497 18.3% 20-25%
Total Revenue…………………………………….......................... 240,034   912,023    
           
Cost of revenues (excluding amortization of
acquired technology-based intangible assets).....................
60,292   236,059    
Gross profit (excluding amortization of
acquired technology-based intangible assets).....................
179,742 74.9% 675,964 74.1% 72-75%
Operating expenses:          
Research & Development………………………............................. 31,835 13.3% 129,378 14.2% 14-16%
Sales & Marketing……………………………….............................. 47,644 19.8% 198,208 21.7% 24-26%
General & Administrative……………………….............................. 21,288 8.9% 83,295 9.1% 9-10%
Depreciation……………………………………............................... 4,443 1.9% 17,425 1.9% 2%
  105,210   428,306    
Gross profit less operating expenses………….................... 74,532   247,658    
Add: Share -based compensation expense **…......................... 2,611   6,601    
Non GAAP-based Adjusted Operating Margin...................... 77,143 32.1% 254,259 27.9% 22-27%
Less: Interest expense…………………………….......................... 1,979   10,366    
Sub-total…………………………………………............................. 75,164   243,893    
Less: tax @ 27% 20,294   65,851    
Non GAAP-based Adjusted Net Income $             54,870   $           178,042    
           
Non GAAP-based Adjusted Net Income per share…………………………………………….............................. $                 0.95   $                 3.10    

Reconciliation of  Non GAAP-based Adjusted Operating Margin  to GAAP-based Net Income:
In '000s of USD Three months ended June 30, 2010   Year ended June 30, 2010  
Non GAAP-based Adjusted Operating Margin…………………………………............. $                       77,143   $                   254,259  
Less:        
Amortization……………………………............. 25,512   96,412  
Share-based compensation expense……...... 2,611   6,601  
Special charges……………………….............. 6,913   42,008  
Other expense, net………….......................... 4,564   8,349  
Interest expense, net……………………......... 1,979   10,366  
GAAP-based provision for  income taxes   (17,603)   1,311  
GAAP-based net income for the period…...... $                       53,167   $                    89,212  
         
Reconciliation of  Non GAAP based Adjusted  Net income to GAAP-based Net Income:
In '000s of USD (except per share data)   Per share   Per share
Non GAAP-based Adjusted Net Income………………………………................ $                      54,870                $     0.95 $                      178,042 $    3.10
Less:        
Amortization……………………………............. 25,512 0.44 96,412 1.68
Share-based compensation expense……...... 2,611 0.04 6,601 0.12
Special charges………………………….......... 6,913 0.12 42,008 0.73
Other expense, net……………....................... 4,564 0.08 8,349 0.15
GAAP-based provision for income taxes........ (17,603) (0.30) 1,311 0.02
Tax on non GAAP-based adjusted net income (per above), @27%........................... (20,294) (0.35) (65,851) (1.15)
GAAP-based net income for the period......... $                      53,167     0.92 $                       89,212 $    1.55
         

*Amounts may differ from those shown on the face of the financial statements due to non-material rounding adjustments.

** For the year ended June 30, 2010, $3.2 million of share-based compensation was included within Special charges.

(3) The following table provides a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three months and year ended June 30, 2011:

         
    Three months ended June 30, 2011
         
Currencies     % of Revenue     % of Expenses*  
EURO .........................................       25%   20%
GBP............................................                    10%   10%
CHF ............................................   5%   2%
CAD ............................................   6%   25%
USD ............................................   44%   31%
Others ........................................   10%   12%
Total ..........................................         100%                  100%
         
         
       
    Year ended June 30, 2011
         
Currencies     % of Revenue     % of Expenses*  
EURO .........................................      25%    20%
GBP ............................................                    9%   9%
CHF ............................................   5%   2%
CAD ...........................................   8%   27%
USD ...........................................   44%   31%
Others ........................................   9%   11%
Total          100%                 100%
         

Expenses include all cost of revenues and operating expenses included within the Consolidated Statements of Income, except for amortization of intangible assets, share-based compensation and special charges.

OPEN TEXT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)  

         
    June 30,
2011  
  June 30,
2010  
         
ASSETS        
Cash and cash equivalents...........................................................................................................   $ 284,140    $ 326,192 
Accounts receivable trade, net of allowance for doubtful accounts of $5,424 as of
June 30, 2011 and $4,868 as of June 30, 2010............................................................................ 
        154,568          132,143 
Income taxes recoverable..............................................................................................................         18,911          44,509 
Prepaid expenses and other current assets..................................................................................         29,678          21,086 
Deferred tax assets........................................................................................................................          27,861          20,242 
    Total current assets........................................................................................................          515,158          544,172 
Capital assets................................................................................................................................          77,825          54,286 
Goodwill.........................................................................................................................................          832,481          666,055 
Acquired intangible assets............................................................................................................         344,995          328,193 
Deferred tax assets.......................................................................................................................         42,737          30,420 
Other assets..................................................................................................................................         19,359          16,896 
Deferred charges..........................................................................................................................         54,989          27,558 
Long-term income taxes recoverable............................................................................................          44,819          48,102 
  Total assets..............................................................................................................................    $ 1,932,363    $ 1,715,682 
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Current liabilities:        
  Accounts payable and accrued liabilities.....................................................................................    $ 126,249    $ 119,604 
  Current portion of long-term debt................................................................................................          15,545          15,486 
  Deferred revenues......................................................................................................................          254,531          219,752 
  Income taxes payable..................................................................................................................          18,424          39,666 
  Deferred tax liabilities..................................................................................................................          624          28,384 
    Total current liabilities.............................................................................................................          415,373          422,892 
Long-term liabilities:        
  Accrued liabilities..........................................................................................................................         13,727          15,755 
  Deferred credits............................................................................................................................          6,878          —   
  Pension liability.............................................................................................................................          18,478          15,888 
  Long-term debt...........................................................................................................................          282,033          285,026 
  Deferred revenues.......................................................................................................................          11,466          10,085 
  Long-term income taxes payable..................................................................................................          101,434          64,699 
  Deferred tax liabilities...................................................................................................................         43,529          13,459 
    Total long-term liabilities.........................................................................................................         477,545          404,912 
Shareholders' equity:        
  Share capital................................................................................................................................        
    57,301,812 and 56,825,995 Common Shares issued and outstanding at June 30, 2011 and 
June 30, 2010, respectively; Authorized Common Shares: unlimited....................................... 
        614,279          602,868 
  Additional paid-in capital..............................................................................................................         74,301          61,298 
  Accumulated other comprehensive income...................................................................................          60,470         44,021 
  Retained earnings.........................................................................................................................    316,894   193,691
  Treasury stock, at cost (572,413 and 307,579 shares, respectively at June 30, 2011 and
June 30, 2010)............................................................................................................................. 
        (26,499)         (14,000)
Total shareholders' equity...............................................................................................................          1,039,445          887,878 
  Total liabilities and shareholders' equity...............................................................................    $ 1,932,363    $ 1,715,682 
         

       

OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except per share data)  

             
    Year ended June 30,
    2011     2010     2009  
Revenues:            
  License..................................................................................    $ 269,202    $ 238,074    $ 229,818 
  Customer support..................................................................          560,541          507,452          405,310 
  Service and other..................................................................          203,560          166,497          150,537 
    Total revenues...................................................................          1,033,303          912,023          785,665 
             
Cost of revenues:            
  License..................................................................................          18,284          16,922          16,204 
  Customer support..................................................................          86,834          83,741          68,902 
  Service and other..................................................................          167,854          135,396          118,998 
  Amortization of acquired technology-based intangible
assets.................................................................................... 
        68,048          60,472          47,733 
    Total cost of revenues........................................................          341,020          296,531          251,837 
Gross profit..............................................................................          692,283          615,492          533,828 
             
Operating expenses:            
  Research and development..................................................          145,992          129,378          116,164 
  Sales and marketing..............................................................          232,332          198,208          186,533 
  General and administrative...................................................          86,696          83,295          73,842 
  Depreciation..........................................................................          22,116          17,425          12,012 
  Amortization of acquired customer-based intangible assets..          38,966          35,940          33,259 
  Special charges....................................................................          15,576          42,008          14,434 
    Total operating expenses...................................................          541,678          506,254          436,244 
Income from operations...........................................................          150,605          109,238          97,584 
Other expense, net..................................................................          (6,095)         (8,349)         (3,238)
Interest expense, net...............................................................          (11,838)         (10,366)         (13,620)
Income before income taxes....................................................          132,672          90,523          80,726 
Provision for income taxes.......................................................          9,469          1,311          23,788 
Net income for the year...........................................................    $ 123,203    $ 89,212    $ 56,938 
Net income per share—basic...................................................    $ 2.16   $ 1.59    $ 1.09 
Net income per share—diluted................................................    $ 2.11    $ 1.55    $ 1.07 
Weighted average number of Common Shares
outstanding—basic.................................................................. 
        57,077          56,280          52,030 
Weighted average number of Common Shares
outstanding—diluted................................................................ 
        58,260          57,385          53,271 
             

OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)  

             
    Year ended June 30,
    2011     2010     2009  
Cash flows from operating activities:            
  Net income for the year.........................................................................................    $ 123,203   $ 89,212   $ 56,938
  Adjustments to reconcile net income to net cash provided by operating activities:            
    Depreciation and amortization............................................................................          129,130         113,837         93,004
    In-process research and development...............................................................          —         —         121
    Share-based compensation expense.................................................................          11,308         9,765         5,032
    Excess tax benefits from share-based compensation.........................................          (1,888)         (1,143)         (8,631)
    Pension expense................................................................................................          552         211         1,377
    Amortization of debt issuance costs...................................................................          1,359         1,390         1,099
    Unrealized gain on financial instruments............................................................               —         (878)         (1,682)
    Loss on sale and write down of capital assets....................................................          12         136         130
    Release of unrealized gain on marketable securities to income.........................               —         (4,353)         —
    Deferred taxes...................................................................................................          (17,779)         (24,219)         (9,914)
    Impairment charges (recoveries) and other impacts..........................................          (482)         (1,081)         223
  Changes in operating assets and liabilities:            
    Accounts receivable...........................................................................................          200         24,521         43,761
    Prepaid expenses and other current assets.......................................................          1,833         (814)         (3,080)
    Income taxes......................................................................................................          17,963         5,066         23,274
    Deferred charges and credits............................................................................          (29,071)         —             —
    Accounts payable and accrued liabilities............................................................          (21,197)         (11,340)         (15,999)
    Deferred revenue...............................................................................................                10,738         3,077         (6,861)
    Other assets.......................................................................................................          (2,660)         (23,196)         (2,622)
Net cash provided by operating activities..................................................................          223,221         180,191         176,170
Cash flows from investing activities:            
    Additions of capital assets-net.............................................................................          (36,662)         (19,314)         (12,150)
    Purchase of weComm Limited, net of cash acquired............................................          (20,198)               —         —
    Purchase of Metastorm Inc., net of cash acquired...............................................          (168,657)               —         —
    Purchase of Streamserve Inc., net of cash acquired............................................          (57,221)               —         —
    Purchase of Burntsand Inc., net of cash acquired...............................................               —         (8,163)         —
    Purchase of Nstein Technologies Inc., net of cash acquired................................               —         (20,370)         —
    Purchase of New Generation Consulting Inc........................................................          (471)         (3,500)         —
    Purchase of Vignette Corporation, net of cash acquired.....................................               —         (90,600)         —
    Purchase of Vizible Corporation...........................................................................          —         —         (850)
    Purchase of Captaris Inc., net of cash acquired..................................................          —         —         (101,033)
    Purchase of eMotion LLC, net of cash acquired..................................................               —         (556)         (3,635)
    Purchase of a division of Spicer Corporation.......................................................          —         —         (11,437)
    Purchase consideration for prior period acquisitions...........................................          (4,577)         (12,843)         (22,794)
    Investments in marketable securities...................................................................               518              —         (8,930)
    Maturity of short-term investments.......................................................................               —         45,525         —
Net cash used in investing activities..........................................................................          (287,268)         (109,821)         (160,829)
Cash flow from financing activities:            
    Excess tax benefits on share-based compensation expense...............................          1,888         1,143         8,631 
    Proceeds from issuance of Common Shares.......................................................          11,512         9,971         19,593 
    Purchase of Treasury Stock................................................................................          (12,499)         (14,000)         —
    Repayment of long-term debt..............................................................................          (3,575)         (3,485)         (3,426)
    Debt issuance costs.............................................................................................                (29)         (1,024)         —
Net cash provided by (used in) financing activities....................................................          (2,703)         (7,395)         24,798 
Foreign exchange gain (loss) on cash held in foreign currencies.............................            24,698         (12,602)         (19,236)
Increase (decrease) in cash and cash equivalents during the year..........................              (42,052)         50,373         20,903 
Cash and cash equivalents at beginning of the year.................................................          326,192         275,819         254,916 
Cash and cash equivalents at end of the year..........................................................    $ 284,140   $ 326,192   $ 275,819 
             

OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except per share data)  

         
  Three months ended
June 30,
    2011     2010  
Revenues:        
  License...........................................................................................    $ 79,558   $ 68,527
  Customer support...........................................................................          150,956         129,077
  Service and other...........................................................................          54,939         42,430
    Total revenues............................................................................          285,453         240,034
         
Cost of revenues:        
  License...........................................................................................          5,547         5,400
  Customer support...........................................................................          23,237         20,532
  Service and other          47,753         34,360
  Amortization of acquired technology-based intangible assets.........          18,524         16,134
    Total cost of revenues.................................................................          95,061         76,426
Gross profit........................................................................................          190,392         163,608
         
Operating expenses:        
  Research and development............................................................          39,437         31,835
  Sales and marketing.......................................................................          68,417         47,644
  General and administrative.............................................................          24,085         21,288
  Depreciation...................................................................................          6,066         4,443
  Amortization of acquired customer-based intangible assets...........          10,807         9,378
  Special charges..............................................................................          4,483         6,913
    Total operating expenses............................................................          153,295         121,501
Income from operations.....................................................................          37,097         42,107
Other expense, net............................................................................          (5,477)         (4,564)
Interest expense, net.........................................................................          (2,253)         (1,979)
Income before income taxes..............................................................          29,367         35,564
Provision for (recovery of) income taxes............................................          775        (17,603)
Net income for the period...................................................................    $ 28,592   $ 53,167
Net income per share—basic.............................................................    $ 0.50   $ 0.94
Net income per share—diluted...........................................................    $ 0.49   $ 0.92
Weighted average number of Common Shares outstanding—basic..          57,276           56,802
Weighted average number of Common Shares outstanding—diluted          58,581         57,897
         

OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)

  Three months ended
June 30,   
    2011   2010
Cash flows from operating activities:        
Net income for the period..................................................................................    $ 28,592   $ 53,167
Adjustments to reconcile net income to net cash provided by operating
activities:
       
  Depreciation and amortization of intangible assets........................................          35,397         29,955
  Share-based compensation expense.............................................................          2,876         2,611
  Excess tax benefits on share-based compensation expense.........................          (311)         (239)
  Pension expense............................................................................................                     165                     (351)
  Amortization of debt issuance costs...............................................................          349         326
  Deferred taxes...............................................................................................          (6,990)         (20,505)
  Impairment and other non cash charges........................................................                (482)                 (1,911)
Changes in operating assets and liabilities:        
  Accounts receivable.......................................................................................          (4,339)         568
  Prepaid expenses and other current assets...................................................          1,709         492
  Income taxes...................................................................................................          (3,857)         23,304
  Deferred charges and credits.........................................................................                101               —
  Accounts payable and accrued liabilities........................................................          825         126
  Deferred revenues..........................................................................................                   (2,075)         4,106
  Other assets...................................................................................................        (3)                (26,429)
         
Net cash provided by operating activities..........................................................          51,957         65,220
Cash flows from investing activities:        
  Additions of capital assets-net.........................................................................          (10,126)         (4,045)
  Purchase of Burntsand Inc., net of cash acquired...........................................                 —          (8,163)
  Purchase of Nstein Technologies Inc., net of cash acquired...........................                 —          (20,370)
  Purchase of New Generation Consulting Inc., net of cash acquired................                  (471)                  (3,500)
  Purchase consideration for prior period acquisitions.......................................       (371)         (1,436)
  Investments in marketable securities...............................................................          1,186          —
         
Net cash used in investing activities...................................................................          (9,782)                (37,514)
Cash flow from financing activities:        
  Excess tax benefits on share-based compensation expense...........................          311         239
  Proceeds from issuance of Common Shares...................................................          2,128         1,034
  Purchase of Treasury Stock.............................................................................         —                (14,000)
  Repayment of long-term debt..........................................................................          (914)         (878)
         
Net cash provided by (used in) financing activities............................................          1,525                (13,605)
Foreign exchange gain (loss) on cash held in foreign currencies......................          2,693                  (9,237)
Increase in cash and cash equivalents during the period..................................          46,393               4,864
Cash and cash equivalents at beginning of the period......................................          237,747         321,328
         
Cash and cash equivalents at end of the period...............................................    $ 284,140   $ 326,192
         

SOURCE Open Text Corporation