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 OpenText Reports Fourth Quarter and Fiscal Year 2016 Financial Results
   Wednesday, July 27, 2016 4:01:00 PM ET

Fiscal 2016

Total revenue of $1.8 billion, down 1%; up 3% Y/Y in CC*

Recurring revenue of $1.5 billion, down 1%; up 3% Y/Y in CC

Cloud services and subscription revenue of $601 million, down 1%; up 2% Y/Y in CC

License revenue of $284 million, down 4%; up 2% Y/Y in CC

GAAP EPS, diluted was $2.33, up 22% Y/Y

Non-GAAP-based EPS of $3.54, up 2% Y/Y

Q4 Fiscal 2016

Total revenue of $484 million, up 0.2%; up 0.2% Y/Y in CC

Recurring revenue of $398 million, up 3%; up 3% Y/Y in CC

Cloud services and subscription revenue of $157 million, up 5%; up 5% Y/Y in CC

License revenue of $86 million, down 11%; down 12% Y/Y in CC

GAAP EPS, diluted was $0.71, up 27% Y/Y

Non-GAAP-based EPS of $0.89, up 2% Y/Y

Open Text Corporation (OTEX ) (TSX: OTC) announced today its financial results for the fourth quarter and fiscal year ended June 30, 2016.

"Fiscal 2016 was a pivotal year for OpenText, in constant currency, we grew revenues 3% and created a more efficient business and expanded our adjusted operating margin by 240 bps. More importantly, we believe we have created the foundation for Fiscal 2017 to be a double-digit growth year led by M&A," said OpenText CEO & CTO Mark J. Barrenechea. "During our Fiscal 2016 fourth quarter we announced four acquisitions that will add revenue, operating income and cash flow."

Barrenechea further added, "In Fiscal 2017, we expect all of our revenue lines and adjusted operating income to grow double digit. We also have the balance sheet and bandwidth to continue acquiring businesses."

Barrenechea concluded, "With our recent acquisitions, Release 16, EP Series, our enhancement packs, and Magellan, our next generation cognitive platform, we expect to grow our market share in Fiscal 2017."

Financial Highlights for Fiscal 2016 with Year Over Year Comparisons (1)
Summary of Annual Results
                                    FY16      FY15      $ Change % Change FY16 in CC* % Change in
                                                                 (Y/Y)                CC*
Revenues: (in millions)
Cloud services and subscriptions    $601.0    $605.3    ($4.3)   (0.7)%   $620.4      2.5%
Customer support                    746.4     731.8     14.6     2.0%     779.1       6.5%
Professional service and other      193.1     220.5     (27.4)   (12.4)%  205.6       (6.8)%
Total Recurring revenues            $1,540.5  $1,557.6  ($17.1)  (1.1)%   $1,605.1    3.0%
License                             283.7     294.3     (10.6)   (3.6)%   298.8       1.5%
Total revenues                      $1,824.2  $1,851.9  ($27.7)  (1.5)%   $1,903.9    2.8%
GAAP-based operating margin         20.2%     18.8%     n/a      140 bps
Non-GAAP-based operating margin (2) 33.8%     30.9%     n/a      290 bps  33.3%       240 bps
GAAP-based EPS, diluted             $2.33     $1.91     $0.42    22.0%
Non-GAAP-based EPS, diluted (2)     $3.54     $3.46     $0.08    2.3%     $3.66       5.8%
Operating cash flows (in millions)  $525.7    $523.0    $2.7     0.5%
Note: Individual line items in tables may be adjusted by non-material amounts to enable totals to align to published financial statements.
Summary of Quarterly Results
                                    Q4 FY16 Q4 FY15 $ Change % Change Q4 FY16 in CC* % Change in
                                                             (Y/Y)                   CC*
Revenues: (in millions)
Cloud services and subscriptions    $156.6  $149.0  $7.6     5.1%     $156.8         5.2%
Customer support                    193.0   184.2   8.8      4.7%     193.0          4.8%
Professional service and other      48.1    52.4    (4.3)    (8.2)%   48.4           (7.6)%
Total Recurring revenues            $397.7  $385.6  $12.1    3.1%     $398.2         3.3%
License                             86.1    97.1    (11)     (11.3)%  85.6           (11.8)%
Total revenues                      $483.8  $482.7  $1.1     0.2%     $483.8         0.2%
GAAP-based operating margin         19.3%   17.1%   n/a      220 bps
Non-GAAP-based operating margin (2) 32.7%   30.8%   n/a      190 bps  32.1%          130 bps
GAAP-based EPS, diluted             $0.71   $0.56   $0.15    26.8%
Non-GAAP-based EPS, diluted (2)     $0.89   $0.87   $0.02    2.3%     $0.87          --%
Operating cash flows (in millions)  $119.1  $131.8  ($12.7)  (9.6)%
 
Note: Individual line items in tables may be adjusted by non-material amounts to enable totals to align to published financial statements.
"In Fiscal 2016, we delivered solid operating cash flow. This demonstrates our strong track record of performance achieving a ten-year cumulative growth rate of 24% for both adjusted operating income and operating cash flow," said OpenText CFO John Doolittle. "Our balance sheet and liquidity position remain very strong with approximately $1.3 billion of cash at the end of the quarter. We also announced the reorganization of our intellectual property to Canada with the view of continuing to enhance operational and administrative efficiencies, among other benefits, while preserving predictability in our future tax rate."
*CC: Constant currency for this purpose is defined as the current period reported revenues/expenses/earnings represented at the prior comparative period’s foreign exchange rate.

OpenText Quarterly Business Highlights

-- 20 customer transactions over $1 million, 10 OpenText Cloud contract signings and 10 on-premises

-- Financial, services and technology industries saw the most demand in cloud and license

-- New customers in the quarter included Red Hat Inc., s.Oliver, Nevada State Controller’s Office, Schwan Cosmetics, Kamehameha Schools, eMeter Corporation, APA Group, State Of Iowa, KUKA, Miller Insurance Services LLP, Kno2, Delta RM, Sanofi, Mount Sinai Health System, Inland Revenue Department, HKSAR and Constellation Brands

-- OpenText signs definitive agreement to acquire Customer Communications Management assets from HP Inc.

-- OpenText signs definitive agreement to acquire Recommind, Inc.

-- OpenText signs definitive agreement to acquire, and closes acquisition of, ANXe Business Corporation

-- OpenText signs definitive agreement to acquire, and closes acquisition of, certain customer experience software and services assets and liabilities from HP Inc.

-- OpenText receives 2016 SAP? Pinnacle Award: Application Innovation Partner of the Year

-- Thousands attend OpenText Enterprise World 2016

Dividend Program Highlights

Cash Dividend

As part of our quarterly, non cumulative cash dividend program the Board declared on July 26, 2016 a cash dividend of $0.23 per Common Share. The record date for this dividend is August 26, 2016 and the payment date is September 16, 2016. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of our Board of Directors.

Summary of Annual Results
                                    FY16      FY15      % Change
Revenue (million)                   $1,824.2  $1,851.9  (1.5)%
GAAP-based gross margin             68.5%     67.7%     80 bps
GAAP-based operating margin         20.2%     18.8%     140 bps
GAAP-based EPS, diluted             $2.33     $1.91     22.0%
Non-GAAP-based gross margin (2)     72.8%     72.2%     60 bps
Non-GAAP-based operating margin (2) 33.8%     30.9%     290 bps
Non-GAAP-based EPS, diluted (2)     $3.54     $3.46     2.3%
Summary of Quarterly Results
                                    Q4 FY16 Q3 FY16 Q4 FY15 % Change     % Change
                                                            (Q4 FY16 vs  (Q4 FY16 vs
                                                            Q3 FY16)     Q4 FY15)
Revenue (million)                   $483.8  $440.5  $482.7  9.8%         0.2%
GAAP-based gross margin             68.4%   67.9%   68.8%   50 bps       (40) bps
GAAP-based operating margin         19.3%   20.1%   17.1%   (80) bps     220 bps
GAAP-based EPS, diluted             $0.71   $0.57   $0.56   24.6%        26.8%
Non-GAAP-based gross margin (2)     72.4%   72.0%   73.6%   40bps        (120) bps
Non-GAAP-based operating margin (2) 32.7%   31.4%   30.8%   130bps       190 bps
Non-GAAP-based EPS, diluted (2)     $0.89   $0.80   $0.87   11.3%        2.3%

Normal Course Issuer Bid

The Company also announced today the authorization of a new share repurchase plan and that it intends to purchase in open market transactions, from time to time over the next 12 months, if considered advisable, up to an aggregate of $200,000,000 of its common shares on NASDAQ Global Select Market, the Toronto Stock Exchange (the "TSX") and/or other exchanges and alternative trading systems in Canada and/or the United States, if eligible. The price that OpenText will pay for common shares in open market transactions will be the market price at the time of purchase or such other price as may be permitted by applicable law or stock exchange rules.

The share purchases will be effected in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934 and the TSX’s normal course issuer bid rules, which contain restrictions on the number of shares that may be purchased on a single day (being 68,748 common shares in the case of the TSX) based on the average daily trading volumes of OpenText’s common shares on the applicable exchange (being 274,991 common shares for the past six months in the case of the TSX), subject to certain exceptions for block purchases. The purchases over the TSX will be made pursuant to a normal course issuer bid ("NCIB"), which the TSX has accepted notice of. Under the NCIB, up to 5% of the Company’s 121,443,442 common shares outstanding as of July 25, 2016, or 6,072,172 common shares, are permitted to be purchased commencing on August 6, 2016 until August 5, 2017. All common shares purchased by OpenText pursuant to the NCIB will be cancelled. During Fiscal 2016, OpenText repurchased and cancelled 1,476,248 common shares for approximately $65.5 million at a volume-weighted average price per share of $44.37 under its expiring share repurchase plan.

OpenText also announced that it has entered into an automatic share purchase plan pursuant to which its designated broker may undertake purchases of its common shares under the NCIB, subject to certain parameters, during pre-determined trading blackout periods when OpenText would not otherwise be permitted to purchase its common shares.

Conference Call Information

The public is invited to listen to the earnings conference call today at 5:00 p.m. ET (2:00 p.m. PT) by dialing 1-800-319-4610 (toll-free) or +1-604-638-5340 (international). Please dial-in 15 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the earnings conference call will be available on the Investor Relations section of the Company’s website at http://investors.opentext.com/events.cfm .

A replay of the call will be available beginning July 27, 2016 at 7:00 p.m. ET through 11:59 p.m. August 10, 2016 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 00617 followed by the number sign.

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

About OpenText

OpenText is the largest independent software provider of Enterprise Information Management (EIM). For more information please visit www.opentext.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release, including statements about the focus of Open Text Corporation ("OpenText" or "the Company") in our fiscal year ending June 30, 2017 (Fiscal 2017) on growth in earnings and cash flows, creating value through investments in broader Enterprise Information Management (EIM) capabilities, distribution, the Company’s presence in the cloud and in growth markets, expected growth in our revenue lines, adjusted operating income and cash flow, its financial condition, results of operations and earnings, announced acquisitions, ongoing tax matters, purchases of common shares by OpenText pursuant to the NCIB, declaration of quarterly dividends, future tax rates, and other matters, may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", "might", "will" and variations of these words or similar expressions are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management’s perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management’s estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to: (i) the future performance, financial and otherwise, of OpenText; (ii) the ability of OpenText to bring new products and services to market and to increase sales; (iii) the strength of the Company’s product development pipeline; (iv) the Company’s growth and profitability prospects; (v) the estimated size and growth prospects of the EIM market; (vi) the Company’s competitive position in the EIM market and its ability to take advantage of future opportunities in this market; (vii) the benefits of the Company’s products and services to be realized by customers; (viii) the demand for the Company’s products and services and the extent of deployment of the Company’s products and services in the EIM marketplace; (ix) the Company’s financial condition and capital requirements; and (x) statements about the impact of "Open Text Release 16" and other product releases. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (ii) the potential for the incurrence of or assumption of debt in connection with acquisitions and the impact on the ratings or outlooks of rating agencies on the Company’s outstanding debt securities; (iii) the possibility that the Company may be unable to meet its future reporting requirements under the U.S. Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder; (iv) the risks associated with bringing new products and services to market; (v) fluctuations in currency exchange rates; (vi) delays in the purchasing decisions of the Company’s customers; (vii) the competition the Company faces in its industry and/or marketplace; (viii) the final determination of litigation, tax audits (including tax examinations in the United States and elsewhere) and other legal proceedings; (ix) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, U.S. or international tax regimes; (x) the possibility of technical, logistical or planning issues in connection with the deployment of the Company’s products or services; (xi) the continuous commitment of the Company’s customers; and (xii) demand for the Company’s products and services. For additional information with respect to risks and other factors which could occur, see the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

OTEX-F

For more information, please contact:

United States:

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

Canada:

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

Copyright ?2016 Open Text. OpenText is a trademark or registered trademark of Open Text. The list of trademarks is not exhaustive of other trademarks. Registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text. All rights reserved. For more information, visit: http://www.opentext.com/2/global/site-copyright.html_SKU .

OPEN TEXT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
                                                                                                                                                       June 30, 2016      June 30, 2015
ASSETS
Cash and cash equivalents                                                                                                                              $      1,283,757   $      699,999
Short-term investments                                                                                                                                 11,839             11,166
Accounts receivable trade, net of allowance for doubtful accounts of $6,740 as of June 30, 2016 and $5,987 as of June 30, 2015                         285,904            284,131
Income taxes recoverable                                                                                                                               31,752             21,151
Prepaid expenses and other current assets                                                                                                              59,021             53,191
Total current assets                                                                                                                                   1,672,273          1,069,638
Property and equipment                                                                                                                                 183,660            160,419
Goodwill                                                                                                                                               2,325,586          2,161,592
Acquired intangible assets                                                                                                                             646,240            679,479
Deferred tax assets                                                                                                                                    241,161            181,587
Other assets                                                                                                                                           53,697             54,946
Deferred charges                                                                                                                                       22,776             37,265
Long-term income taxes recoverable                                                                                                                     8,751              8,404
Total assets                                                                                                                                           $      5,154,144   $      4,353,330
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities                                                                                                               $      257,450     $      241,370
Current portion of long-term debt                                                                                                                      8,000              8,000
Deferred revenues                                                                                                                                      373,549            358,066
Income taxes payable                                                                                                                                   32,030             17,001
Total current liabilities                                                                                                                              671,029            624,437
Long-term liabilities:
Accrued liabilities                                                                                                                                    29,848             34,682
Deferred credits                                                                                                                                       8,357              12,943
Pension liability                                                                                                                                      61,993             56,737
Long-term debt                                                                                                                                         2,137,987          1,549,370
Deferred revenues                                                                                                                                      37,461             28,223
Long-term income taxes payable                                                                                                                         149,041            151,484
Deferred tax liabilities                                                                                                                               79,231             65,647
Total long-term liabilities                                                                                                                            2,503,918          1,899,086
Shareholders’ equity:
Share capital
121,404,677 and 122,293,986 Common Shares issued and outstanding at June 30, 2016 and June 30, 2015, respectively; Authorized Common Shares: unlimited 817,788            808,010
Additional paid-in capital                                                                                                                             147,280            126,417
Accumulated other comprehensive income                                                                                                                 46,310             51,828
Retained earnings                                                                                                                                      992,546            863,015
Treasury stock, at cost (633,647 shares at June 30, 2016 and 625,725 at June 30, 2015, respectively)                                                   (25,268)           (19,986)
Total OpenText shareholders’ equity                                                                                                                    1,978,656          1,829,284
Non-controlling interests                                                                                                                              541                523
Total shareholders’ equity                                                                                                                             1,979,197          1,829,807
Total liabilities and shareholders’ equity                                                                                                             $      5,154,144   $      4,353,330
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
                                                               Year Ended June 30,
                                                               2016           2015           2014
Revenues:
License                                                        $    283,710   $    294,266   $    305,846
Cloud services and subscriptions                               601,018        605,309        373,400
Customer support                                               746,409        731,797        707,024
Professional service and other                                 193,091        220,545        238,429
Total revenues                                                 1,824,228      1,851,917      1,624,699
Cost of revenues:
License                                                        10,296         12,899         13,161
Cloud services and subscriptions                               244,021        237,310        142,193
Customer support                                               89,861         94,456         96,068
Professional service and other                                 155,584        172,742        189,403
Amortization of acquired technology-based intangible assets    74,238         81,002         69,917
Total cost of revenues                                         574,000        598,409        510,742
Gross profit                                                   1,250,228      1,253,508      1,113,957
Operating expenses:
Research and development                                       194,057        196,491        176,834
Sales and marketing                                            344,235        373,610        346,941
General and administrative                                     140,397        162,728        142,080
Depreciation                                                   54,929         50,906         35,237
Amortization of acquired customer-based intangible assets      113,201        108,239        81,023
Special charges                                                34,846         12,823         31,314
Total operating expenses                                       881,665        904,797        813,429
Income from operations                                         368,563        348,711        300,528
Other income (expense), net                                    (1,423)        (28,047)       3,941
Interest and other related expense, net                        (76,363)       (54,620)       (27,934)
Income before income taxes                                     290,777        266,044        276,535
Provision for income taxes                                     6,282          31,638         58,461
Net income for the period                                      $    284,495   $    234,406   $    218,074
Net (income) loss attributable to non-controlling interests    (18)           (79)           51
Net income attributable to OpenText                            $    284,477   $    234,327   $    218,125
Earnings per share--basic attributable to OpenText             $    2.34      $    1.92      $    1.82
Earnings per share--diluted attributable to OpenText           $    2.33      $    1.91      $    1.81
Weighted average number of Common Shares outstanding--basic    121,463        122,092        119,674
Weighted average number of Common Shares outstanding--diluted  122,038        122,957        120,576
Dividends declared per Common Share                            $    0.8300    $    0.7175    $    0.6225
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
                                                              Three Months Ended June 30,
                                                              2016              2015
Revenues:
License                                                       $       86,126    $       97,129
Cloud services and subscriptions                              156,624           148,967
Customer support                                              192,969           184,221
Professional service and other                                48,084            52,391
Total revenues                                                483,803           482,708
Cost of revenues:
License                                                       3,106             3,511
Cloud services and subscriptions                              64,889            58,424
Customer support                                              25,237            23,578
Professional service and other                                41,546            42,743
Amortization of acquired technology-based intangible assets   17,994            22,454
Total cost of revenues                                        152,772           150,710
Gross profit                                                  331,031           331,998
Operating expenses:
Research and development                                      53,747            52,357
Sales and marketing                                           95,815            104,443
General and administrative                                    33,330            41,766
Depreciation                                                  14,931            13,390
Amortization of acquired customer-based intangible assets     29,637            28,741
Special charges                                               10,092            8,791
Total operating expenses                                      237,552           249,488
Income from operations                                        93,479            82,510
Other income (expense), net                                   409               690
Interest and other related expense, net                       (21,902)          (18,194)
Income before income taxes                                    71,986            65,006
Recovery of income taxes                                      (14,347)          (3,763)
Net income for the period                                     $       86,333    $       68,769
Net loss attributable to non-controlling interests            57                35
Net income attributable to OpenText                           $       86,390    $       68,804
Earnings per share--basic attributable to OpenText            $       0.71      $       0.56
Earnings per share--diluted attributable to OpenText          $       0.71      $       0.56
Weighted average number of Common Shares outstanding--basic   121,324           122,245
Weighted average number of Common Shares outstanding--diluted 122,020           122,888
Dividends declared per Common Share                           $       0.2300    $       0.2000
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)
                                                                      Year Ended June 30,
                                                                      2016          2015          2014
Net income for the period                                             $   284,495   $   234,406   $   218,074
Other comprehensive income--net of tax:
Net foreign currency translation adjustments                          (3,318)       15,690        (2,779)
Unrealized gain (loss) on cash flow hedges:
Unrealized (loss)                                                     (2,574)       (6,064)       (357)
Loss reclassified into net income                                     2,956         5,710         3,242
Actuarial gain (loss) relating to defined benefit pension plans:
Actuarial loss                                                        (3,374)       (3,302)       (841)
Amortization of actuarial loss into net income                        347           357           294
Unrealized net gain (loss) on short-term investments                  445           (12)          --
Unrealized gain on marketable securities (Actuate)                    --            1,906         --
Release of unrealized gain on marketable securities (Actuate)         --            (1,906)       --
Total other comprehensive income (loss), net, for the period          (5,518)       12,379        (441)
Total comprehensive income                                            278,977       246,785       217,633
Comprehensive (income) loss attributable to non-controlling interests (18)          (79)          51
Total comprehensive income attributable to OpenText                   $   278,959   $   246,706   $   217,684
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
                                                                                  Year Ended June 30,
                                                                                  2016             2015           2014
Cash flows from operating activities:
Net income for the period                                                         $    284,495     $    234,406   $     218,074
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets                                242,368          240,147        186,177
Share-based compensation expense                                                  25,978           22,047         19,906
Excess tax benefits on share-based compensation expense                           (230)            (1,675)        (1,844)
Pension expense                                                                   4,577            4,796          3,232
Amortization of debt issuance costs                                               4,678            4,556          3,191
Amortization of deferred charges and credits                                      9,903            10,525         11,307
Loss on sale and write down of property and equipment                             1,108            1,368          15
Release of unrealized gain on marketable securities to income                     --               (3,098)        --
Write off of unamortized debt issuance costs                                      --               2,919          --
Deferred Taxes                                                                    (54,461)         (14,578)       (12,334)
Changes in operating assets and liabilities:
Accounts receivable                                                               8,985            43,189         (17,186)
Prepaid expenses and other current assets                                         316              (3,534)        11,146
Income taxes                                                                      6,294            2,933          11,308
Deferred charges and credits                                                      --               --             9,870
Accounts payable and accrued liabilities                                          (5,671)          (22,714)       (36,478)
Deferred revenue                                                                  (4,781)          6,775          16,601
Other assets                                                                      2,163            (5,031)        (5,858)
Net cash provided by operating activities                                         525,722          523,031        417,127
Cash flows from investing activities:
Additions of property and equipment                                               (70,009)         (77,046)       (42,268)
Proceeds from maturity of short-term investments                                  11,297           17,017         --
Purchase of CEM Business                                                          (152,711)        --             --
Purchase of ANXe Business Corporation                                             (104,570)        --             --
Purchase of Daegis Inc., net of cash acquired                                     (22,146)         --             --
Purchase of Actuate Corporation, net of cash acquired                             (8,153)          (291,800)      --
Purchase of Informative Graphics Corporation, net of cash acquired                (3,464)          (35,180)       --
Purchase of GXS Group, Inc., net of cash acquired                                 --               --             (1,076,886)
Purchase of Cordys Holding B.V., net of cash acquired                             --               --             (30,588)
Purchase of ICCM Professional Services Limited, net of cash acquired              (2,027)          --             --
Purchase of a division of Spicer Corporation                                      --               (222)          --
Purchase of Patents                                                               --               --             (192)
Purchase consideration for prior period acquisitions                              --               (590)          (887)
Other investing activities                                                        (9,393)          (10,574)       (2,547)
Net cash used in investing activities                                             (361,176)        (398,395)      (1,153,368)
Cash flows from financing activities:
Excess tax benefits on share-based compensation expense                           230              1,675          1,844
Proceeds from issuance of Common Shares                                           20,097           15,240         24,808
Proceeds from long-term debt                                                      600,000          800,000        800,000
Repayment of long-term debt and revolver                                          (8,000)          (530,284)      (45,911)
Debt issuance costs                                                               (6,765)          (18,271)       (16,685)
Equity issuance costs                                                             --               --             (144)
Common Shares repurchased                                                         (65,509)         --             --
Purchase of Treasury Stock                                                        (10,627)         (10,126)       (1,275)
Payments of dividends to shareholders                                             (99,262)         (87,629)       (74,693)
Net cash provided by financing activities                                         430,164          170,605        687,944
Foreign exchange gain (loss) on cash held in foreign currencies                   (10,952)         (23,132)       5,742
Increase (decrease) in cash and cash equivalents during the period                583,758          272,109        (42,555)
Cash and cash equivalents at beginning of the period                              699,999          427,890        470,445
Cash and cash equivalents at end of the period                                    $    1,283,757   $    699,999   $     427,890
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
                                                                                  Three Months Ended June 30,
                                                                                  2016             2015
Cash flows from operating activities:
Net income for the period                                                         $    86,333      $    68,769
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets                                62,562           64,585
Share-based compensation expense                                                  6,898            6,107
Excess tax expense (benefits) on share-based compensation expense                 27               (64)
Pension expense                                                                   1,118            1,194
Amortization of debt issuance costs                                               1,208            1,146
Amortization of deferred charges and credits                                      2,653            2,632
Loss on sale and write down of property and equipment                             --               1,250
Deferred taxes                                                                    (38,769)         (10,541)
Changes in operating assets and liabilities:
Accounts receivable                                                               (13,167)         (33,371)
Prepaid expenses and other current assets                                         2,905            467
Income taxes                                                                      3,004            1,579
Deferred charges and credits                                                      --               --
Accounts payable and accrued liabilities                                          21,763           31,033
Deferred revenue                                                                  (17,345)         70
Other assets                                                                      (70)             (3,039)
Net cash provided by operating activities                                         119,120          131,817
Cash flows from investing activities:
Additions of property and equipment                                               (21,112)         (16,460)
Proceeds from maturity of short-term investments                                  2,058            9,925
Purchase of CEM Business                                                          (152,711)
Purchase of ANXe Business Corporation                                             (104,570)
Purchase of Actuate Corporation, net of cash acquired                             --               (32)
Other investing activities                                                        (3,269)          (1,659)
Net cash used in investing activities                                             (279,604)        (8,226)
Cash flows from financing activities:
Excess tax (expense) benefits on share-based compensation expense                 (27)             64
Proceeds from issuance of Common Shares                                           8,269            2,413
Proceeds from long-term debt                                                      600,000          --
Repayment of long-term debt and revolver                                          (2,000)          (9,799)
Debt issuance costs                                                               (6,765)          (195)
Purchase of Treasury stock                                                        --               (8,875)
Payments of dividends to shareholders                                             (27,635)         (24,455)
Net cash provided by (used in) financing activities                               571,842          (40,847)
Foreign exchange gain (loss) on cash held in foreign currencies                   (5,006)          4,078
Increase in cash and cash equivalents during the period                           406,352          86,822
Cash and cash equivalents at beginning of the period                              877,405          613,177
Cash and cash equivalents at end of the period                                    $    1,283,757   $    699,999
Notes
(1)   All dollar amounts in this press release are in U.S. Dollars unless otherwise indicated.
(2)   Use of Non-GAAP Financial Measures: In addition to reporting financial results in accordance with U.S. GAAP, the Company provides certain financial measures that are not in accordance with U.S. GAAP (Non-GAAP).These Non-GAAP financial measures have certain limitations in that they do not have a standardized meaning and thus the Company’s definition may be different from similar Non-GAAP financial measures used by other companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company’s financial performance to that of other companies. However, the Company’s management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of these Non-GAAP financial measures both in its reconciliation to the U.S. GAAP financial measures and its consolidated financial statements, all of which should be considered when evaluating the Company’s results.
      The Company uses these Non-GAAP financial measures to supplement the information provided in its consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of Non-GAAP financial measures are not meant to be a substitute for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a supplement to such U.S. GAAP measures. OpenText strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement the disclosure of the U.S. GAAP measures with certain Non-GAAP measures defined below.
      Non-GAAP-based net income and Non-GAAP-based EPS are calculated as net income or earnings per share on a diluted basis, excluding the amortization of acquired intangible assets, other income (expense), share-based compensation, and Special charges (recoveries), all net of tax. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit, and the amortization of acquired technology-based intangible assets and share-based compensation within cost of sales. Non-GAAP-based gross margin is calculated as Non-GAAP-based gross profit expressed as a percentage of total revenue. Non-GAAP-based income from operations is calculated as income from operations, excluding the amortization of acquired intangible assets, Special charges (recoveries), and share-based compensation expense. Non-GAAP-based operating margin is calculated as Non-GAAP-based income from operations expressed as a percentage of total revenue.
      The Company’s management believes that the presentation, of the above defined Non-GAAP financial measures, provides useful information to investors because they portray the financial results of the Company before the impact of certain non-operational charges. The use of the term "non-operational charge" is defined for this purpose as an expense that does not impact the ongoing operating decisions taken by the Company’s management and is based upon the way the Company’s management evaluates the performance of the Company’s business for use in the Company’s internal reports. In the course of such evaluation and for the purpose of making operating decisions, the Company’s management excludes certain items from its analysis, including amortization of acquired intangible assets, Special charges (recoveries), share-based compensation, other income (expense), and the taxation impact of these items. These items are excluded based upon the manner in which management evaluates the business of the Company and are not excluded in the sense that they may be used under U.S. GAAP.
      The Company believes the provision of supplemental Non-GAAP measures allow investors to evaluate the operational and financial performance of the Company’s core business using the same evaluation measures that management uses, and is therefore a useful indication of OpenText’s performance or expected performance of future operations and facilitates period-to-period comparison of operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary Non-GAAP financial measures that exclude certain items from the presentation of its financial results in this press release.
      The following charts provide (unaudited) reconciliations of U.S. GAAP-based financial measures to Non-U.S. GAAP-based financial measures for the following periods presented:
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended June 30, 2016.
(In thousands except for per share amounts)
                                                                                                                            Three Months Ended June 30, 2016
                                                                                                                            GAAP-based       GAAP-based Adjustments      Note    Non-GAAP-        Non-GAAP-
                                                                                                                            Measures         Measures                            based            based
                                                                                                                                             % of Total                          Measures         Measures
                                                                                                                                             Revenue                                              % of Total
                                                                                                                                                                                                  Revenue
Cost of revenues
Cloud services and subscriptions                                                                                            $       64,889              $       (312)    (1)     $       64,577
Customer support                                                                                                            25,237                      (269)            (1)     24,968
Professional service and other                                                                                              41,546                      (540)            (1)     41,006
Amortization of acquired technology-based intangible assets                                                                 17,994                      (17,994)         (2)     --
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)                             331,031          68.4%      19,115           (3)     350,146          72.4%
Operating expenses
Research and development                                                                                                    53,747                      (836)            (1)     52,911
Sales and marketing                                                                                                         95,815                      (3,026)          (1)     92,789
General and administrative                                                                                                  33,330                      (1,915)          (1)     31,415
Amortization of acquired customer-based intangible assets                                                                   29,637                      (29,637)         (2)     --
Special charges (recoveries)                                                                                                10,092                      (10,092)         (4)     --
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) 93,479           19.3%      64,621           (5)     158,100          32.7%
Other income (expense), net                                                                                                 409                         (409)            (6)     --
Provision for (recovery of) income taxes                                                                                    (14,347)                    41,644           (7)     27,297
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText                                                 86,390                      22,568           (8)     108,958
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText                         $       0.71                $       0.18     (8)     $       0.89
(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross profit stated in dollars, and gross margin stated as a percentage of total revenue.
(4) Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods following the relevant acquisitions, include one-time non-recurring charges or recoveries, and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5) GAAP-based and Non-GAAP-based income from operations stated in dollars, and operating margin stated as a percentage of total revenue.
(6) Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.
(7) Adjustment relates to differences between the GAAP-based tax recovery rate of approximately 20% and a Non-GAAP-based tax rate of 20%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, tax arising on internal reorganizations, and "book to return" adjustments for tax return filings and tax assessments (in total "adjusted expenses"). In arriving at our Non-GAAP-based tax rate of 20%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:
                                                    Three Months Ended June 30, 2016
                                                                   Per share diluted
GAAP-based net income, attributable to OpenText     $     86,390   $     0.71
Add:
Amortization                                        47,631         0.39
Share-based compensation                            6,898          0.06
Special charges (recoveries)                        10,092         0.08
Other (income) expense, net                         (409)          --
GAAP-based provision for (recovery of) income taxes (14,347)       (0.12)
Non-GAAP based provision for income taxes           (27,297)       (0.23)
Non-GAAP-based net income, attributable to OpenText $     108,958  $     0.89
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the year ended June 30, 2016.
(In thousands except for per share amounts)
                                                                                                                            Year Ended June 30, 2016
                                                                                                                            GAAP-based       GAAP-based Adjustments      Note    Non-GAAP-        Non-GAAP-
                                                                                                                            Measures         Measures                            based            based
                                                                                                                                             % of Total                          Measures         Measures
                                                                                                                                             Revenue                                              % of Total
                                                                                                                                                                                                  Revenue
Cost of revenues
Cloud services and subscriptions                                                                                            $       244,021             $       (953)    (1)     $       243,068
Customer support                                                                                                            89,861                      (900)            (1)     88,961
Professional service and other                                                                                              155,584                     (1,626)          (1)     153,958
Amortization of acquired technology-based intangible assets                                                                 74,238                      (74,238)         (2)     --
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)                             1,250,228        68.5%      77,717           (3)     1,327,945        72.8%
Operating expenses
Research and development                                                                                                    194,057                     (2,824)          (1)     191,233
Sales and marketing                                                                                                         344,235                     (12,069)         (1)     332,166
General and administrative                                                                                                  140,397                     (7,606)          (1)     132,791
Amortization of acquired customer-based intangible assets                                                                   113,201                     (113,201)        (2)     --
Special charges (recoveries)                                                                                                34,846                      (34,846)         (4)     --
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) 368,563          20.2%      248,263          (5)     616,826          33.8%
Other income (expense), net                                                                                                 (1,423)                     1,423            (6)     --
Provision for (recovery of) income taxes                                                                                    6,282                       101,793          (7)     108,075
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText                                                 284,477                     147,893          (8)     432,370
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText                         $       2.33                $       1.21     (8)     $       3.54
(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross profit stated in dollars, and gross margin stated as a percentage of total revenue.
(4) Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods following the relevant acquisitions, including one-time non-recurring charges or recoveries, and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5) GAAP-based and Non-GAAP-based income from operations stated in dollars, and operating margin stated as a percentage of total revenue.
(6) Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.
(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 2% and a Non-GAAP-based tax rate of 20%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, tax arising on internal reorganizations, and "book to return" adjustments for tax return filings and tax assessments (in total "adjusted expenses"). In arriving at our Non-GAAP-based tax rate of 20%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:
                                                    Year Ended June 30, 2016
                                                                  Per share diluted
GAAP-based net income, attributable to OpenText     $    284,477  $     2.33
Add:
Amortization                                        187,439       1.54
Share-based compensation                            25,978        0.21
Special charges (recoveries)                        34,846        0.29
Other (income) expense, net                         1,423         0.01
GAAP-based provision for (recovery of) income taxes 6,282         0.05
Non-GAAP based provision for income taxes           (108,075)     (0.89)
Non-GAAP-based net income, attributable to OpenText $    432,370  $     3.54
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended March 31, 2016.
(In thousands except for per share amounts)
                                                                                                                            Three Months Ended March 31, 2016
                                                                                                                            GAAP-based       GAAP-based Adjustments      Note    Non-GAAP-        Non-GAAP-
                                                                                                                            Measures         Measures                            based            based
                                                                                                                                             % of Total                          Measures         Measures
                                                                                                                                             Revenue                                              % of Total
                                                                                                                                                                                                  Revenue
Cost of revenues
Cloud services and subscriptions                                                                                            $       61,298              $       (202)    (1)     $       61,096
Customer support                                                                                                            22,427                      (215)            (1)     22,212
Professional service and other                                                                                              37,599                      (247)            (1)     37,352
Amortization of acquired technology-based intangible assets                                                                 17,630                      (17,630)         (2)     --
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)                             299,109          67.9%      18,294           (3)     317,403          72.0%
Operating expenses
Research and development                                                                                                    48,160                      (500)            (1)     47,660
Sales and marketing                                                                                                         84,600                      (3,213)          (1)     81,387
General and administrative                                                                                                  37,731                      (1,589)          (1)     36,142
Amortization of acquired customer-based intangible assets                                                                   27,966                      (27,966)         (2)     --
Special charges (recoveries)                                                                                                (1,671)                     1,671            (4)     --
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) 88,569           20.1%      49,891           (5)     138,460          31.4%
Other income (expense), net                                                                                                 2,120                       (2,120)          (6)     --
Provision for (recovery of) income taxes                                                                                    5,353                       19,100           (7)     24,453
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText                                                 69,115                      28,671           (8)     97,786
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText                         $       0.57                $       0.23     (8)     $       0.80
(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross profit stated in dollars, and gross margin stated as a percentage of total revenue.
(4) Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods following the relevant acquisitions, including one-time non-recurring charges or recoveries, and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5) GAAP-based and Non-GAAP-based income from operations stated in dollars, and operating margin stated as a percentage of total revenue.
(6) Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.
(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 7% and a Non-GAAP-based tax rate of 20%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, tax arising on internal reorganizations, and "book to return" adjustments for tax return filings and tax assessments (in total "adjusted expenses"). In arriving at our Non-GAAP-based tax rate of 20%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:
                                                    Three Months Ended March 31, 2016
                                                                  Per share diluted
GAAP-based net income, attributable to OpenText     $     69,115  $     0.57
Add:
Amortization                                        45,596        0.37
Share-based compensation                            5,966         0.05
Special charges (recoveries)                        (1,671)       (0.01)
Other (income) expense, net                         (2,120)       (0.02)
GAAP-based provision for (recovery of) income taxes 5,353         0.04
Non-GAAP based provision for income taxes           (24,453)      (0.20)
Non-GAAP-based net income, attributable to OpenText $     97,786  $     0.80
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended June 30, 2015.
(In thousands except for per share amounts)
                                                                                                                            Three Months Ended June 30, 2015
                                                                                                                            GAAP-based       GAAP-based Adjustments      Note    Non-GAAP-        Non-GAAP-
                                                                                                                            Measures         Measures                            based            based
                                                                                                                                             % of Total                          Measures         Measures
                                                                                                                                             Revenue                                              % of Total
                                                                                                                                                                                                  Revenue
Cost of revenues
Cloud services and subscriptions                                                                                            $       58,424              $       (252)    (1)     $       58,172
Customer support                                                                                                            23,578                      (200)            (1)     23,378
Professional service and other                                                                                              42,743                      (421)            (1)     42,322
Amortization of acquired technology-based intangible assets                                                                 22,454                      (22,454)         (2)     --
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)                             331,998          68.8%      23,327           (3)     355,325          73.6%
Operating expenses
Research and development                                                                                                    52,357                      (665)            (1)     51,692
Sales and marketing                                                                                                         104,443                     (2,508)          (1)     101,935
General and administrative                                                                                                  41,766                      (2,061)          (1)     39,705
Amortization of acquired customer-based intangible assets                                                                   28,741                      (28,741)         (2)     --
Special charges (recoveries)                                                                                                8,791                       (8,791)          (4)     --
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) 82,510           17.1%      66,093           (5)     148,603          30.8%
Other income (expense), net                                                                                                 690                         (690)            (6)     --
Provision for (recovery of) income taxes                                                                                    (3,763)                     27,272           (7)     23,509
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText                                                 68,804                      38,131           (8)     106,935
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText                         $       0.56                $       0.31     (8)     $       0.87
(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross profit stated in dollars, and gross margin stated as a percentage of total revenue.
(4) Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods following the relevant acquisitions, including one-time non-recurring charges or recoveries, and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5) GAAP-based and Non-GAAP-based income from operations stated in dollars, and operating margin stated as a percentage of total revenue.
(6) Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.
(7) Adjustment relates to differences between the GAAP-based tax recovery rate of approximately 6% and a Non-GAAP-based tax rate of 18%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, tax arising on internal reorganizations, and "book to return" adjustments for tax return filings and tax assessments (in total "adjusted expenses"). In arriving at our Non-GAAP-based tax rate of 18%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:
                                                    Three Months Ended June 30, 2015
                                                                   Per share diluted
GAAP-based net income, attributable to OpenText     $     68,804   $     0.56
Add:
Amortization                                        51,195         0.42
Share-based compensation                            6,107          0.05
Special charges (recoveries)                        8,791          0.07
Other (income) expense, net                         (690)          (0.01)
GAAP-based provision for (recovery of) income taxes (3,763)        (0.03)
Non-GAAP based provision for income taxes           (23,509)       (0.19)
Non-GAAP-based net income, attributable to OpenText $     106,935  $     0.87
Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the year ended June 30, 2015.
(In thousands except for per share amounts)
                                                                                                                            Year Ended June 30, 2015
                                                                                                                            GAAP-based       GAAP-based Adjustments      Note    Non-GAAP-        Non-GAAP-
                                                                                                                            Measures         Measures                            based            based
                                                                                                                                             % of Total                          Measures         Measures
                                                                                                                                             Revenue                                              % of Total
                                                                                                                                                                                                  Revenue
Cost of revenues:
Cloud services and subscriptions                                                                                            $       237,310             $       (833)    (1)     $       236,477
Customer support                                                                                                            94,456                      (832)            (1)     93,624
Professional service and other                                                                                              172,742                     (1,335)          (1)     171,407
Amortization of acquired technology-based intangible assets                                                                 81,002                      (81,002)         (2)     --
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)                             1,253,508        67.7%      84,002           (3)     1,337,510        72.2%
Operating expenses
Research and development                                                                                                    196,491                     (2,496)          (1)     193,995
Sales and marketing                                                                                                         373,610                     (9,095)          (1)     364,515
General and administrative                                                                                                  162,728                     (7,456)          (1)     155,272
Amortization of acquired customer-based intangible assets                                                                   108,239                     (108,239)        (2)     --
Special charges (recoveries)                                                                                                12,823                      (12,823)         (4)     --
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) 348,711          18.8%      224,111          (5)     572,822          30.9%
Other income (expense), net                                                                                                 (28,047)                    28,047           (6)     --
Provision for (recovery of) income taxes                                                                                    31,638                      61,559           (7)     93,197
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText                                                 234,327                     190,599          (8)     424,926
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText                         $       1.91                $       1.55     (8)     $       3.46
(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross profit stated in dollars, and gross margin stated as a percentage of total revenue.
(4) Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods following the relevant acquisitions, including one-time non-recurring charges or recoveries, and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5) GAAP-based and Non-GAAP-based income from operations stated in dollars, and operating margin stated as a percentage of total revenue.
(6) Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.
(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 12% and a Non-GAAP-based tax rate of 18%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, tax arising on internal reorganizations, and "book to return" adjustments for tax return filings and tax assessments (in total "adjusted expenses"). In arriving at our Non-GAAP-based tax rate of 18%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:
                                                    Year Ended June 30, 2015
                                                                  Per share diluted
GAAP-based net income, attributable to OpenText     $    234,327  $     1.91
Add:
Amortization                                        189,241       1.54
Share-based compensation                            22,047        0.18
Special charges (recoveries)                        12,823        0.10
Other (income) expense, net                         28,047        0.23
GAAP-based provision for (recovery of) income taxes 31,638        0.26
Non-GAAP based provision for income taxes           (93,197)      (0.76)
Non-GAAP-based net income, attributable to OpenText $    424,926  $     3.46
(3) The following tables provide a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three months and year ended June 30, 2016 and 2015:
           Three Months Ended           Three Months Ended
           June 30, 2016                June 30, 2015
Currencies % of Revenue % of Expenses*  % of Revenue % of Expenses*
EURO       25%          15%             23%          14%
GBP        7%           7%              8%           8%
CAD        5%           12%             5%           14%
USD        54%          49%             52%          48%
Other      9%           17%             12%          16%
Total      100%         100%            100%         100%
           Year Ended                   Year Ended
           June 30, 2016                June 30, 2015
Currencies % of Revenue % of Expenses*  % of Revenue % of Expenses*
EURO       24%          15%             24%          14%
GBP        8%           7%              8%           8%
CAD        4%           12%             5%           13%
USD        54%          49%             51%          48%
Other      10%          17%             12%          17%
Total      100%         100%            100%         100%
* Expenses include all cost of revenues and operating expenses included within the Consolidated Statements of Income, except for amortization of intangible assets, share-based compensation and Special charges (recoveries).

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/opentext-reports-fourth-quarter-and-fiscal-year-2016-financial-results-300305066.html

SOURCE Open Text Corporation

http://rt.prnewswire.com/rt.gif?NewsItemId=LA55903&Transmission_Id=201607271601PR_NEWS_USPR_____LA55903&DateId=20160727



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