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 OpenText Reports Fourth Quarter and Fiscal Year 2017 Financial Results
   Thursday, August 03, 2017 4:01:00 PM ET

Q4 Fiscal 2017 - Total revenue of $664 million, up 37% Y/Y; $675 million in CC

Fiscal 2017 - Total revenue of $2.29 billion, up 26% Y/Y; $2.32 billion in CC

Open Text Corporation (OTEX, TSX: OTEX ) today announced its financial results for the fourth quarter and fiscal year ended June 30, 2017.

"Fiscal 2017 was a transformational year for OpenText as we strengthened our product offerings with OpenText Release 16 and acquisitions. OpenText delivered a record $2.29 billion in revenues and $728 million in Adjusted Operating Income, representing 26% and 18% in year-over-year growth, respectively," said Mark J. Barrenechea, OpenText CEO & CTO. "Our Annual Recurring Revenues (Cloud Services & Subscriptions and Customer Support) grew 25% to $1.69 billion."

"Strategic acquisitions and positive organic growth continue to be our leading growth drivers. Fiscal 2018 will be the first full year of benefit from acquisitions completed over the last 12 months and we expect growth in total revenue, annual recurring revenues, margin, and cash flow. As well, we will remain focused on operational excellence and disciplined capital allocation," said Barrenechea.

Barrenechea concluded, "Our new corporate brand, "OpenText: The Information Company", has been well received by our customers, partners and employees. OpenText Enterprise Information Management (EIM) enables customers to digitize their processes and supply chains, incorporate more information through machines and unlock the value of that information with our new Artificial Intelligence (AI) platform, Magellan. We support our customers operating in a hybrid world, deploying on-premises, in the OpenText Cloud, or in a cloud of their choice."

Financial Highlights for Fiscal 2017 with Year Over Year Comparisons

Summary of Annual Results
(in millions except per share data)     FY17        FY16        $ Change  % Change        FY17 in CC*% Change in
                                                                          (Y/Y)                      CC*
Revenues:
Cloud services and subscriptions        $705.5      $601.0      $104.5    17.4   %        $711.8     18.4  %
Customer support                        981.1       746.4       234.7     31.4   %        993.5      33.1  %
Total annual recurring revenues         $1,686.6    $1,347.4    $339.2    25.2   %        $1,705.3   26.6  %
License                                 369.1       283.7       85.4      30.1   %        372.8      31.4  %
Professional service and other          235.3       193.1       42.2      21.9   %        239.5      24.0  %
Total revenues                          $2,291.1    $1,824.2    $466.8    25.6   %        $2,317.5   27.0  %
GAAP-based operating income             $352.9      $368.6      ($15.6 )  (4.2)  %
Non-GAAP-based operating income (1)     $728.5      $616.8      $111.6    18.1   %        $736.0     19.3  %
GAAP-based operating margin             15.4     %  20.2     %  n/a       (480)       bps
Non-GAAP-based operating margin (1)     31.8     %  33.8     %  n/a       (200)       bps 31.8     % (200)       bps
GAAP-based EPS, diluted(2)(3)           $4.01       $1.17       $2.84     242.7  %
Non-GAAP-based EPS, diluted (1)(2)(4)   $2.02       $1.77       $0.25     14.1   %        $2.05      15.8  %
Net income, attributable to OpenText(3) $1,025.7    $284.5      $741.2    260.5  %
Adjusted EBITDA(1)                      $792.5      $671.7      $120.8    18.0   %
Operating cash flows                    $439.3      $525.7      ($86.5)   (16.4) %
Summary of Quarterly Results
(in millions except per share data)   Q4 FY17    Q4 FY16    $ Change % Change        Q4 FY17 in % Change in
                                                                     (Y/Y)           CC*        CC*
Revenues:
Cloud services and subscriptions      $183.6     $156.6     $27.0    17.2   %        $186.3     18.9  %
Customer support                      287.8      193.0      94.8     49.1   %        293.0      51.8  %
Total annual recurring revenues       $471.4     $349.6     $121.8   34.9   %        $479.3     37.1  %
License                               123.5      86.1       37.4     43.4   %        125.6      45.8  %
Professional service and other        68.6       48.1       20.5     42.7   %        70.5       46.6  %
Total revenues                        $663.6     $483.8     $179.8   37.2   %        $675.4     39.6  %
GAAP-based operating income           $106.5     $93.5      $13.0    13.9   %
Non-GAAP-based operating income (1)   $219.9     $158.1     $61.8    39.1            $222.7     40.9  %
GAAP-based operating margin           16.0   %   19.3   %   n/a      (330)       bps
Non-GAAP-based operating margin (1)   33.1   %   32.7   %   n/a      40          bps 33.0   %   30          bps
GAAP-based EPS, diluted(2)            $0.17      $0.35      ($0.18)  (51.4) %
Non-GAAP-based EPS, diluted (1)(2)(4) $0.60      $0.45      $0.15    33.3   %        $0.61      35.6  %
Net income attributable to OpenText   $46.1      $86.4      ($40.3)  (46.6) %
Adjusted EBITDA(1)                    $237.0     $173.1     $63.9    36.9   %
Operating cash flows                  $102.5     $119.1     ($16.6)  (14.0) %
(1)                                                                   Please see note 2 "Use of Non-GAAP Financial Measures" below
(2)                                                                   As a result of the two-for-one share split, effected January 24, 2017 by way of a share sub-division, all current and historical period per share data and number of Common Shares outstanding in this press release are presented on a post share split basis.
(3)                                                                   Recorded a significant tax benefit in Q1 FY17 of $876.1 million. This significant tax benefit is specifically tied to the Company’s internal reorganization and applied to Q1 FY17 only and as a result does not continue in future periods.
(4)                                                                   Please also see note 14 to the Company’s Consolidated Financial Statements on Form 10-K. Reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period.
Note: Individual line items in tables may be adjusted by non-material amounts to enable totals to align to published financial statements.

"We finished a transformative fiscal year with strong fourth quarter results and delivered on our margin targets including margin expansion for each of the acquisitions," said OpenText CFO John Doolittle. "Our focus in Fiscal 2018 will be on continued margin expansion, particularly related to ECD, and operating cash flow growth."

*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

-- 37 customer transactions over $1 million, 18 OpenText Cloud and 19 on-premise

-- Financial, Services, Consumer Goods and Technology industries saw the most demand in cloud and license

-- New customers in the quarter included Deutsche Bundesbank, Hatch, Maxim Lighting, Menarini Group, Companhia de Electricidade de Macau, The County of Los Angeles, Department of Human Resources, NASA Langley Research Center, State of Tennessee Comptroller of the Treasury, Lincolnshire County Council, Qumu, Panasonic, Modec, Singapore’s Ministry of National Development, UEM, L?hiTapiola, the Natori Company, Volkswagen Financial Services, SecureWorks, Covenant Health, Illovo Sugar Africa, Constellation Brands, VITAL Shared Services, Ooredoo, Anthem, Southern California Edison, Tecnimont, Scotiabank Inverlat S.A., Alberta Blue Cross Benefits Corp.

-- OpenText Enhances Release 16 to Digitize Business Processes and Manage Information from Engagement to Insight

-- OpenText buys Covisint Corporation

-- OpenText Launches Magellan, New Analytics and Artificial Intelligence (AI) Platform

-- OpenText to Acquire Guidance Software Inc.

-- OpenText Announces Accenture Interactive, Deloitte, SAP and Tata Consultancy Services as Diamond Sponsors at OpenText Enterprise World 2017

-- OpenText Announces OpenText People Center

-- OpenText Announces New Global Cloud Reseller Agreement with SAP to Provide End-to-End HR Document Management

-- OpenText Named SAP Solution Extension Partner of the Year in 2017 SAP? Pinnacle Awards

Dividend Program Highlights

Cash Dividend As part of our quarterly, non-cumulative cash dividend program, the Board declared on August 2, 2017 a cash dividend to $0.132 per common share. The record date for this dividend is September 1, 2017 and the payment date is September 22, 2017. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of the Board of Directors.

Summary of Annual Results
                                      FY17        FY16        % Change
Revenue (million)                     $2,291.1    $1,824.2    25.6  %
GAAP-based gross margin               66.7     %  68.5     %  (180)      bps
GAAP-based operating margin           15.4     %  20.2     %  (480)      bps
GAAP-based EPS, diluted(1)(2)         $4.01       $1.17       242.7 %
Non-GAAP-based gross margin (3)       72.6     %  72.8     %  (20)       bps
Non-GAAP-based operating margin (3)   31.8     %  33.8     %  (200)      bps
Non-GAAP-based EPS, diluted (2)(3)(4) $2.02       $1.77       14.1  %
Summary of Quarterly Results
                                      Q4 FY17    Q3 FY17    Q4 FY16    % Change        % Change
                                                                       (Q4 FY17 vs     (Q4 FY17 vs
                                                                       Q3 FY17)        Q4 FY16)
Revenue (million)                     $663.6     $593.1     $483.8     11.9  %         37.2    %
GAAP-based gross margin               66.9   %   64.5   %   68.4   %   240         bps (150)       bps
GAAP-based operating margin           16.0   %   11.0   %   19.3   %   500         bps (330)       bps
GAAP-based EPS, diluted(2)            $0.17      $0.08      $0.35      112.5 %         (51.4)%
Non-GAAP-based gross margin (3)       73.6   %   71.2   %   72.4   %   240         bps 120         bps
Non-GAAP-based operating margin (3)   33.1   %   29.1   %   32.7   %   400         bps 40          bps
Non-GAAP-based EPS, diluted (2)(3)(4) $0.60      $0.45      $0.45      33.3  %         33.3    %
(1) Recorded a significant tax benefit in Q1 FY17 of $876.1 million. This significant tax benefit is specifically tied to the Company’s internal reorganization and applied to Q1 FY17 only and as a result does not continue in future periods.
(2) As a result of the two-for-one share split, effected January 24, 2017 by way of a share sub-division, all current and historical period per share data and number of Common Shares outstanding in this press release are presented on a post share split basis.
(3) Please see note 2 "Use of Non-GAAP Financial Measures" below
(4) Please also see note 14 to the Company’s Consolidated Financial Statements on Form 10-K. Reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period.

Shelf Renewal

The Company also announced today that it is filing a renewed preliminary short form base shelf prospectus with the securities regulatory authorities in each of the provinces of Canada. A final shelf prospectus, once a receipt has been issued by the Canadian securities regulatory authorities, will allow OpenText or any selling security holders, as applicable, to offer and issue or sell, as applicable, from time to time, an aggregate of up to US$1 billion of equity and debt securities, or any combination thereof, during the 25-month period that the shelf prospectus remains effective. The Company expects to file a corresponding automatic shelf registration statement on Form S-3 with the U.S. Securities and Exchange Commission (the "SEC") concurrently with the filing of the final shelf prospectus in Canada. The specific terms of any future offering will be established in a prospectus supplement to the shelf prospectus, which supplement will be filed with the applicable Canadian securities regulatory authorities and the SEC.

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 August 3, 2017 at 7:00 p.m. ET through 11:59 p.m. on August 17, 2017 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 1541 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 enables the digital world, creating a better way for organizations to work with information, on premises or in the cloud. For more information about OpenText (OTEX, TSX: OTEX ) 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, 2018 (Fiscal 2018) 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, expected ECD Business revenue contributions, adjusted operating income and cash flow, its financial condition, results of operations and earnings, announced acquisitions, ongoing tax matters, the integration of the acquired businesses, expected timing, charges and savings related to restructuring activities, declaration of quarterly dividends, future tax rates, new platform and product offerings 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 including expected growth in the Artificial Intelligence 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) downward pressure on our share price and dilutive effect of future sales or issuances of equity securities (including in connection with future acquisitions); (x) the Company’s financial condition and capital requirements; and (xi) statements about the impact of 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, or applicable Canadian securities regulation; (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.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

OTEX-F

For more information, please contact:

Greg Secord Vice President, Investor Relations Open Text Corporation 415-963-0825 investors@opentext.com

Copyright ?2017 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/who-we-are/copyright-information .

OPEN TEXT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
                                                                                                                                                       June 30, 2017      June 30, 2016
ASSETS
Cash and cash equivalents                                                                                                                              $      443,357     $      1,283,757
Short-term investments                                                                                                                                 --                 11,839
Accounts receivable trade, net of allowance for doubtful accounts of $6,319 as of June 30, 2017 and $6,740 as of June 30, 2016                         445,812            285,904
Income taxes recoverable                                                                                                                               32,683             31,752
Prepaid expenses and other current assets                                                                                                              81,625             59,021
Total current assets                                                                                                                                   1,003,477          1,672,273
Property and equipment                                                                                                                                 227,418            183,660
Goodwill                                                                                                                                               3,416,749          2,325,586
Acquired intangible assets                                                                                                                             1,472,542          646,240
Deferred tax assets                                                                                                                                    1,215,712          241,161
Other assets                                                                                                                                           93,763             53,697
Deferred charges                                                                                                                                       42,344             22,776
Long-term income taxes recoverable                                                                                                                     8,557              8,751
Total assets                                                                                                                                           $      7,480,562   $      5,154,144
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities                                                                                                               $      342,120     $      257,450
Current portion of long-term debt                                                                                                                      182,760            8,000
Deferred revenues                                                                                                                                      570,328            373,549
Income taxes payable                                                                                                                                   31,835             32,030
Total current liabilities                                                                                                                              1,127,043          671,029
Long-term liabilities:
Accrued liabilities                                                                                                                                    50,338             29,848
Deferred credits                                                                                                                                       5,283              8,357
Pension liability                                                                                                                                      58,627             61,993
Long-term debt                                                                                                                                         2,387,057          2,137,987
Deferred revenues                                                                                                                                      61,678             37,461
Long-term income taxes payable                                                                                                                         162,493            149,041
Deferred tax liabilities                                                                                                                               94,724             79,231
Total long-term liabilities                                                                                                                            2,820,200          2,503,918
Shareholders’ equity:
Share capital
264,059,567 and 242,809,354 Common Shares issued and outstanding at June 30, 2017 and June 30, 2016, respectively; authorized Common Shares: unlimited 1,439,850          817,788
Additional paid-in capital                                                                                                                             173,604            147,280
Accumulated other comprehensive income                                                                                                                 48,800             46,310
Retained earnings                                                                                                                                      1,897,624          992,546
Treasury stock, at cost (1,101,612 shares at June 30, 2017 and 1,267,294 at June 30, 2016, respectively)                                               (27,520)           (25,268)
Total OpenText shareholders’ equity                                                                                                                    3,532,358          1,978,656
Non-controlling interests                                                                                                                              961                541
Total shareholders’ equity                                                                                                                             3,533,319          1,979,197
Total liabilities and shareholders’ equity                                                                                                             $      7,480,562   $      5,154,144
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
                                                               Year Ended June 30,
                                                               2017             2016           2015
Revenues:
License                                                        $    369,144     $    283,710   $    294,266
Cloud services and subscriptions                               705,495          601,018        605,309
Customer support                                               981,102          746,409        731,797
Professional service and other                                 235,316          193,091        220,545
Total revenues                                                 2,291,057        1,824,228      1,851,917
Cost of revenues:
License                                                        13,632           10,296         12,899
Cloud services and subscriptions                               300,255          244,021        237,310
Customer support                                               122,753          89,861         94,456
Professional service and other                                 195,195          155,584        172,742
Amortization of acquired technology-based intangible assets    130,556          74,238         81,002
Total cost of revenues                                         762,391          574,000        598,409
Gross profit                                                   1,528,666        1,250,228      1,253,508
Operating expenses:
Research and development                                       281,680          194,057        196,491
Sales and marketing                                            444,838          344,235        373,610
General and administrative                                     170,438          140,397        162,728
Depreciation                                                   64,318           54,929         50,906
Amortization of acquired customer-based intangible assets      150,842          113,201        108,239
Special charges                                                63,618           34,846         12,823
Total operating expenses                                       1,175,734        881,665        904,797
Income from operations                                         352,932          368,563        348,711
Other income (expense), net                                    15,743           (1,423)        (28,047)
Interest and other related expense, net                        (119,124)        (76,363)       (54,620)
Income before income taxes                                     249,551          290,777        266,044
Provision for income taxes                                     (776,364)        6,282          31,638
Net income for the period                                      $    1,025,915   $    284,495   $    234,406
Net (income) loss attributable to non-controlling interests    (256)            (18)           (79)
Net income attributable to OpenText                            $    1,025,659   $    284,477   $    234,327
Earnings per share--basic attributable to OpenText             $    4.04        $    1.17      $    0.96
Earnings per share--diluted attributable to OpenText           $    4.01        $    1.17      $    0.95
Weighted average number of Common Shares outstanding--basic    253,879          242,926        244,184
Weighted average number of Common Shares outstanding--diluted  255,805          244,076        245,914
Dividends declared per Common Share                            $    0.4770      $    0.4150    $    0.3588
As a result of the two-for-one share split, effected January 24, 2017 by way of a share sub-division, all current and historical period per share data and number of Common Shares outstanding in these Consolidated Financial Statements are presented on a post share split basis.
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
(Unaudited)
                                                              Three Months Ended June 30
                                                              2017              2016
Revenues:
License                                                       $       123,497   $       86,126
Cloud services and subscriptions                              183,638           156,624
Customer support                                              287,804           192,969
Professional service and other                                68,615            48,084
Total revenues                                                663,554           483,803
Cost of revenues:
License                                                       3,388             3,106
Cloud services and subscriptions                              79,588            64,889
Customer support                                              35,224            25,237
Professional service and other                                58,028            41,546
Amortization of acquired technology-based intangible assets   43,288            17,994
Total cost of revenues                                        219,516           152,772
Gross profit                                                  444,038           331,031
Operating expenses:
Research and development                                      81,301            53,747
Sales and marketing                                           129,541           95,815
General and administrative                                    47,499            33,330
Depreciation                                                  17,190            14,931
Amortization of acquired customer-based intangible assets     42,594            29,637
Special charges                                               19,461            10,092
Total operating expenses                                      337,586           237,552
Income from operations                                        106,452           93,479
Other income (expense), net                                   11,178            409
Interest and other related expense, net                       (32,372)          (21,902)
Income before income taxes                                    85,258            71,986
Provision for (recovery of) income taxes                      39,000            (14,347)
Net income for the period                                     $       46,258    $       86,333
Net (income) loss attributable to non-controlling interests   (121)             57
Net income attributable to OpenText                           $       46,137    $       86,390
Earnings per share--basic attributable to OpenText            $       0.17      $       0.36
Earnings per share--diluted attributable to OpenText          $       0.17      $       0.35
Weighted average number of Common Shares outstanding--basic   263,938           242,648
Weighted average number of Common Shares outstanding--diluted 265,818           244,040
Dividends declared per Common Share                           $       0.1320    $       0.1150
As a result of the two-for-one share split, effected January 24, 2017 by way of a share sub-division, all current and historical period per share data and number of Common Shares outstanding in these Condensed Consolidated Financial Statements are presented on a post share split basis.
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)
                                                                                                                                                                 Year Ended June 30,
                                                                                                                                                                 2017             2016          2015
Net income for the period                                                                                                                                        $    1,025,915   $   284,495   $   234,406
Other comprehensive income--net of tax:
Net foreign currency translation adjustments                                                                                                                     (4,756)          (3,318)       15,690
Unrealized gain (loss) on cash flow hedges:
Unrealized gain (loss) - net of tax expense (recovery) effect of $34, ($928) and ($2,188) for the year ended June 30, 2017, 2016 and 2015, respectively          95               (2,574)       (6,064)
(Gain) loss reclassified into net income - net of tax recovery effect of $67, $1,065 and $2,059 for the year ended June 30, 2017, 2016 and 2015, respectively    186              2,956         5,710
Actuarial gain (loss) relating to defined benefit pension plans:
Actuarial gain (loss) - net of tax expense (recovery) effect of $840, ($1,612) and ($1,422) for the year ended June 30, 2017, 2016 and 2015, respectively        6,216            (3,374)       (3,302)
Amortization of actuarial loss into net income - net of tax recovery effect of $241, $132 and $89 for the year ended June 30, 2017, 2016 and 2015, respectively  565              347           357
Unrealized net gain (loss) on marketable securities - net of tax effect of nil for the year ended June 30, 2017, 2016 and 2015, respectively                     184              445           (12)
Unrealized gain on marketable securities - net of tax effect of nil for the year ended June 30, 2017, 2016 and 2015, respectively                                --               --            1,906
Release of unrealized gain on marketable securities - net of tax effect of nil for the year ended June 30, 2017, 2016 and 2015, respectively                     --               --            (1,906)
Total other comprehensive income (loss), net, for the period                                                                                                     2,490            (5,518)       12,379
Total comprehensive income                                                                                                                                       1,028,405        278,977       246,785
Comprehensive (income) loss attributable to non-controlling interests                                                                                            (256)            (18)          (79)
Total comprehensive income attributable to OpenText                                                                                                              $    1,028,149   $   278,959   $   246,706
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
                                                                                  Year Ended June 30,
                                                                                  2017              2016             2015
Cash flows from operating activities:
Net income for the period                                                         $     1,025,915   $    284,495     $    234,406
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets                                345,715           242,368          240,147
Share-based compensation expense                                                  30,507            25,978           22,047
Excess tax (benefits) on share-based compensation expense                         (1,534)           (230)            (1,675)
Pension expense                                                                   3,893             4,577            4,796
Amortization of debt issuance costs                                               5,014             4,678            4,556
Amortization of deferred charges and credits                                      6,298             9,903            10,525
Loss on sale and write down of property and equipment                             784               1,108            1,368
Release of unrealized gain on marketable securities to income                     --                --               (3,098)
Deferred taxes                                                                    (871,195)         (54,461)         (14,578)
Share in net (income) of equity investees                                         (5,952)           --               --
Write off of unamortized debt issuance costs                                      833               --               2,919
Other non-cash charges                                                            1,033             --               --
Changes in operating assets and liabilities:
Accounts receivable                                                               (126,784)         8,985            43,189
Prepaid expenses and other current assets                                         (7,766)           316              (3,534)
Income taxes and deferred charges and credits                                     (1,683)           6,294            2,933
Accounts payable and accrued liabilities                                          53,490            (5,671)          (22,714)
Deferred revenue                                                                  3,484             (4,781)          6,775
Other assets                                                                      (22,799)          2,163            (5,031)
Net cash provided by operating activities                                         439,253           525,722          523,031
Cash flows from investing activities:
Additions of property and equipment                                               (79,592)          (70,009)         (77,046)
Proceeds from maturity of short-term investments                                  9,212             11,297           17,017
Purchase of ECD Business                                                          (1,622,394)       --               --
Purchase of HP Inc. CCM Business                                                  (315,000)         --               --
Purchase of Recommind, Inc.                                                       (170,107)         --               --
Purchase of HP Inc. CEM Business                                                  (7,289)           (152,711)        --
Purchase of ANXe Business Corporation                                             143               (104,570)        --
Purchase of Daegis Inc., net of cash acquired                                     --                (22,146)         --
Purchase consideration for prior period acquisitions                              --                (13,644)         (327,792)
Other investing activities                                                        (5,937)           (9,393)          (10,574)
Net cash used in investing activities                                             (2,190,964)       (361,176)        (398,395)
Cash flows from financing activities:
Excess tax benefits on share-based compensation expense                           1,534             230              1,675
Proceeds from issuance of long-term debt                                          256,875           600,000          800,000
Proceeds from revolver                                                            225,000           --               --
Proceeds from issuance of Common Shares from exercise of stock options and ESPP   35,593            20,097           15,240
Proceeds from issuance of Common Shares under the public Equity Offering          604,223           --               --
Repayment of long-term debt and revolver                                          (57,880)          (8,000)          (530,284)
Debt issuance costs                                                               (7,240)           (6,765)          (18,271)
Equity issuance costs                                                             (19,574)          --               --
Common Shares repurchased                                                         --                (65,509)         --
Purchase of treasury stock                                                        (8,198)           (10,627)         (10,126)
Repurchase of non-controlling interest                                            (208)             --               --
Payments of dividends to shareholders                                             (120,581)         (99,262)         (87,629)
Net cash provided by financing activities                                         909,544           430,164          170,605
Foreign exchange gain (loss) on cash held in foreign currencies                   1,767             (10,952)         (23,132)
Increase (decrease) in cash and cash equivalents during the period                (840,400)         583,758          272,109
Cash and cash equivalents at beginning of the period                              1,283,757         699,999          427,890
Cash and cash equivalents at end of the period                                    $     443,357     $    1,283,757   $    699,999
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
                                                                                  Three Months Ended June 30,
                                                                                  2017           2016
Cash flows from operating activities:
Net income for the period                                                         $    46,258    $    86,333
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets                                103,071        62,562
Share-based compensation expense                                                  8,134          6,898
Excess tax expense (benefits) on share-based compensation expense                 52             27
Pension expense                                                                   940            1,118
Amortization of debt issuance costs                                               1,233          1,208
Amortization of deferred charges and credits                                      (140)          2,653
Loss on sale and write down of property and equipment                             784            --
Deferred taxes                                                                    19,049         (38,769)
Share in net (income) loss of equity investees                                    201            --
Changes in operating assets and liabilities:
Accounts receivable                                                               (89,689)       (13,167)
Prepaid expenses and other current assets                                         (1,532)        2,905
Income taxes and deferred charges and credits                                     (3,253)        3,004
Accounts payable and accrued liabilities                                          36,969         21,763
Deferred revenue                                                                  (3,433)        (17,345)
Other assets                                                                      (16,164)       (70)
Net cash provided by operating activities                                         102,480        119,120
Cash flows from investing activities:
Additions of property and equipment                                               (29,521)       (21,112)
Proceeds from maturity of short-term investments                                  --             2,058
Purchase of HP Inc. CEM Business                                                  --             (152,711)
Purchase of ANXe Business Corporation                                             --             (104,570)
Other investing activities                                                        (2,924)        (3,269)
Net cash used in investing activities                                             (32,445)       (279,604)
Cash flows from financing activities:
Excess tax benefits on share-based compensation expense                           (52)           (27)
Proceeds from issuance of long-term debt                                          --             600,000
Proceeds from issuance of Common Shares from exercise of stock options and ESPP   8,925          8,269
Repayment of long-term debt and revolver                                          (51,940)       (2,000)
Debt issuance costs                                                               (1,040)        (6,765)
Equity issuance costs                                                             (102)          --
Purchase of treasury stock                                                        (3,953)        --
Repurchase of non-controlling interest                                            (208)          --
Payments of dividends to shareholders                                             (34,628)       (27,635)
Net cash provided by (used in) financing activities                               (82,998)       571,842
Foreign exchange gain (loss) on cash held in foreign currencies                   7,320          (5,006)
Increase (decrease) in cash and cash equivalents during the period                (5,643)        406,352
Cash and cash equivalents at beginning of the period                              449,000        877,405
Cash and cash equivalents at end of the period                                    $    443,357   $    1,283,757

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, attributable to OpenText, are calculated as net income or earnings per share, attributable to OpenText, on a diluted basis, after giving effect to the amortization of acquired intangible assets, other income (expense), share-based compensation, and Special charges (recoveries), all net of tax and any tax benefits/expense items unrelated to current period income, as further described in the tables below. 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.
    Adjusted earnings (loss) before interest, taxes, depreciation and amortization (Adjusted EBITDA) is calculated as net income attributable to OpenText, excluding interest income (expense), provision for income taxes, depreciation and amortization of acquired intangible assets, other income (expense), share-based compensation and Special charges (recoveries).
    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.
    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, 2017.
(In thousands except for per share amounts)
                                                                                                                            Three Months Ended June 30, 2017
                                                                                                                            GAAP-based       GAAP-basedAdjustments      Note    Non-GAAP-        Non-GAAP-
                                                                                                                            Measures         Measures                           based            based
                                                                                                                                             % of Total                         Measures         Measures
                                                                                                                                             Revenue                                             % of Total
                                                                                                                                                                                                 Revenue
Cost of revenues
Cloud services and subscriptions                                                                                            $       79,588             $       (390)    (1)     $       79,198
Customer support                                                                                                            35,224                     (313)            (1)     34,911
Professional service and other                                                                                              58,028                     (449)            (1)     57,579
Amortization of acquired technology-based intangible assets                                                                 43,288                     (43,288)         (2)     --
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)                             444,038          66.9    % 44,440           (3)     488,478          73.6    %
Operating expenses
Research and development                                                                                                    81,301                     (1,777)          (1)     79,524
Sales and marketing                                                                                                         129,541                    (2,450)          (1)     127,091
General and administrative                                                                                                  47,499                     (2,755)          (1)     44,744
Amortization of acquired customer-based intangible assets                                                                   42,594                     (42,594)         (2)     --
Special charges (recoveries)                                                                                                19,461                     (19,461)         (4)     --
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) 106,452          16.0    % 113,477          (5)     219,929          33.1    %
Other income (expense), net                                                                                                 11,178                     (11,178)         (6)     --
Provision for (recovery of) income taxes                                                                                    39,000                     (10,731)         (7)     28,269
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText                                                 46,137                     113,030          (8)     159,167
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText                         $       0.17               $       0.43     (8)     $       0.60
(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 relevant to an acquisition and include one-time, non-recurring charges or recoveries that 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. Other income (expense) also includes our share of income (losses) from our holdings in non-marketable securities investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.
(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 46% and a Non-GAAP-based tax rate of approximately 15%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and "book to return" adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 15%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:
                                                     Three Months Ended June 30, 2017
                                                                    Per share diluted
GAAP-based net income, attributable to OpenText      $     46,137   $     0.17
Add:
Amortization                                         85,882         0.32
Share-based compensation                             8,134          0.03
Special charges (recoveries)                         19,461         0.07
Other (income) expense, net                          (11,178)       (0.04)
GAAP-based provision for (recovery of ) income taxes 39,000         0.15
Non-GAAP-based provision for income taxes            (28,269)       (0.10)
Non-GAAP-based net income, attributable to OpenText  $     159,167  $     0.60
Reconciliation of Adjusted EBITDA
                                                            Three Months Ended June 30, 2017
GAAP-based net income, attributable to OpenText             $          46,137
Add:
Provision for (recovery of) income taxes                    39,000
Interest and other related expense, net                     32,372
Amortization of acquired technology-based intangible assets 43,288
Amortization of acquired customer-based intangible assets   42,594
Depreciation                                                17,190
Share-based compensation                                    8,134
Special charges (recoveries)                                19,461
Other (income) expense, net                                 (11,178)
Adjusted EBITDA                                             $          236,998
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the year ended June 30, 2017.
(In thousands except for per share amounts)
                                                                                                                            Year Ended June 30, 2017
                                                                                                                            GAAP-based       GAAP-basedAdjustments      Note    Non-GAAP-        Non-GAAP-
                                                                                                                            Measures         Measures                           based            based
                                                                                                                                             % of Total                         Measures         Measures
                                                                                                                                             Revenue                                             % of Total
                                                                                                                                                                                                 Revenue
Cost of revenues
Cloud services and subscriptions                                                                                            $       300,255            $       (1,229)  (1)     $       299,026
Customer support                                                                                                            122,753                    (1,079)          (1)     121,674
Professional service and other                                                                                              195,195                    (1,451)          (1)     193,744
Amortization of acquired technology-based intangible assets                                                                 130,556                    (130,556)        (2)     --
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)                             1,528,666        66.7    % 134,315          (3)     1,662,981        72.6    %
Operating expenses
Research and development                                                                                                    281,680                    (7,149)          (1)     274,531
Sales and marketing                                                                                                         444,838                    (9,680)          (1)     435,158
General and administrative                                                                                                  170,438                    (9,919)          (1)     160,519
Amortization of acquired customer-based intangible assets                                                                   150,842                    (150,842)        (2)     --
Special charges (recoveries)                                                                                                63,618                     (63,618)         (4)     --
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) 352,932          15.4    % 375,523          (5)     728,455          31.8    %
Other income (expense), net                                                                                                 15,743                     (15,743)         (6)     --
Provision for (recovery of) income taxes                                                                                    (776,364)                  867,764          (7)     91,400
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText                                                 1,025,659                  (507,984)        (8)     517,675
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText                         $       4.01               $       (1.99)   (8)     $       2.02
(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 relevant to an acquisition and include one-time, non-recurring charges or recoveries that 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. Other income (expense) also includes our share of income (losses) from our holdings in non-marketable securities investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.
(7) Adjustment relates to differences between the GAAP-based tax recovery rate of approximately 311% and a Non-GAAP-based tax rate of approximately 15%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and "book to return" adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 15%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:
                                                    Year Ended June 30, 2017
                                                                    Per share diluted
GAAP-based net income, attributable to OpenText     $    1,025,659  $     4.01
Add:
Amortization                                        281,398         1.10
Share-based compensation                            30,507          0.12
Special charges (recoveries)                        63,618          0.25
Other (income) expense, net                         (15,743)        (0.06)
GAAP-based provision for (recovery of) income taxes (776,364)       (3.03)
Non-GAAP based provision for income taxes           (91,400)        (0.37)
Non-GAAP-based net income, attributable to OpenText $    517,675    $     2.02
Reconciliation of Adjusted EBITDA
                                                            Year Ended June 30, 2017
GAAP-based net income, attributable to OpenText             $        1,025,659
Add:
Provision for (recovery of) income taxes                    (776,364)
Interest and other related expense, net                     119,124
Amortization of acquired technology-based intangible assets 130,556
Amortization of acquired customer-based intangible assets   150,842
Depreciation                                                64,318
Share-based compensation                                    30,507
Special charges (recoveries)                                63,618
Other (income) expense, net                                 (15,743)
Adjusted EBITDA                                             $        792,517
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended March 31, 2017.
(In thousands except for per share amounts)
                                                                                                                            Three Months Ended March 31, 2017
                                                                                                                            GAAP-based       GAAP-basedAdjustments      Note    Non-GAAP-        Non-GAAP-
                                                                                                                            Measures         Measures                           based            based
                                                                                                                                             % of Total                         Measures         Measures
                                                                                                                                             Revenue                                             % of Total
                                                                                                                                                                                                 Revenue
Cost of revenues
Cloud services and subscriptions                                                                                            $       77,225             $       (268)    (1)     $       76,957
Customer support                                                                                                            34,442                     (261)            (1)     34,181
Professional service and other                                                                                              55,529                     (89)             (1)     55,440
Amortization of acquired technology-based intangible assets                                                                 39,285                     (39,285)         (2)     --
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)                             382,641          64.5    % 39,903           (3)     422,544          71.2    %
Operating expenses
Research and development                                                                                                    77,086                     (1,634)          (1)     75,452
Sales and marketing                                                                                                         117,498                    (2,081)          (1)     115,417
General and administrative                                                                                                  44,828                     (2,328)          (1)     42,500
Amortization of acquired customer-based intangible assets                                                                   40,825                     (40,825)         (2)     --
Special charges (recoveries)                                                                                                20,586                     (20,586)         (4)     --
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) 65,261           11.0    % 107,357          (5)     172,618          29.1    %
Other income (expense), net                                                                                                 1,424                      (1,424)          (6)     --
Provision for (recovery of) income taxes                                                                                    13,239                     7,798            (7)     21,037
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText                                                 21,616                     98,135           (8)     119,751
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText                         $       0.08               $       0.37     (8)     $       0.45
(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 relevant to an acquisition and include one-time, non-recurring charges or recoveries that 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. Other income (expense) also includes our share of income (losses) from our holdings in non-marketable securities investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.
(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 38% and a Non-GAAP-based tax rate of approximately 15%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and "book to return" adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 15%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:
                                                     Three Months Ended March 31, 2017
                                                                    Per share diluted
GAAP-based net income, attributable to OpenText      $     21,616   $     0.08
Add:
Amortization                                         80,110         0.30
Share-based compensation                             6,661          0.03
Special charges (recoveries)                         20,586         0.08
Other (income) expense, net                          (1,424)        (0.01)
GAAP-based provision for (recovery of ) income taxes 13,239         0.05
Non-GAAP-based provision for income taxes            (21,037)       (0.08)
Non-GAAP-based net income, attributable to OpenText  $     119,751  $     0.45
Reconciliation of Adjusted EBITDA
                                                            Three months ended March 31, 2017
GAAP-based net income, attributable to OpenText             $           21,616
Add:
Provision for (recovery of) income taxes                    13,239
Interest and other related expense, net                     31,734
Amortization of acquired technology-based intangible assets 39,285
Amortization of acquired customer-based intangible assets   40,825
Depreciation                                                16,557
Share-based compensation                                    6,661
Special charges (recoveries)                                20,586
Other (income) expense, net                                 (1,424)
Adjusted EBITDA                                             $           189,079
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-basedAdjustments      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                         $       0.35               $       0.10     (8)     $       0.45
(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 relevant to an acquisition and include one-time, non-recurring charges or recoveries that 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 20% and a Non-GAAP-based tax rate of approximately 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 and "book to return" adjustments for tax return filings and tax assessments. In arriving at our Non-GAAP-based tax rate of approximately 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   $     0.35
Add:
Amortization                                         47,631         0.20
Share-based compensation                             6,898          0.03
Special charges (recoveries)                         10,092         0.04
Other (income) expense, net                          (409)          --
GAAP-based provision for (recovery of ) income taxes (14,347)       (0.06)
Non-GAAP-based provision for income taxes            (27,297)       (0.11)
Non-GAAP-based net income, attributable to OpenText  $     108,958  $     0.45
Reconciliation of Adjusted EBITDA
                                                            Three months ended June 30, 2016
GAAP-based net income, attributable to OpenText             $          86,390
Add:
Provision for (recovery of) income taxes                    (14,347)
Interest and other related expense, net                     21,902
Amortization of acquired technology-based intangible assets 17,994
Amortization of acquired customer-based intangible assets   29,637
Depreciation                                                14,931
Share-based compensation                                    6,898
Special charges (recoveries)                                10,092
Other (income) expense, net                                 (409)
Adjusted EBITDA                                             $          173,088
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-basedAdjustments      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                         $       1.17               $       0.60     (8)     $       1.77
(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 relevant to an acquisition and include one-time, non-recurring charges or recoveries that 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 and "book to return" adjustments for tax return filings and tax assessments. 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  $     1.17
Add:
Amortization                                        187,439       0.77
Share-based compensation                            25,978        0.10
Special charges (recoveries)                        34,846        0.14
Other (income) expense, net                         1,423         0.01
GAAP-based provision for (recovery of) income taxes 6,282         0.03
Non-GAAP based provision for income taxes           (108,075)     (0.45)
Non-GAAP-based net income, attributable to OpenText $    432,370  $     1.77
Reconciliation of Adjusted EBITDA
                                                            Year Ended June 30, 2016
GAAP-based net income, attributable to OpenText             $        284,477
Add:
Provision for (recovery of) income taxes                    6,282
Interest and other related expense, net                     76,363
Amortization of acquired technology-based intangible assets 74,238
Amortization of acquired customer-based intangible assets   113,201
Depreciation                                                54,929
Share-based compensation                                    25,978
Special charges (recoveries)                                34,846
Other (income) expense, net                                 1,423
Adjusted EBITDA                                             $        671,737
(3) The following tables provide a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three months and years ended June 30, 2017 and 2016:
           Three Months Ended           Three Months Ended
           June 30, 2017                June 30, 2016
Currencies % of Revenue % of Expenses*  % of Revenue % of Expenses*
EURO       22     %     16      %       25     %     15      %
GBP        6      %     6       %       7      %     7       %
CAD        4      %     10      %       5      %     12      %
USD        58     %     52      %       54     %     49      %
Other      10     %     16      %       9      %     17      %
Total      100    %     100     %       100    %     100     %
           Year Ended June 30, 2017      Year Ended June 30, 2016
Currencies % of Revenue % of Expenses*   % of Revenue % of Expenses*
EURO       22     %     15      %        24     %     15      %
GBP        6      %     7       %        8      %     7       %
CAD        4      %     11      %        4      %     12      %
USD        58     %     52      %        54     %     49      %
Other      10     %     15      %        10     %     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).

View original content:http://www.prnewswire.com/news-releases/opentext-reports-fourth-quarter-and-fiscal-year-2017-financi

SOURCE Open Text Corporation

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