Exhibit 99.1
[OPEN TEXT LOGO APPEARS HERE]
CONFIDENTIAL DRAFT-NOT FOR RELEASE
OPEN TEXT REPORTS STRONG SECOND QUARTER
REVENUE GROWTH
License Revenue grows 61%
WATERLOO, ON—January 22, 2004—Open Text™ Corporation (Nasdaq: OTEX; TSX: OTC), an enterprise content management (ECM) vendor and provider of Livelink®, the leading collaboration and knowledge management software for the global enterprise, today announced financial results for its second quarter ended December 31, 2003.(1)
Financial Highlights
Total revenue for the second quarter was $61.7 million, up 43% from the same period last year. During the quarter license revenue of $27.9 million grew by 61%. Revenue results were broadly based, with 58% derived from North America, 39% from Europe and 3% from the Middle East and Asia, consistent with previous quarters.
For the second quarter, Open Text reported adjusted net income of $8.5 million, or adjusted earnings per share (EPS) of $0.20. This compares to adjusted net income of $6.5 million, or $0.16 adjusted EPS in the second quarter a year ago. (2)
Open Text reported net income for the second quarter in accordance with GAAP, of $7.7 million, or $0.18 EPS, compared to net income of $6.2 million, or $0.15 EPS in the second quarter a year ago, marking the 20th consecutive profitable quarter for the Company.
Cash flow from operations was $5.2 million. The cash on hand at quarter end was $112.3 million or $2.77 per share. (3)
At quarter end, deferred revenue was $39.8 million, up $9.6 million or 32% over a year ago. Accounts receivable was $39.9 million, resulting in days sales outstanding (DSO) of 58 days.
“We are delighted to have achieved record revenue results in the quarter, driven by strong license revenue growth,” said Tom Jenkins, CEO of Open Text. “These results indicate that our customers positively view the business combination agreement with IXOS. This will strengthen our leadership position in the ECM market and further enhance our pipeline by significantly expanding our global customer base.”
IXOS Tender Offer
Open Text would like to remind IXOS shareholders that although the tender offer closes on Friday, January 30, 2004 at 12:00 noon (local time Frankfurt/Main, Germany), the tender processing in Europe may take several days. Open Text recommends that IXOS shareholders choosing to tender their shares do so by Monday, January 26, 2004. More information on the business combination agreement can be found at:
www.2016091ontario.de
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Recent Highlights
| 1. | Open Text Waives Minimum Condition—Extension of the Offer to Acquire all of the Shares of IXOS until January 30, 2004 |
Open Text’s wholly owned subsidiary, 2016091 Ontario Inc., waived the condition of the Offer requiring that at least 67% of the outstanding shares of IXOS be tendered to the Offer. The acceptance period of the Offer is extended until 12:00 noon (local time Frankfurt/Main, Germany) on Friday, January 30, 2004.
For more information please see the press release at:
www.opentext.com/news/pr.html?id=1442
| 2. | Open Text Hosts LinkUp Europe 2004 in London, Paris and Munich |
Attendees will be invited to join the conference in their favorite city: London Conference: April 26-27; Paris Conference: April 28; and Munich Conference: April 28-29. LinkUp Europe 2004 promises to be a valuable opportunity for prospects, customers and partners to learn about the future of Enterprise Content Management at Open Text.
For more information please see the press release at:
www.opentext.com/news/pr.html?id=1439
| 3. | U.S. Department of Defense Certifies Open Text’s Livelink MeetingZone Software for Collaboration |
Livelink MeetingZone™, the Company’s online team meeting solution, has received U.S. Department of Defense (DoD) certification for collaboration software, a key requirement for all collaboration software used by U.S. defense and intelligence agencies.
For more information please see the press release at:
www.opentext.com/news/pr.html?id=1415
| 4. | Open Text and IXOS Announce Business Combination to form the World’s Largest ECM Software Vendor |
2016091 Ontario Inc., a wholly owned subsidiary of Open Text will acquire all of the issued and outstanding shares of IXOS. The transaction will proceed via a tender offer for cash consideration of either 9 Euro per share (approximately US$11.37) or 0.5220 of an Open Text share for each share of IXOS tendered. The Open Text share will include a warrant to purchase 0.1484 of an Open Text share for up to one year after closing the transaction, with a strike price of US $20.75 per share. The cash consideration represents a 34% premium based on the three months volume weighted average prior to the announcement.
For more information on the business combination agreement please visit:
www.2016091ontario.de
Upcoming Investor Events
Open Text announced it plans to participate in the following financial conferences. Note that event dates and times are subject to change after the release of this announcement. To confirm a date or learn about Web cast availability, visit the Company’s Web site closer to event date at:
www.opentext.com/investor/investor_events/
January 28, 2004
Orion Securities Technology Conference
Toronto, ON Canada
February 5, 2004
RBC Banff Springs Conference
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Banff, AB Canada
February 12, 2004
Merrill Lynch Services and Software Conference
Santa Monica, CA USA
May 17, 2004
South West Securities Software Conference
Chicago, IL USA
Teleconference Call
Open Text invites the public to listen to the Company’s teleconference call concerning financial results for the second quarter of fiscal 2004.
Date: Thursday, January 22, 2004
Time: 5:30 p.m. ET / 2:30 p.m. PT
Length: 45 minutes, approximately
Where: 416-640-1907
Please dial the above number approximately 10 minutes before the teleconference is scheduled to begin. The operator will take your name and connect your line with the meeting.
Replay of the call will be available beginning January 22, 2004 from 7:30 p.m. For replay information, or to listen to the call via Web cast, please use the following link:
www.opentext.com/events/event.html?id=35264
Additional materials, including accompanying financial and operating statistics relating to these financial results may be obtained from the investor site within the Open Text corporate Web site at: www.opentext.com/investor/quarterly_reports/index.html
About Open Text
Open Text™ is the market leader in providing Enterprise Content Management (ECM) solutions that bring together people, processes and information in global organizations. Since launching the world’s first Internet search engine and the first Web-based enterprise collaboration and knowledge management software, Open Text has continued its leadership in providing global enterprises with innovative and effective solutions. Throughout its history, Open Text has matched its tradition of innovation with a track record of financial strength and growth. Today, the Company supports fifteen million seats across 10,000 deployments in 31 countries and 12 languages worldwide. Open Text’s flagship product, Livelink® seamlessly combines collaboration with content management, helping organizations transform information into knowledge to provide the foundation for innovation, compliance and accelerated growth. For more information on Open Text and Livelink, go to: www.opentext.com and www.opentext.com/livelink.
# # #
Forward-looking statements in this press release are not promises or guarantees and are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. The Company cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Forward-looking statements relate to, among other things, the future performance of Open Text, the benefits of any acquisition, the strength of the Company’s pipeline, the Company’s growth and profitability prospects, the Company’s position in the market, and future opportunities therein, the benefits of the Company’s products to be realized by customers, the demand for the Company’s products and the deployment of Livelink and Livelink MeetingZone by customers. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or
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circumstances. The risks and uncertainties that may affect forward-looking statements include, among others, risks involved in the completion and integration of acquisitions, the possibility of technical, logistical or planning issues in connection with deployments, the continuous commitment of the Company’s customers, demand for the Company’s products and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission (SEC), including the Company’s Form 10-K for the year ended June 30, 2003, and Form 10-Q for the quarter ended September 30, 2003. Forward-looking statements are based on management’s beliefs and opinions at the time the statements are made, and the Company does not undertake any obligations to update forward-looking statements should circumstances or management’s beliefs or opinions change.
Copyright© 2004 by Open Text Corporation. LIVELINK, LIVELINK MEETINGZONE, and OPEN TEXT are trademarks or registered trademarks of Open Text Corporation in the United States of America, Canada, the European Union and/or other countries. This list of trademarks is not exhaustive. Other trademarks, registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text Corporation or other respective owners.
| (1) | Reported under U.S. Generally Accepted Accounting Principles (GAAP). All amounts are in US Dollars. |
| (2) | The Company uses the financial measures “adjusted net income” and “adjusted EPS” to supplement its consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of adjusted net income and adjusted EPS are not meant to be a substitute for net income or net income per share presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with such GAAP measures. Adjusted net income and adjusted EPS are calculated as net income excluding(a) the amortization of acquired intangible assets,(b) other income, gain (loss) on investments,(c) income tax on equity gain and(d) restructuring charges. The terms adjusted net income and adjusted EPS do not have a standardized meaning prescribed by GAAP, and therefore the Company’s definitions are unlikely to be comparable to similar measures presented by other companies. The Company’s management believes that the presentation of adjusted net income and adjusted EPS provide useful information to investors because they exclude non-operational charges and are a better indication of Open Text’s profitability from recurring operations. The items excluded from the computation of adjusted net income and adjusted EPS, which are otherwise included in the determination of net income and EPS prepared in accordance with GAAP, are items that Open Text does not consider to be meaningful in evaluating the Company’s past financial performance or the future prospects and may hinder a comparison of its period-to-period profitability. |
| (3) | Includes $46.8 million that is temporarily restricted in use, as a provision of the financing arrangement for the IXOS transaction. |
For more information, please contact:
Greg Secord
Director, Investor Relations
Open Text Corporation
+1-519-888-7111 ext.2408
gsecord@opentext.com
Anne Marie Rahm
Director, Investor Relations
Open Text Corporation
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+1-617-204-3359
arahm@opentext.com
Alan Hoverd
Chief Financial Officer
Open Text Corporation
+1-905-762-6222 ahoverd@opentext.com
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OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In US Dollars)
(in thousands, except share data)
| December 31, 2003 | June 30, 2003 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 65,421 | $ | 116,554 | ||||
Accounts receivable - net of allowance for doubtful accounts of $1,944 as of December 31, 2003 and $1,933 as of June 30, 2003 | 39,942 | 35,855 | ||||||
Income taxes recoverable | 5,127 | 484 | ||||||
Prepaid expenses and other assets | 4,368 | 3,541 | ||||||
Deferred tax asset | 5,866 | 7,688 | ||||||
Total current assets | 120,724 | 164,122 | ||||||
Restricted cash(3) | 46,837 | — | ||||||
Capital assets | 11,850 | 10,011 | ||||||
Goodwill, net of accumulated amortization of $12,807 at December 31, 2003 and June 30, 2003 | 50,262 | 32,301 | ||||||
Deferred tax asset | 13,388 | 8,674 | ||||||
Other assets | 35,411 | 23,579 | ||||||
| $ | 278,472 | $ | 238,687 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 42,032 | $ | 31,596 | ||||
Deferred revenues | 38,628 | 38,086 | ||||||
Total current liabilities | 80,660 | 69,682 | ||||||
Long term liabilities: | ||||||||
Deferred revenues | 1,149 | 1,696 | ||||||
Deferred tax | 2,557 | — | ||||||
Accrued liabilities | 4,944 | 4,912 | ||||||
| 8,650 | 6,608 | |||||||
Shareholders’ equity: | ||||||||
Share capital | 217,810 | 204,343 | ||||||
Accumulated other comprehensive income: | ||||||||
Cumulative translation adjustment | 2,132 | (119 | ) | |||||
Accumulated deficit | (30,780 | ) | (41,827 | ) | ||||
Total shareholders’ equity | 189,162 | 162,397 | ||||||
| $ | 278,472 | $ | 238,687 | |||||
[GRAPHIC APPEARS HERE]
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In US Dollars)
(in thousands, except per share data)
| Three months ended December 31, | Six months ended December 31, | |||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||
| (unaudited) | (unaudited) | |||||||||||
Revenues: | ||||||||||||
License | $ | 27,893 | $ | 17,368 | $ | 44,760 | $ | 32,844 | ||||
Customer support | 21,928 | 14,883 | 41,348 | 28,545 | ||||||||
Service | 11,853 | 10,763 | 19,751 | 19,280 | ||||||||
Total revenues | 61,674 | 43,014 | 105,859 | 80,669 | ||||||||
Cost of revenues: | ||||||||||||
License | 2,550 | 1,618 | 3,841 | 3,267 | ||||||||
Customer support | 4,054 | 2,401 | 7,235 | 4,718 | ||||||||
Service | 9,126 | 7,447 | 16,329 | 13,682 | ||||||||
Total cost of revenues | 15,730 | 11,466 | 27,405 | 21,667 | ||||||||
Gross profit | 45,944 | 31,548 | 78,454 | 59,002 | ||||||||
Operating expenses: | ||||||||||||
Research and development | 9,924 | 6,850 | 17,955 | 13,012 | ||||||||
Sales and marketing | 18,500 | 13,815 | 32,307 | 25,801 | ||||||||
General and administrative | 4,886 | 3,545 | 8,241 | 6,787 | ||||||||
Depreciation | 1,479 | 1,228 | 2,666 | 2,444 | ||||||||
Amortization of acquired intangible assets | 1,635 | 738 | 2,822 | 1,225 | ||||||||
Total operating expenses | 36,424 | 26,176 | 63,991 | 49,269 | ||||||||
Income from operations | 9,520 | 5,372 | 14,463 | 9,733 | ||||||||
Other income | 869 | 498 | 488 | 1,115 | ||||||||
Interest income | 210 | 348 | 437 | 732 | ||||||||
Income before income taxes | 10,599 | 6,218 | 15,388 | 11,580 | ||||||||
Provision for income taxes | 2,907 | — | 4,341 | — | ||||||||
Net income for the period | $ | 7,692 | $ | 6,218 | $ | 11,047 | $ | 11,580 | ||||
Adjusted net income for the period (2) | $ | 8,458 | $ | 6,458 | $ | 13,381 | $ | 11,690 | ||||
Adjusted diluted net income per share (2) | $ | 0.20 | $ | 0.16 | $ | 0.31 | $ | 0.29 | ||||
Basic earnings per share | $ | 0.19 | $ | 0.16 | $ | 0.28 | $ | 0.30 | ||||
Diluted earnings per share | $ | 0.18 | $ | 0.15 | $ | 0.26 | $ | 0.28 | ||||
Weighted average number of Common Shares outstanding - basic | 40,372 | 38,564 | 39,947 | 38,922 | ||||||||
Weighted average number of Common Shares outstanding - diluted | 43,361 | 40,718 | 42,872 | 40,874 | ||||||||
[GRAPHIC APPEARS HERE]
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASHFLOWS
(In thousands of US Dollars)
Three months ended December 31, | Six months ended December 31, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income for the period | $ | 7,692 | $ | 6,218 | $ | 11,047 | $ | 11,580 | ||||||||
Non-cash items: | ||||||||||||||||
Depreciation and amortization | 3,114 | 1,966 | 5,488 | 3,669 | ||||||||||||
Unrealized foreign exchange gain | (1,522 | ) | (214 | ) | (1,508 | ) | (581 | ) | ||||||||
Deferred income taxes | (135 | ) | — | 100 | — | |||||||||||
Other | (2 | ) | — | 8 | — | |||||||||||
Changes in operating assets and liabilities net of assets acquired: | ||||||||||||||||
Accounts receivable | (8,027 | ) | 2,609 | (29 | ) | 6,124 | ||||||||||
Prepaid and other assets | 1,006 | 1,072 | 231 | 1,336 | ||||||||||||
Accounts payable and accrued liabilities | 3,220 | 532 | (1,217 | ) | (1,076 | ) | ||||||||||
Deferred revenue | (1,641 | ) | (364 | ) | (6,040 | ) | 396 | |||||||||
Income taxes | 1,527 | (151 | ) | (2,840 | ) | (177 | ) | |||||||||
Net cash provided by operating activities | 5,232 | 11,668 | 5,240 | 21,271 | ||||||||||||
Cash flows used in investing activities: | ||||||||||||||||
Acquisitions of capital assets | (1,115 | ) | (918 | ) | (1,942 | ) | (1,448 | ) | ||||||||
Purchase of Centrinity Inc., net of cash acquired | — | (11,369 | ) | — | (11,369 | ) | ||||||||||
Purchase of Gauss Interprise AG, net of cash acquired | (9,764 | ) | — | (9,764 | ) | — | ||||||||||
Purchase of SER, net of cash acquired | (3,403 | ) | — | (3,403 | ) | — | ||||||||||
Cash restricted for acquisitions | (34,837 | ) | — | (46,837 | ) | — | ||||||||||
Business acquisition costs | (760 | ) | — | (1,801 | ) | — | ||||||||||
Purchase of patent | — | — | — | (1,246 | ) | |||||||||||
Other acquisitions | (1,254 | ) | — | (1,949 | ) | — | ||||||||||
Other | — | — | — | (132 | ) | |||||||||||
Net cash used in investing activities | (51,133 | ) | (12,287 | ) | (65,696 | ) | (14,195 | ) | ||||||||
Cash flow from financing activities: | ||||||||||||||||
Payments of obligations under capital leases | (58 | ) | — | (150 | ) | — | ||||||||||
Deferred financing fees | (668 | ) | (668 | ) | ||||||||||||
Proceeds from issuance of Common Shares | 2,601 | 775 | 9,387 | 2,486 | ||||||||||||
Repurchase of Common Shares | — | (1,066 | ) | — | (17,302 | ) | ||||||||||
Net cash provided by (used in) financing activities | 1,875 | (291 | ) | 8,569 | (14,816 | ) | ||||||||||
Foreign exchange gain on cash held in foreign currency | 700 | 238 | 754 | 186 | ||||||||||||
Decrease in cash and cash equivalents during the period | (43,326 | ) | (672 | ) | (51,133 | ) | (7,554 | ) | ||||||||
Cash and cash equivalents at beginning of period | 108,747 | 103,013 | 116,554 | 109,895 | ||||||||||||
Cash and cash equivalents at end of period | $ | 65,421 | $ | 102,341 | $ | 65,421 | $ | 102,341 | ||||||||
OPEN TEXT CORPORATION
PROFORMA SUPPLEMENTAL INFORMATION
For the three and six month periods ended December 31, 2003 and 2002
(in thousands of US dollars, except per share data)
| Three month period ended December 31, | Six month period ended December 31, | |||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Net income | $ | 7,692 | $ | 6,218 | $ | 11,047 | $ | 11,580 | ||||||||
Adjustments: | ||||||||||||||||
Amortization of acquired intangible assets | 1,635 | 738 | 2,822 | 1,225 | ||||||||||||
Other income | (869 | ) | (498 | ) | (488 | ) | (1,115 | ) | ||||||||
Total adjustments | 766 | 240 | 2,334 | 110 | ||||||||||||
Adjusted net income | $ | 8,458 | $ | 6,458 | $ | 13,381 | $ | 11,690 | ||||||||
Addback income tax expense | $ | 2,907 | $ | 0 | $ | 4,341 | $ | 0 | ||||||||
Adjusted net income excluding tax expense | $ | 11,365 | $ | 6,458 | $ | 17,722 | $ | 11,690 | ||||||||
Adjusted diluted net income per share | $ | 0.20 | $ | 0.16 | $ | 0.31 | $ | 0.29 | ||||||||
Adjusted diluted net income per share excluding income tax | $ | 0.26 | $ | 0.16 | $ | 0.41 | $ | 0.29 | ||||||||
Shares used to compute earnings per share Diluted | 43,361 | 40,718 | 42,872 | 40,874 | ||||||||||||