UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2003
OR
| ¨ | TRANSITION QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 0-27544
OPEN TEXT CORPORATION
(Exact name of registrant as specified in its charter)
| ONTARIO |
98-0154400 | |
| (State of other jurisdiction |
(IRS Employer Identification No.) |
185 Columbia Street West, Waterloo, Ontario, Canada N2L 5Z5
(Address of principal executive offices)
Registrant’s telephone number, including area code: (519) 888-7111
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
At May 9, 2003 there were 19,499,185 outstanding Common Shares of the registrant.
OPEN TEXT CORPORATION
| Page No. | ||||
| Item 1. |
||||
| Condensed Consolidated Balance Sheets as of March 31, 2003 (Unaudited) and June 30, 2002 |
3 | |||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 | ||
| Item 3. |
33 | |||
| Item 4. |
34 | |||
| Item 6. |
34 | |||
| 36 | ||||
| 37 | ||||
2
Item 1. Condensed Consolidated Financial Statements
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In US Dollars)
(in thousands, except share data)
| March 31, 2003 |
June 30, 2002 |
|||||||
| (unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
108,098 |
|
$ |
109,895 |
| ||
| Available for sale securities |
|
129 |
|
|
— |
| ||
| Accounts receivable, net of allowance for doubtful accounts of $1,933 as of March 31, 2003 and $1,458 as of June 30, 2002 |
|
30,187 |
|
|
33,094 |
| ||
| Income taxes recoverable |
|
620 |
|
|
1,194 |
| ||
| Prepaid expenses and other current assets |
|
3,388 |
|
|
2,530 |
| ||
| Deferred tax asset |
|
1,964 |
|
|
— |
| ||
| Total current assets |
|
144,386 |
|
|
146,713 |
| ||
| Capital assets |
|
9,062 |
|
|
8,401 |
| ||
| Goodwill, net of accumulated amortization of $12,807 at March 31, 2003 and June 30, 2002 |
|
42,928 |
|
|
24,587 |
| ||
| Deferred tax asset |
|
12,691 |
|
|
— |
| ||
| Other assets |
|
12,961 |
|
|
7,146 |
| ||
| $ |
222,028 |
|
$ |
186,847 |
| |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued liabilities (note 3) |
$ |
31,850 |
|
$ |
18,889 |
| ||
| Deferred revenues |
|
34,409 |
|
|
23,927 |
| ||
| Total current liabilities |
|
66,259 |
|
|
42,816 |
| ||
| Long-term liabilities: |
||||||||
| Deferred revenues |
|
2,731 |
|
|
— |
| ||
| Accrued liabilities |
|
5,044 |
|
|
— |
| ||
| Total long-term liabilities |
|
7,775 |
|
|
— |
| ||
| Shareholders’ equity: |
||||||||
| Share capital |
||||||||
| 19,450,999 and 19,875,872 Common Shares issued and outstanding at March 31, 2003 and June 30, 2002, respectively |
|
201,938 |
|
|
204,815 |
| ||
| Accumulated other comprehensive income |
|
(2,731 |
) |
|
(780 |
) | ||
| Accumulated deficit (note 6) |
|
(51,213 |
) |
|
(60,004 |
) | ||
| Total shareholders’ equity |
|
147,994 |
|
|
144,031 |
| ||
| $ |
222,028 |
|
$ |
186,847 |
| |||
See accompanying notes to condensed consolidated financial statements
3
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In US Dollars)
(in thousands, except per share data)
| Three months ended March 31, |
Nine months ended |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| (unaudited) |
(unaudited) |
|||||||||||||||
| Revenues: |
||||||||||||||||
| License and networking |
$ |
19,025 |
|
$ |
15,540 |
|
$ |
51,869 |
|
$ |
46,122 |
| ||||
| Customer support |
|
16,190 |
|
|
12,157 |
|
|
44,735 |
|
|
36,368 |
| ||||
| Service |
|
8,744 |
|
|
9,657 |
|
|
28,024 |
|
|
30,294 |
| ||||
| Total revenues |
|
43,959 |
|
|
37,354 |
|
|
124,628 |
|
|
112,784 |
| ||||
| Cost of revenues: |
||||||||||||||||
| License and networking |
|
1,601 |
|
|
1,076 |
|
|
4,868 |
|
|
3,703 |
| ||||
| Customer support |
|
2,734 |
|
|
2,149 |
|
|
7,452 |
|
|
6,407 |
| ||||
| Service |
|
6,606 |
|
|
6,406 |
|
|
20,288 |
|
|
20,603 |
| ||||
| Total cost of revenues |
|
10,941 |
|
|
9,631 |
|
|
32,608 |
|
|
30,713 |
| ||||
| Gross profit |
|
33,018 |
|
|
27,723 |
|
|
92,020 |
|
|
82,071 |
| ||||
| Operating expenses: |
||||||||||||||||
| Research and development |
|
7,611 |
|
|
6,029 |
|
|
20,624 |
|
|
18,060 |
| ||||
| Sales and marketing |
|
13,190 |
|
|
11,680 |
|
|
38,991 |
|
|
37,385 |
| ||||
| General and administrative |
|
3,592 |
|
|
2,967 |
|
|
10,378 |
|
|
9,376 |
| ||||
| Depreciation |
|
1,297 |
|
|
1,370 |
|
|
3,741 |
|
|
4,265 |
| ||||
| Amortization of acquired intangible assets |
|
822 |
|
|
1,655 |
|
|
2,047 |
|
|
4,968 |
| ||||
| Total operating expenses |
|
26,512 |
|
|
23,701 |
|
|
75,781 |
|
|
74,054 |
| ||||
| Income from operations |
|
6,506 |
|
|
4,022 |
|
|
16,239 |
|
|
8,017 |
| ||||
| Other income (loss) |
|
876 |
|
|
(107 |
) |
|
1,991 |
|
|
129 |
| ||||
| Interest income |
|
239 |
|
|
367 |
|
|
971 |
|
|
1,559 |
| ||||
| Income before income taxes |
|
7,621 |
|
|
4,282 |
|
|
19,201 |
|
|
9,705 |
| ||||
| Provision for income taxes (note 4) |
|
(829 |
) |
|
— |
|
|
(829 |
) |
|
(289 |
) | ||||
| Net income for the period |
$ |
6,792 |
|
$ |
4,282 |
|
$ |
18,372 |
|
$ |
9,416 |
| ||||
| Basic net income per share (note 7) |
$ |
0.35 |
|
$ |
0.21 |
|
||||||||||