THIS DOCUMENT IS A COPY OF THE QUARTERLY REPORT ON FORM 10-Q FILED FEBRUARY 10, 2005 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
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 December 31, 2004
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 or other jurisdiction of incorporation or organization) |
(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 x No ¨
At February 7, 2005 there were 49,976,628 outstanding Common Shares of the registrant.
OPEN TEXT CORPORATION
| Page No | ||||
| PART I Financial Information: |
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| Item 1. |
Financial Statements |
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| Condensed Consolidated Balance Sheets as of December 31, 2004 (Unaudited) and June 30, 2004 |
3 | |||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
27 | ||
| Item 3. |
45 | |||
| Item 4. |
47 | |||
| Item 1. |
48 | |||
| Item 2. |
48 | |||
| Item 3. |
49 | |||
| Item 4. |
49 | |||
| Item 5. |
49 | |||
| Item 6. |
50 | |||
| 51 | ||||
| 52 | ||||
2
OPEN TEXT CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of US dollars, except share data)
| December 31, 2004 |
June 30, 2004 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 102,174 | $ | 156,987 | ||||
| Accounts receivable - net of allowance for doubtful accounts of $3,815 as of December 31, 2004 and $3,628 as of June 30, 2004 |
80,898 | 82,996 | ||||||
| Income taxes recoverable |
14,552 | 7,041 | ||||||
| Prepaid expenses and other current assets |
7,699 | 6,550 | ||||||
| Deferred tax assets (note 5) |
11,941 | 18,776 | ||||||
| Total current assets |
217,264 | 272,350 | ||||||
| Capital assets (note 4) |
29,541 | 24,678 | ||||||
| Goodwill (note 10) |
247,427 | 223,752 | ||||||
| Deferred tax assets (note 5) |
40,392 | 27,668 | ||||||
| Acquired intangible assets (note 11) |
142,209 | 116,588 | ||||||
| Other assets |
3,557 | 3,619 | ||||||
| $ | 680,390 | $ | 668,655 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued liabilities (note 3) |
$ | 76,544 | $ | 94,075 | ||||
| Deferred revenues |
62,849 | 62,661 | ||||||
| Deferred tax liabilities (note 5) |
12,128 | 10,892 | ||||||
| Total current liabilities |
151,521 | 167,628 | ||||||
| Long term liabilities: |
||||||||
| Accrued liabilities (note 3) |
29,480 | 21,520 | ||||||
| Deferred revenues |
465 | 915 | ||||||
| Deferred tax liabilities (note 5) |
35,668 | 35,536 | ||||||
| Total long term liabilities |
65,613 | 57,971 | ||||||
| Minority interest |
8,628 | 10,051 | ||||||
| Shareholders’ equity: |
||||||||
| Share capital 49,825,409 and 51,054,786 Common Shares issued and outstanding at December 31,2004, and June 30, 2004, respectively |
421,004 | 427,015 | ||||||
| Warrants issued |
19,991 | 22,705 | ||||||
| Accumulated other comprehensive income: |
||||||||
| Cumulative translation adjustment |
37,655 | 1,814 | ||||||
| Accumulated deficit (note 7) |
(24,022 | ) | (18,529 | ) | ||||
| Total shareholders’ equity |
454,628 | 433,005 | ||||||
| $ | 680,390 | $ | 668,655 | |||||
See accompanying notes to condensed consolidated financial statements
3
OPEN TEXT CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of US dollars, except per share data)
| Three months ended December 31, |
Six months ended December 31, | |||||||||||||
| 2004 |
2003 |
2004 |
2003 | |||||||||||
| Revenues: |
||||||||||||||
| License |
$ | 42,622 | $ | 27,893 | $ | 66,526 | $ | 44,760 | ||||||
| Customer support |
44,542 | 21,928 | 85,334 | 41,348 | ||||||||||
| Service |
27,528 | 11,853 | 48,428 | 19,751 | ||||||||||
| Total revenues |
114,692 | 61,674 | 200,288 | 105,859 | ||||||||||
| Cost of revenues: |
||||||||||||||
| License |
3,051 | 2,550 | 5,205 | 3,841 | ||||||||||
| Customer support |
8,062 | 4,054 | 15,556 | 7,235 | ||||||||||
| Service |
22,585 | 9,126 | 39,239 | 16,329 | ||||||||||
| Total cost of revenues |
33,698 | 15,730 | 60,000 | 27,405 | ||||||||||
| Gross profit |
80,994 | 45,944 | 140,288 | 78,454 | ||||||||||
| Operating expenses: |
||||||||||||||
| Research and development |
15,842 | 9,924 | 30,525 | 17,955 | ||||||||||
| Sales and marketing |
30,787 | 18,500 | 56,284 | 32,307 | ||||||||||
| General and administrative |
9,564 | 4,886 | 21,422 | 8,241 | ||||||||||
| Depreciation |
2,589 | 1,479 | 4,988 | 2,666 | ||||||||||
| Amortization of acquired intangible assets |
6,146 | 1,635 | 11,575 | 2,822 | ||||||||||
| Provision for restructuring |
(1,449 | ) | — | (1,449 | ) | — | ||||||||
| Total operating expenses |
63,479 | 36,424 | 123,345 | 63,991 | ||||||||||
| Income from operations |
17,515 | 9,520 | 16,943 | 14,463 | ||||||||||
| Other income (expense) |
(1,691 | ) | 869 | (2,624 | ) | 488 | ||||||||
| Interest income |
303 | 210 | 605 | 437 | ||||||||||
| Income before income taxes |
16,127 | 10,599 | 14,924 | 15,388 | ||||||||||
| Provision for income taxes |
4,355 | 2,907 | 4,030 | 4,341 | ||||||||||
| Income before minority interest |
11,772 | 7,692 | 10,894 | 11,047 | ||||||||||
| Minority interest |
802 | — | 910 | — | ||||||||||
| Net income for the period |
$ | 10,970 | $ | 7,692 | $ | 9,984 | $ | 11,047 | ||||||
| Basic earnings per share |
$ | 0.22 | $ | 0.19 | $ | 0.20 | $ | 0.28 | ||||||
| Diluted earnings per share |
$ | 0.21 | $ | 0.18 | $ | 0.19 | $ | 0.26 | ||||||
| Weighted average number of Common Shares outstanding |
||||||||||||||
| Basic |
50,310 | 40,372 | 50,708 | 39,947 | ||||||||||
| Diluted |
52,361 | 43,361 | 53,120 | 42,872 | ||||||||||
See accompanying notes to condensed consolidated financial statements
4
OPEN TEXT CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF DEFICIT
(in thousands of US Dollars)
| Three months ended December 31, |
Six months ended December 31, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Deficit, beginning of period |
$ | (25,537 | ) | $ | (38,472 | ) | $ | (18,529 | ) | $ | (41,827 | ) | ||||
| Repurchase of common shares |
(9,455 | ) | — | (15,477 | ) | — | ||||||||||
| Net income |
10,970 | 7,692 | 9,984 | 11,047 | ||||||||||||
| Deficit, end of period |
$ | (24,022 | ) | $ | (30,780 | ) | $ | (24,022 | ) | $ | (30,780 | ) | ||||
See accompanying notes to condensed consolidated financial statements
5
OPEN TEXT CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US Dollars)
| Three months ended December 31, |
Six months ended December 31, |
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| 2004 |
2003 |
2004 |
2003 |
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| Cash flows from operating activities: |
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| Net income for the period |
$ | 10,970 | $ | 7,692 | $ | 9,984 | $ | 11,047 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
8,735 | 3,114 | 16,563 | 5,488 | ||||||||||||
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