Open Text Announces Preliminary Fourth Quarter 2005 Financial Results Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Scott Penner - TD Newcrest - Analyst : Just to John, on the restructuring -- I am sure you're still working through it -- but any idea what the expected cash impact is to be?

Question: Scott Penner - TD Newcrest - Analyst : Okay and how many shares were repurchased during the quarter and at what cost?

Question: Scott Penner - TD Newcrest - Analyst : And John, have you seen any decline in the maintenance renewal rates or any pressure on pricing there?

Question: Scott Penner - TD Newcrest - Analyst : Then just lastly, on the deals that I guess made up the missed revenue, were these -- can you give us some idea -- the profile of these deals, whether it was a bunch of small transactions or some larger ones again, please?

Question: Tom Liston - Versant Partners - Analyst : John, just on the overall myth, can you comment on the effect of whether the ECM spending slowdown was a major part and vis-a-vis extended sales cycles or even competition getting tougher?

Question: Tom Liston - Versant Partners - Analyst : And was there any geographic weakness that you can point to now besides the effect of the currency?

Question: Tom Liston - Versant Partners - Analyst : And any vertical that you saw any weakness in?

Question: Ed Maguire - Merrill Lynch - Analyst : Any idea approximately where licenses are going to come in for the quarter?

Question: Ed Maguire - Merrill Lynch - Analyst : And that would also go for the tax rates? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 11, 2005 / 9:00PM, OTEX.TO - Open Text Announces Preliminary Fourth Quarter 2005 Financial Results

Question: Ed Maguire - Merrill Lynch - Analyst : When are you hoping to provide an update -- kind of a rough idea?

Question: Peter Misek - Canaccord Capital - Analyst : Just a question looking a little bit further out, do you think that there has been any change in dynamic in the ECM space versus your expectation, say 3 months ago?

Question: Peter Misek - Canaccord Capital - Analyst : Has any of the product cycles out of IXOS or GOSS (ph) had any impact in your opinion on your specific results?

Question: Peter Misek - Canaccord Capital - Analyst : And then sort of the last question. We've had some Sarbanes-Oxley deadlines pass. Was there any regulatory issue that you guys capitalize on more that's going to disappear or change in the future in your opinion? Thanks.

Question: Robert Fortes - Jefferies & Company - Analyst : What was the impact in the quarter of the change in exchange rates since you gave your last guidance?

Question: Robert Fortes - Jefferies & Company - Analyst : Great and thank you. And of the five deals -- big deals -- how many of those were in Europe?

Question: Robert Fortes - Jefferies & Company - Analyst : So, I thought I heard you say there was five large transactions -- four new customers.

Question: Robert Fortes - Jefferies & Company - Analyst : Speaking of -- the last question. Speaking of compliance, are you guys done with your Sarbanes-Oxley audit work?

Question: Barbara Coffey - Brean Murray - Analyst : As you were looking across Europe, were there certain countries that were weaker than others? And also, you had said that you weren't going to extend the specifics on the verticals, but was any particular vertical continuing to be strong?

Question: David Wright - BMO Nesbitt Burns - Analyst : On the restructuring charge, if it's just a normal course of business in cutting back, shouldn't the restructuring charge be included as sort of normal costs? Or is there something else going on that you actually separate -- like are you stopping work on certain products or certain business areas?

Question: David Wright - BMO Nesbitt Burns - Analyst : So I guess what I'm asking is, what type of restructuring are (multiple speakers)

Question: David Wright - BMO Nesbitt Burns - Analyst : So when I look at your previous guidance, which was 115 to 125, and then your new guidance is 108 to 112, so I guess at the low end. You have taken your guidance down $7 million, and you said that the currency impact was 6 million. I'm trying to figure out how important this miss is because it can be almost totally explained by the currency issue.

Question: David Wright - BMO Nesbitt Burns - Analyst : And to clarify, John, I think in your opening comments, you said that you did sign five large transactions -- four were new customers, is that correct?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay but that you missed a certain number?

Question: David Wright - BMO Nesbitt Burns - Analyst : And the large transactions, were any of those million dollar transactions?

Question: David Wright - BMO Nesbitt Burns - Analyst : And, what was the U.S. market like aside from Europe then? Is the environment reasonable, or is it slowing as well?

Question: Howard Lis - GMP Securities - Analyst : I apologize if any of my questions are repetitive, but I missed the beginning of the call. We were late in getting some of our e-mails here. Aside from the thing that you missed a number of larger transactions, could you provide any other details around geographic emphasis of those missed deals or any vertical discussion? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 11, 2005 / 9:00PM, OTEX.TO - Open Text Announces Preliminary Fourth Quarter 2005 Financial Results

Question: Howard Lis - GMP Securities - Analyst : Did I hear correctly, it was $6 million the impact of foreign exchange? That seems awfully high in what -- from the last time you gave guidance, which was at early May?

Question: Howard Lis - GMP Securities - Analyst : From the last time you gave guidance?

Question: Howard Lis - GMP Securities - Analyst : Right, but I guess what I am getting at is -- 2 months ago, you gave guidance for the quarter, and you are saying since that time until the end of June, the currency --

Question: Howard Lis - GMP Securities - Analyst : No, I know that. I'm just trying to understand how in 2 months, exchange changed so much in your assumptions. It goes back to the question of how you guys are forecasting it and determining your outlook. Maybe you can talk a little bit about how you're going to do it going forward in terms of providing guidance and figuring that out?

Question: Howard Lis - GMP Securities - Analyst : And just one final question on the restructuring. As you're looking at the various options you've got, given you are seeing now a slowdown or it's not growing as fast as you expected in the market, are you thinking about cuts more on the sales and marketing front? Are there certain regions outright that are not carrying their weight that you're going to scale back completely? Maybe you can give us some insight there, thanks?

Question: Howard Lis - GMP Securities - Analyst : And when are you going to have that call?

Question: Howard Lis - GMP Securities - Analyst : Even roughly, is it later this month? Is it--?

Question: Nate Swanson - ThinkEquity Partners - Analyst : Just stepping back and looking at this, it seems like nothing has really gone right since the IXOS acquisition. You took charges and restructuring at that time. Now, we are looking at 20 or 30 million more. I guess I'd like to know what your plan is to return the Company to growth outside of just cutting costs. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 11, 2005 / 9:00PM, OTEX.TO - Open Text Announces Preliminary Fourth Quarter 2005 Financial Results

Question: Nate Swanson - ThinkEquity Partners - Analyst : Okay, should we expect an EPS loss either in the June or September quarters?

Question: Nate Swanson - ThinkEquity Partners - Analyst : I guess I am just doing the simple math; it looks like licensed revenues are going to be down 10 to 15% year-over-year, and it's been trending that way for some time, at least organically. Given the restructuring charges that you're taking, should we expect licensed revenue to continue to decline at the expense of EPS growth?

Question: Blair Abernethy - Clarus Securities - Analyst : Just a couple of things, Alan. Do you have the cash balance at the end of the quarter?

Question: Blair Abernethy - Clarus Securities - Analyst : Okay do you have the equity on the ownership interest in IXOS at the end of the quarter?

Question: Blair Abernethy - Clarus Securities - Analyst : Just on the restructuring, the -- one thing you haven't mentioned is -- product consolidation, you have talked about looking at some of the offices geographically and so on. Is product consolidation something that might be on the table as well?

Question: David Shore - Desjardins Securities - Analyst : John, one of things that has come out over the last couple of quarters with the miss is a question about forecasting and guidance. What are you doing to change how you look at guidance or how you're going to forecast the results and provide that information to the streets?

Question: David Shore - Desjardins Securities - Analyst : Okay so does that mean that you're not going to be providing a full year guidance, just a quarterly guidance?

Question: Richard Tse - National Bank Financial - Analyst : I guess when you suggested last quarter your guidance was 115 to 125, it was conservative and obviously this is a lot worse than that. What went wrong with that conservative guidance and versus what you were thinking at that time?

Question: Richard Tse - National Bank Financial - Analyst : I guess on that point, is the common reason that they are citing is that -- these deals are just too big, and they need more authorization? Or is it simply that it's not a priority as it used to be and they're dedicating their monies to other technology?

Question: Robert Schwartz - Jefferies & Company - Analyst : I don't have the exact dates when you last gave guidance. But, I'm going to say someone mentioned mid-May, and I'm looking at an exchange rate table of the euro versus the dollar. And it's down about less than 5% since mid-May. And so if I take 110 million of licenses, I don't see how I get the 6 million currency effect unless all of the impact comes from Europe and you still had some negative impact from your hedging efforts. I just don't know how to reconcile that. Can you help me?

Question: Robert Schwartz - Jefferies & Company - Analyst : Okay. But you would have had insight into the middle of May when you gave guidance, right? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 11, 2005 / 9:00PM, OTEX.TO - Open Text Announces Preliminary Fourth Quarter 2005 Financial Results