HUMC Hummingbird

Third Quarter Sales Grow 7% Year over Year to $66.0 Million; Enterprise Content Management Revenues up 10%; Operating Cash Flow of $12.9 Million; Adjusted EPS $0.36 TORONTO, Aug. 14 /PRNewswire-FirstCall/ -- Hummingbird Ltd. (NASDAQ:HUMCNASDAQ: TSX:NASDAQ:HUM), a leading global provider of integrated enterprise content management (ECM) and network connectivity solutions, today reported financial and operating results for the third quarter ended June 30, 2006. The financial figures in this release are reported in U.S. dollars in accordance with U.S. generally accepted accounting principles, except where noted. ------------------------------------------------------------------------- SUMMARY FINANCIAL RESULTS U.S. GAAP (Millions of U.S. dollars except share data) Three Months Ended Nine Months Ended June 30 June 30 2006 2005 2006 2005 -------- -------- -------- -------- Sales $ 66.0 $ 61.7 $ 192.3 $ 169.9 Net Income/(Loss) $ 1.9 $ (1.9) $ 7.4 $ (4.8) Diluted Earnings/(Loss) Per Share $ 0.11 $ (0.11) $ 0.42 $ (0.28) Diluted Number of Shares (Millions) 17.4 17.5 17.4 17.5 Adjusted Net Income (Note) $ 6.3 $ 5.6 $ 17.7 $ 15.4 Adjusted Diluted Earnings Per Share $ 0.36 $ 0.32 $ 1.02 $ 0.88 Adjusted Diluted Number of Shares (Millions) 17.4 17.5 17.4 17.6 Note: Adjusted Net Income comprises Net Income/(Loss) excluding amortization of other intangible assets, restructuring and other charges, in-process research and development expense and stock- based compensation expense, net of related taxes and losses carried forward and utilized, and utilized carried forward research and development investment tax credits and expenses. "I'm very pleased with another quarter of strong financial performance," said Barry Litwin, President and Chief Executive Officer of Hummingbird Ltd. "Our ongoing success is the result of the unique and compelling value proposition we bring to the marketplace. On August 4th we announced that we had reached an agreement to be acquired by Open Text in a transaction that offers immediate liquidity to our shareholders. We are confident that upon closure of the acquisition that the combined company will continue to be a global leader providing state of the art enterprise software solutions to the world's leading corporations and professional services firms. We are enormously proud of what we have built at Hummingbird over the past two decades, and we know that our customers are at the heart of the Hummingbird story. We are absolutely committed to working with Open Text to deliver a seamless transition for our customers, and for our employees. In the meantime, we continue to maintain our strong customer focus and deliver the best ECM and Connectivity solutions, service and support in the market." Financial Highlights -------------------- Total sales for the quarter ended June 30, 2006 were $66.0 million, representing an increase of 6.9% from the quarter ended June 30, 2005. Enterprise Content Management revenues for the quarter were $49.6 million, a 10.4% increase from the same quarter last year. Connectivity revenues for the quarter were $16.4 million, compared to the $16.8 million for the third quarter last year. Total license revenues were $28.4 million, compared to $28.3 million in the third quarter of 2005. Adjusted net income(1) in the current quarter was $6.3 million, compared to $5.6 million in the same period last year. Adjusted diluted earnings per share (based on adjusted net income) for this quarter were $0.36, compared to $0.32 for the corresponding period last year. During the quarter the company recorded other charges totaling $3.0 million for transaction costs incurred related to Symphony Technology Group's offer to acquire Hummingbird pursuant to a plan of arrangement. In addition, the company recorded restructuring charges of $0.2 million for severance and related costs incurred after the Company reviewed its global operations to align costs with revenues, and to recognize cost efficiencies. Operating expenses for the current quarter excluding amortization of intangibles, stock-based compensation expense, and restructuring and other charges, were $49.3 million, compared to $46.9 million in the third quarter of the previous fiscal year. For the third quarter of fiscal 2006, Hummingbird reported a net income of $1.9 million, compared to net loss of $1.9 million for the same quarter in 2005. The diluted earnings per share of $0.11 in the current quarter compares to a diluted loss per share of $0.11 for the third quarter of the prior year. Sales for the nine months ended June 30, 2006 were $192.3 million, an increase of 13.2% over the previous year. Enterprise Content Management revenues for the current nine months were $141.6 million, up $21.9 million or 18.3% from the same period last year. Operating expenses excluding amortization of intangibles, stock-based compensation expense, and restructuring and other charges, were $144.0 million for the first nine months of fiscal 2006, compared to $128.0 million in the same period last year. Net income for the current nine month period was $7.4 million resulting in diluted earnings per share of $0.42, compared to a net loss of $4.8 million and a diluted loss per share of $0.28 in the nine months ended June 30, 2005. Adjusted net income for the nine months ended June 30, 2006 was $17.7 million compared to $15.4 million in the same period in 2005. Adjusted diluted earnings per share, based on adjusted net income, was $1.02 compared to $0.88 for the nine months ended June 30, 2005. Total assets as at June 30, 2006 were $409.3 million, compared to $399.4 million as at March 31, 2006. The Company's cash position, including short-term investments, was $113.0 million as at June 30, 2006. Cash flow from operations generated in the current quarter was $12.9 million. (1) Adjusted net income is presented because management considers it to be a better metric to evaluate and compare the quarterly performance of the Company's core business, since it excludes certain non-cash and non-recurring expenses. In addition, it is the primary method that management uses to plan and forecast the Company's results. Adjusted net income is not a recognized profitability measure under U.S. GAAP, and the Company's method of calculating adjusted net income may differ from, and accordingly may not be comparable to, similarly titled measures used by other companies. Adjusted net income should not be considered in isolation and its presentation should not be construed an alternative to net income determined in accordance with U.S. GAAP, as an indicator of the Company's performance. Other ----- Hummingbird Continues to Gain Market Share ------------------------------------------ On July 5 the Company announced that independent research firm Gartner had ranked Hummingbird in the top five in market share among more than 60 vendors that Gartner tracks in the ECM market. Additionally, Gartner identified that Hummingbird has demonstrated one of the highest content management software revenue growth rates among the leading vendors at 20.4%, nearly double the growth rate for the overall content management software market. This recognition from Gartner confirms that Hummingbird's vertical and horizontal solutions built on the Company's leading ECM platform are successfully differentiating Hummingbird from its peer group of competitors. Open Text to Acquire Hummingbird -------------------------------- On August 4, 2006 the Company announced that it has entered into a definitive agreement pursuant to which Open Text Corporation will acquire all of Hummingbird's outstanding shares in an all-cash transaction valued at US$27.85 per share, or approximately US$489 million. The Board of Directors has unanimously approved the transaction and Hummingbird's Board is unanimously recommending that shareholders vote in favour of the transaction. Hummingbird expects to send an information circular relating to the transaction to shareholders later in August. A copy of the agreement providing for the transaction will be filed with Canadian and U.S securities regulators and will be available at http://www.sedar.com/ and at http://www.sec.gov/. The transaction is to be carried out by way of a statutory plan of arrangement and will be subject to the approval of two-thirds of the votes cast by Hummingbird's shareholders at a meeting of shareholders, currently expected to be held in late-September, as well as court approval. The transaction is also subject to certain other customary conditions, including the receipt of regulatory approvals. The proposed transaction is expected to close in early-October, shortly after receipt of shareholder and court approvals. About Hummingbird ----------------- Hummingbird Ltd. (NASDAQ:HUMCNASDAQ:TSX:NASDAQ:HUM) is a leading global provider of enterprise software solutions. The Company's enterprise software solutions fall into two principal categories: enterprise content management (ECM) solutions, and network connectivity solutions. Hummingbird's ECM solutions enable organizations to manage the lifecycle of enterprise content from creation to disposition, thereby enabling organizations to address critical business needs, such as information management, business continuity, compliance and risk mitigation. The network connectivity solutions provide a comprehensive set of core network technologies that enables the enterprise to connect to any type of legacy system. Founded in 1984, Hummingbird employs over 1,400 people and serves more than 33,000 customers, including 90% of Fortune 100. Hummingbird solutions are sold directly from 40 offices worldwide and through an Alliance Network of partners and resellers. For more information, visit http://www.hummingbird.com/ Note to Investors ----------------- Forward-looking statements in this press release, including statements relating to the Company's capital structure, future sales growth, profitability, competitive position and release of new products are made pursuant to the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions made by and information currently available to the Company. Investors are cautioned that these forward-looking statements are subject to risks and uncertainties that may cause future results to differ materially from those expected. Such risks include, but are not limited to: the Company's ability to secure underwriting support and attract investors to its stock; the Company's ability to introduce new products in a timely manner and its ability to generate demand for, and gain market acceptance of those products in an intensely competitive marketplace, where many of its competitors have substantially greater resources than the Company; the Company's ability to maintain revenue growth at current levels or anticipate a decline in revenue from any of its products; the Company's ability to reduce its costs to the extent required to maintain profitability should revenue decline; the Company's ability to hire, train, and retain highly qualified personnel; the Company's reliance on third party distribution channels as part of its sales and marketing strategy; and other risks detailed in the Company's various securities filings with the Securities and Exchange Commission and Canadian securities regulators. Forward-looking statements are based on management's current plans, estimates, opinions and projections, and the Company assumes no obligation to update forward-looking statements if assumptions related to these plans, estimates, opinions and projections should change. The Board of Directors of Hummingbird reviewed and approved this news release prior to it being issued. HUMMINGBIRD LTD. CONSOLIDATED BALANCE SHEETS U.S. GAAP (thousands of U.S.$) As at As at June 30 September 30 2006 2005 ---- ---- (Unaudited) (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 113,021 $ 84,997 Accounts receivable 60,924 66,771 Unbilled receivables 1,417 664 Income taxes recoverable 320 804 Inventory 512 862 Prepaid expenses 5,419 5,350 Other receivables 1,535 1,528 Current portion of deferred income taxes 7,873 - ------------------------------------------------------------------------- 191,021 160,976 OTHER ASSETS 1,787 2,068 FIXED ASSETS 11,349 11,584 DEFERRED INCOME TAXES 739 - GOODWILL AND OTHER INTANGIBLE ASSETS 204,369 204,002 ------------------------------------------------------------------------- $ 409,265 $ 378,630 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities $ 32,059 $ 33,972 Other payable 15,900 - Current portion of other long-term liabilities 97 997 Deferred revenue 76,057 74,035 ------------------------------------------------------------------------- 124,113 109,004 DEFERRED INCOME TAXES 10,559 10,308 OTHER LONG-TERM LIABILITIES - 67 ------------------------------------------------------------------------- 134,672 119,379 ------------------------------------------------------------------------- SHAREHOLDERS' EQUITY SHARE CAPITAL Authorized: unlimited common and preferred shares Issued and outstanding: 17,617,449 common shares at June 30, 2006 and 17,418,338 common shares at September 30, 2005 170,650 164,907 ADDITIONAL PAID-IN CAPITAL 4,663 3,510 RETAINED EARNINGS 98,098 91,941 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) 1,182 (1,107) ------------------------------------------------------------------------- 274,593 259,251 ------------------------------------------------------------------------- $ 409,265 $ 378,630 ------------------------------------------------------------------------- ------------------------------------------------------------------------- HUMMINGBIRD LTD. CONSOLIDATED STATEMENTS OF OPERATIONS U.S. GAAP (thousands of U.S.$, except share data) Three Months Ended Nine Months Ended June 30 June 30 2006 2005 2006 2005 ---- ---- ---- ---- (Unaudited) (Unaudited) (Unaudited) (Unaudited) SALES $ 65,972 $ 61,722 $ 192,262 $ 169,878 COST OF SALES 8,121 7,176 24,141 20,403 ------------------------------------------------------------------------- GROSS PROFIT 57,851 54,546 168,121 149,475 ------------------------------------------------------------------------- EXPENSES Sales and marketing 29,223 29,246 86,641 76,188 Research and development 12,340 11,738 35,642 34,137 General and administration 7,963 5,929 22,938 17,709 Restructuring charges 159 1,276 2,130 6,854 Other charges 2,955 2,802 3,302 8,142 Amortization of other intangible assets 5,068 4,411 16,175 13,829 In-process research and development expense - 1,251 - 1,251 ------------------------------------------------------------------------- TOTAL EXPENSES 57,708 56,653 166,828 158,110 ------------------------------------------------------------------------- OPERATING INCOME (LOSS) 143 (2,107) 1,293 (8,635) INTEREST AND OTHER INCOME, NET 945 827 2,656 2,096 ------------------------------------------------------------------------- INCOME (LOSS) BEFORE INCOME TAXES 1,088 (1,280) 3,949 (6,539) INCOME TAX (RECOVERY) EXPENSE (789) 594 (3,417) (1,723) ------------------------------------------------------------------------- NET INCOME (LOSS) $ 1,877 $ (1,874) $ 7,366 $ (4,816) ------------------------------------------------------------------------- ------------------------------------------------------------------------- BASIC EARNINGS (LOSS) PER SHARE $ 0.11 $ (0.11) $ 0.42 $ (0.28) ------------------------------------------------------------------------- ------------------------------------------------------------------------- DILUTED EARNINGS (LOSS) PER SHARE $ 0.11 $ (0.11) $ 0.42 $ (0.28) ------------------------------------------------------------------------- ------------------------------------------------------------------------- BASIC WEIGHTED AVERAGE NUMBER OF SHARES (in thousands) 17,443 17,474 17,425 17,479 ------------------------------------------------------------------------- ------------------------------------------------------------------------- DILUTED WEIGHTED AVERAGE NUMBER OF SHARES (in thousands) 17,443 17,474 17,429 17,479 ------------------------------------------------------------------------- ------------------------------------------------------------------------- HUMMINGBIRD LTD. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY U.S. GAAP (thousands of U.S.$, except share data) (Unaudited) Accumulated Other Compre- Additional hensive Paid-in Retained Income Common Shares Capital Earnings (Loss) Total Outstanding Amount BALANCE AT SEPTEMBER 30, 2004 17,448,279 $ 164,521 $ 3,510 $ 98,819 $ (930) $ 265,920 COMPREHENSIVE LOSS Net loss - - - (1,729) - (1,729) STOCK OPTIONS EXERCISED UNDER THE ESOP 42,169 838 - - - 838 ------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 2004 17,490,448 165,359 3,510 97,090 (930) 265,029 COMPREHENSIVE LOSS Net loss - - - (1,213) - (1,213) STOCK OPTIONS EXERCISED UNDER THE ESOP 20,040 392 - - - 392 ------------------------------------------------------------------------- BALANCE AT MARCH 31, 2005 17,510,488 165,751 3,510 95,877 (930) 264,208 COMPREHENSIVE LOSS Net loss - - - (1,874) - (1,874) SHARES REPURCHASED (95,100) (900) (1,039) (1,939) STOCK OPTIONS EXERCISED UNDER THE ESOP 2,750 52 - - - 52 ------------------------------------------------------------------------- BALANCE AT JUNE 30, 2005 17,418,138 164,903 3,510 92,964 (930) 260,447 ------------------------------------------------------------------------- COMPREHENSIVE LOSS Net loss - - - (1,023) - (1,023) Foreign currency translation adjustment - - - - (177) (177) ------------------------------------------------------------------------- TOTAL COMPREHENSIVE LOSS - - - (1,023) (177) (1,200) ------------------------------------------------------------------------- STOCK OPTIONS EXERCISED UNDER THE ESOP 200 4 - - - 4 ------------------------------------------------------------------------- ------------------------------------------------------------------------- BALANCE AT SEPTEMBER 30, 2005 17,418,338 164,907 3,510 91,941 (1,107) 259,251 ------------------------------------------------------------------------- COMPREHENSIVE INCOME Net income - - - 554 - 554 Foreign currency translation adjustment - - - - (1,031) (1,031) ------------------------------------------------------------------------- TOTAL COMPREHENSIVE INCOME (LOSS) - - - 554 (1,031) (477) ------------------------------------------------------------------------- SHARES REPURCHASED - - - - - - STOCK OPTIONS EXERCISED UNDER THE ESOP 1,250 27 - - - 27 STOCK-BASED COMPENSATION EXPENSE - - 488 - - 488 ------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 2005 17,419,588 164,934 3,998 92,495 (2,138) 259,289 ------------------------------------------------------------------------- COMPREHENSIVE INCOME Net income - - - 4,935 - 4,935 Foreign currency translation adjustment - - - - 829 829 ------------------------------------------------------------------------- TOTAL COMPREHENSIVE INCOME - - - 4,935 829 5,764 ------------------------------------------------------------------------- SHARES REPURCHASED (79,300) (751) - (1,209) - (1,960) STOCK OPTIONS EXERCISED UNDER THE ESOP 59,634 1,266 (40) - - 1,226 STOCK-BASED COMPENSATION EXPENSE - 536 - - 536 ------------------------------------------------------------------------- BALANCE AT MARCH 31, 2006 17,399,922 165,449 4,494 96,221 (1,309) 264,855 ------------------------------------------------------------------------- COMPREHENSIVE INCOME Net income - - - 1,877 - 1,877 Foreign currency translation adjustment - - - - 2,491 2,491 ------------------------------------------------------------------------- TOTAL COMPREHENSIVE INCOME - - - 1,877 2,491 4,368 ------------------------------------------------------------------------- SHARES REPURCHASED - - - - - - STOCK OPTIONS EXERCISED UNDER THE ESOP 217,527 5,201 (42) - - 5,159 STOCK-BASED COMPENSATION EXPENSE - 211 - - 211 ------------------------------------------------------------------------- ------------------------------------------------------------------------- BALANCE AT JUNE 30, 2006 17,617,449 $ 170,650 $ 4,663 $ 98,098 $ 1,182 $ 274,593 ------------------------------------------------------------------------- ------------------------------------------------------------------------- HUMMINGBIRD LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. GAAP (thousands of U.S.$) Three Months Ended Nine Months Ended June 30 June 30 2006 2005 2006 2005 ---- ---- ---- ---- (Unaudited) (Unaudited) (Unaudited) (Unaudited) CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net income (loss) $ 1,877 $ (1,874) $ 7,366 $ (4,816) Add (deduct) items not affecting cash: Amortization of other intangible assets 5,068 4,411 16,175 13,829 In-process research and development expense - 1,251 - 1,251 Stock-based compensation expense 211 - 1,235 - Deferred income taxes (7,847) (2,078) (9,310) (6,516) Depreciation 787 942 2,332 2,705 Changes in operating assets and liabilities: Accounts receivable 10,391 (15) 7,153 (1,228) Unbilled receivables (748) (102) (752) 137 Income taxes recoverable/payable 6,710 1,595 436 (6,487) Inventory 53 105 350 4 Prepaid expenses 244 1,441 17 (630) Other receivables (265) 684 (24) (156) Accounts payable and accrued liabilities 1,727 3,833 (1,251) 8,647 Deferred revenue (5,320) 1,525 1,526 3,830 ------------------------------------------------------------------------- 12,888 11,718 25,253 10,570 ------------------------------------------------------------------------- INVESTING ACTIVITIES Short-term investments - net matured - - - 4,943 Decrease in other assets 229 416 296 800 Acquisitions - net of cash acquired - (57,101) - (57,923) Other payable - 8,965 - 8,965 Additions to fixed assets (857) (638) (2,042) (1,577) ------------------------------------------------------------------------- (628) (48,358) (1,746) (44,792) ------------------------------------------------------------------------- FINANCING ACTIVITIES Repayment of other long-term liabilities (35) (43) (967) (151) Shares repurchased - (1,939) (1,960) (1,939) Issuance of shares 5,159 52 6,412 1,282 ------------------------------------------------------------------------- 5,124 (1,930) 3,485 (808) ------------------------------------------------------------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 17,384 (38,570) 26,992 (35,030) FOREIGN EXCHANGE GAIN (LOSS) ON CASH HELD IN FOREIGN CURRENCY 1,339 - 1,032 - CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 94,298 129,083 84,997 125,543 ------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 113,021 $ 90,513 $ 113,021 $ 90,513 ------------------------------------------------------------------------- ------------------------------------------------------------------------- NON CASH ITEMS Unpaid contingent consideration $ 5,200 $ - $ 15,900 $ - SUPPLEMENTARY CASH FLOW INFORMATION Interest paid $ 13 $ 3 $ 27 $ 39 Income taxes paid 376 420 5,462 10,623 Interest received 967 1,036 2,461 2,341 HUMMINGBIRD LTD. PROFORMA SUPPLEMENTAL INFORMATION RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME (thousands of U.S.$, except share data) U.S. GAAP Three Months Ended Nine Months Ended June 30 June 30 2006 2005 2006 2005 ---- ---- ---- ---- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net income (loss), U.S. GAAP $ 1,877 $ (1,874) $ 7,366 $ (4,816) Adjusted for: Restructuring and other charges 3,114 4,078 5,432 14,996 Amortization of other intangible assets 5,068 4,411 16,175 13,829 In-process research and development expense - 1,251 - 1,251 Stock-based compensation expense (included in G&A) 211 - 1,235 - Income tax expense(x) (4,012) (2,282) (12,496) (9,876) ------------------------------------------------------------------------- ------------------------------------------------------------------------- ADJUSTED NET INCOME $ 6,258 $ 5,584 $ 17,712 $ 15,384 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ADJUSTED BASIC EARNINGS PER SHARE $ 0.36 $ 0.32 $ 1.02 $ 0.88 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ADJUSTED DILUTED EARNINGS PER SHARE $ 0.36 $ 0.32 $ 1.02 $ 0.88 ------------------------------------------------------------------------- ------------------------------------------------------------------------- BASIC WEIGHTED AVERAGE NUMBER OF SHARES (in thousands) 17,443 17,474 17,425 17,479 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ADJUSTED DILUTED WEIGHTED AVERAGE NUMBER OF SHARES (in thousands)(xx) 17,443 17,510 17,429 17,569 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (x) Income tax expense amounts represent the income tax effects on restructuring and other charges, amortization of other intangible assets, stock-based compensation expense, losses carried forward and utilized, and utilized carried forward research and development investment tax credits and expenses. (xx) The adjusted diluted weighted average number of shares for the three and nine months periods ended June 30, 2005 differs from the number shown in the U.S. GAAP Consolidated Statements of Income, where the diluted number of shares presented is impacted by anti- dilutive provisions for both periods. DATASOURCE: Hummingbird Ltd. CONTACT: Inder Duggal, Chief Financial Officer, Hummingbird Ltd., Tel: (416) 496-2200 ext. 2205, ; Dan Coombes, Director, Investor Relations, Hummingbird Ltd., Tel: (416) 496-2200 ext. 6359, ; Michele Stevenson, Senior Manager, Corporate Communications, Hummingbird Ltd., Tel: (416) 496-2200 ext. 2263,

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