Captaris Reports EPS of $0.08 in the Fourth Quarter of 2006
EPS of $0.14 in 2006 compares to a loss of $0.14 Per Share in 2005
Bellevue, Wash., February 15, 2007 — Captaris, Inc. (NASDAQ: CAPA), a leading provider of software products that automate document-centric business processes, today reported financial results
for its 2006 fourth quarter and fiscal year ended December 31, 2006.
Total revenue for the fourth quarter was $25.2 million, a 2% increase over the prior year’s fourth quarter and a 3% increase
over the preceding quarter. Revenue by category compared to the fourth quarter of 2005 was as follows:
- Software revenue was $9.3 million, a decrease of $427,000 or 4%
- Maintenance, support and service revenue was $9.5 million, an increase of $901,000 or 10%
- Hardware revenue was $6.5 million, an increase of $86,000 or 1%
Gross profit was $17.4 million, or comparable with the same quarter last year, and gross margin was 68.8%, down from 70.5%
in the same quarter last year.
Total operating expenses were $15.1 million for the fourth quarter of 2006, a decrease of approximately $2.8 million, or 16%,
from total operating expenses of $17.8 million for the same quarter last year. The decline in operating expenses reflects
continued effective cost controls and the results of actions initiated in the fourth quarter of 2005 to reduce the Company’s
operating cost structure.
“Our strong earnings reflect the improved execution and increased operating leverage we are achieving as our business expands,”
said David P. Anastasi, President and CEO of Captaris. “As we significantly improved our cost structure, we also made significant
progress toward other key goals in 2006, including strategic product development and expanding our market presence. We are
excited about our growth prospects in 2007 and are well positioned to leverage our solid customer base and portfolio of attractive
technologies to expand our business.”
The Company recognized stock-based compensation expense of $201,000 in the fourth quarter of 2006, compared to a benefit of
$7,000 in the fourth quarter of 2005. Amortization of intangible assets for the fourth quarter of 2006 was $693,000, including
$481,000 in cost of revenue and $212,000 in operating expenses, compared to $868,000 in the fourth quarter of 2005, including
$481,000 in cost of revenue and $387,000 in operating expenses. Depreciation was $697,000 in the fourth quarter of 2006, compared
to $867,000 in the fourth quarter of 2005.
Operating income in the fourth quarter of 2006 was $2.3 million, compared to an operating loss of $427,000 in the fourth quarter
of 2005, and operating income of $2.0 million in the third quarter of 2006.
Net income for the fourth quarter of 2006 was $2.2 million, or $0.08 per basic and diluted share, compared to net income of
$44,000, or break even per share, in the same quarter last year and $1.6 million or $0.06 per share in the third quarter of
2006.
For the year ended December 31, 2006, total revenue of $92.0 million increased $5.6 million or 6%; operating expenses of $60.4
million decreased $7.3 million or 11%; and net income of $4.0 million increased $8.0 million compared to 2005.
Cash flow from operations was $1.9 million in the fourth quarter of 2006, compared to $1.6 million in the fourth quarter in
2005. For the year ended December 31, 2006, cash flow from operations was $13.9 million, an increase of $12.5 million compared
to cash from operations of $1.4 million in 2005.
Consolidated cash, cash equivalents and investment balances as of December 31, 2006 totaled $59.4 million, an increase of
$2.5 million from September 30, 2006, and an increase of $7.8 million from December 31, 2005. Deferred revenue at December
31, 2006 was $25.9 million, an increase of $2.1 million over the preceding quarter and an increase of $3.7 million from December
31, 2005.
Stock Repurchase
During the quarter, the Company repurchased 550,000 shares of its outstanding common stock at a cost of approximately $3.5
million and an average purchase price of $6.45 per share. For the full year 2006, the Company repurchased approximately 2.1
million shares at a cost of $11.3 million, compared to approximately 1.3 million shares at a cost of about $4.9 million in
2005. Captaris may repurchase shares under its stock repurchase program subject to overall market conditions, stock prices
and its cash position and requirements.
On December 31, 2006, the total number of outstanding common shares was 27.6 million. As of December 31, 2006, $12.6 million
was available for repurchases under the Company's repurchase program.
Conference Call
The Company will discuss its 2006 fourth quarter and full year results and business outlook for the first quarter of 2007
on its regularly scheduled conference call today, February 15, at 1:45 pm PT/ 4:45 p.m. ET. The live web cast of the conference
call can be accessed from the Investor Relations section of the Captaris Web site at www.captaris.com or at www.mkr-group.com
(under featured events). To access the live conference call, dial (800) 218-0713 and give the Company name “Captaris.” An
audio replay of the conference call can be accessed at (800) 405-2236. The replay will be available starting two hours after
the call and remain in effect until Thursday, February 22 at 11:59 PT. The required pass code is 11081537#.
About Captaris, Inc.
Captaris, Inc. is a leading provider of software products that automate business processes, manage documents electronically
and provide efficient information delivery. Our product suite of Captaris RightFax, Captaris Workflow and Captaris Alchemy
Document Management is distributed through a global network of leading technology partners. We have customers in financial
services, healthcare, government and many other industries, and our products are installed in all of the Fortune 100 and many
Global 2000 companies. Headquartered in Bellevue, Washington, Captaris was founded in 1982 and is publicly traded on the NASDAQ
National Market under the symbol CAPA. For more information please visit www.captaris.com.
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, including, without limitation, statements regarding our belief that we have positioned ourselves for improving
operating leverage in future quarters and our plan to repurchase shares under our stock repurchase plan. Forward-looking statements
include all passages containing verbs such as "aims," "anticipates," "estimates," "expects," "intends," "plans," "predicts,"
"projects" or "targets" or nouns corresponding to such verbs. Forward-looking statements also include any other passages that
are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. Forward-looking
statements are based on the opinions and estimates of the management at the time the statements are made and are subject to
certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking
statements. Factors that could affect Captaris’ actual results include, among others, the impact, if any, of stock-based compensation
charges, the potential failure to maintain and expand Captaris’ network of dealers and resellers or to establish and maintain
strategic relationships, inability to integrate recent and future acquisitions, inability to develop new products or product
enhancements on a timely basis, inability to protect our proprietary rights or to operate without infringing the patents and
proprietary rights of others, and quarterly and seasonal fluctuations in operating results. More information about factors
that potentially could affect Captaris’ financial results is included in Captaris’ quarterly reports on Form 10-Q filed in
2006 and most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Readers are cautioned not
to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Except as required
by law, Captaris undertakes no obligation to update any forward-looking or other statements in this press release, whether
as a result of new information, future events or otherwise.
The following are registered trademarks and trademarks of Captaris: Captaris, Alchemy, RightFax, Captaris Document Management,
Captaris Interchange and Captaris Workflow. All other brand names and trademarks are the property of their respective owners.
| Captaris, Inc. |
|
|
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|
| Condensed Consolidated Balance Sheets |
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| (in thousands) |
|
|
|
|
| (Unaudited) |
|
|
|
|
| |
|
|
December 31, |
|
December 31, |
| |
|
|
2006 |
|
2005 |
| Assets |
|
|
|
|
| Current assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ 10,695 |
|
$ 6,420 |
| Short-term investments, available-for-sale |
|
7,084 |
|
17,506 |
| Accounts receivable, net |
|
21,347 |
|
18,776 |
| Inventories, net |
|
961 |
|
534 |
| Prepaid expenses and other assets |
|
2,971 |
|
1,759 |
| Income tax receivable and deferred tax assets, net |
3,052 |
|
4,141 |
| |
Total current assets |
|
46,110 |
|
49,136 |
| |
|
|
|
|
|
| Long-term investments, available-for-sale |
|
41,584 |
|
27,601 |
| Restricted cash |
|
1,000 |
|
1,000 |
| Other long-term assets |
|
303 |
|
337 |
| Equipment and leasehold improvements, net |
|
4,340 |
|
6,200 |
| Intangible assets, net |
|
6,570 |
|
9,767 |
| Goodwill |
|
|
32,199 |
|
32,313 |
| Deferred tax assets, net |
|
3,842 |
|
4,849 |
| |
Total assets |
|
$ 135,948 |
|
$ 131,203 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Liabilities and Shareholders' Equity |
|
|
|
|
| Current liabilities: |
|
|
|
|
| Accounts payable |
|
$ 5,308 |
|
$ 4,665 |
| Accrued compensation and benefits |
|
4,522 |
|
3,764 |
| Other accrued liabilities |
|
1,920 |
|
2,390 |
| Income taxes payable |
|
192 |
|
80 |
| Deferred revenue |
|
20,328 |
|
18,104 |
| |
Total current liabilities |
|
32,270 |
|
29,003 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Accrued liabilities - noncurrent |
|
307 |
|
317 |
| Deferred revenue - noncurrent |
|
5,544 |
|
4,104 |
| |
Total liabilities |
|
38,121 |
|
33,424 |
| |
|
|
|
|
|
| Shareholders' equity: |
|
|
|
|
| Common stock |
|
275 |
|
284 |
| Additional paid-in capital |
|
46,614 |
|
50,835 |
| Retained earnings |
49,790 |
|
45,809 |
| Accumulated other comprehensive income |
|
1,148 |
|
851 |
| |
Total shareholders' equity |
|
97,827 |
|
97,779 |
| |
|
|
|
|
|
| |
Total liabilities and shareholders' equity |
|
$ 135,948 |
|
$ 131,203 |
| Captaris, Inc. |
|
|
|
|
|
|
|
| Condensed Consolidated Statements of Operations |
|
|
|
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|
| (in thousands, except per share data) |
|
|
|
|
|
|
|
| (Unaudited) |
|
|
|
|
|
|
|
| |
Quarter Ended |
|
Year Ended |
| |
December 31, |
|
December 31, |
| |
2006 |
|
2005 |
|
2006 |
|
2005 |
| |
|
|
|
|
|
|
|
| Net revenue: |
|
|
|
|
|
|
|
| Software revenue |
$ 9,264 |
|
$ 9,691 |
|
$ 34,428 |
|
$ 32,860 |
| Maintenance, support and services revenue |
9,490 |
|
8,589 |
|
36,183 |
|
31,997 |
| Hardware revenue |
6,469 |
|
6,383 |
|
21,375 |
|
21,523 |
| Net revenue |
25,223 |
|
24,663 |
|
91,986 |
|
86,380 |
| |
|
|
|
|
|
|
|
| Cost of revenue |
7,865 |
|
7,266 |
|
27,720 |
|
26,925 |
| |
|
|
|
|
|
|
|
| Gross profit |
17,358 |
|
17,397 |
|
64,266 |
|
59,455 |
| |
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
| Research and development |
2,840 |
|
3,748 |
|
12,227 |
|
13,976 |
| Selling and marketing |
8,051 |
|
9,251 |
|
31,830 |
|
34,448 |
| General and administrative |
3,964 |
|
4,438 |
|
16,103 |
|
18,529 |
| Amortization of intangible assets |
212 |
|
387 |
|
1,274 |
|
1,749 |
| Gain on sale of discontinued CallXpress product line |
- |
|
- |
|
(1,000) |
|
(1,000) |
| |
|
|
|
|
|
|
|
| Total operating expenses |
15,067 |
|
17,824 |
|
60,434 |
|
67,702 |
| |
|
|
|
|
|
|
|
| Operating income (loss) |
2,291 |
|
(427) |
|
3,832 |
|
(8,247) |
| |
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
| Interest |
500 |
|
287 |
|
1,894 |
|
1,121 |
| Other, net |
292 |
|
(1) |
|
55 |
|
(210) |
| Other income |
792 |
|
286 |
|
1,949 |
|
911 |
| |
|
|
|
|
|
|
|
Income (loss) from continuing operations before income tax
expense (benefit)
|
3,083 |
|
(141) |
|
5,781 |
|
(7,336) |
| Income tax expense (benefit) |
827 |
|
(182) |
|
1,816 |
|
(3,319) |
| |
|
|
|
|
|
|
|
| Income (loss) from continuing operations |
2,256 |
|
41 |
|
3,965 |
|
(4,017) |
| |
|
|
|
|
|
|
|
| Discontinued operations: |
|
|
|
|
|
|
|
Gain(loss) from sale of MediaTel assets, net of income tax
expense (benefit)
|
(11) |
|
3 |
|
16 |
|
38 |
| Income (loss) from discontinued operations |
(11) |
|
3 |
|
16 |
|
38 |
| |
|
|
|
|
|
|
|
| Net income (loss) |
$ 2,245 |
|
$ 44 |
|
$ 3,981 |
|
$ (3,979) |
| |
|
|
|
|
|
|
|
| Basic net income (loss) per common share: |
|
|
|
|
|
|
|
| Income (loss) from continuing operations |
$ 0.08 |
|
$ 0.00 |
|
$ 0.14 |
|
$ (0.14) |
| Income(loss) from discontinued operations |
(0.00) |
|
0.00 |
|
0.00 |
|
0.00 |
| Net income (loss) |
$ 0.08 |
|
$ 0.00 |
|
$ 0.14 |
|
$ (0.14) |
| |
|
|
|
|
|
|
|
| Diluted net income (loss) per common share: |
|
|
|
|
|
|
|
| Income (loss) from continuing operations |
$ 0.08 |
|
$ 0.00 |
|
$ 0.14 |
|
$ (0.14) |
| Income(loss) from discontinued operations |
(0.00) |
|
0.00 |
|
0.00 |
|
0.00 |
| Net income (loss) |
$ 0.08 |
|
$ 0.00 |
|
$ 0.14 |
|
$ (0.14) |
| |
|
|
|
|
|
|
|
| Weighted average basic common shares |
27,206 |
|
28,400 |
|
27,899 |
|
28,907 |
| Weighted average diluted common shares |
28,506 |
|
28,557 |
|
28,514 |
|
28,907 |
| Captaris, Inc. |
|
|
|
| Condensed Consolidated Statements of Cash Flows |
|
|
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| (in thousands) |
|
|
|
| (Unaudited) |
|
|
|
| |
Year Ended |
| |
December 31, |
| |
2006 |
|
2005 |
| |
|
|
|
| Cash flows from operating activities: |
|
|
|
| Net income (loss) |
$ 3,981 |
|
$ (3,979) |
| Adjustments to reconcile net income (loss) to net cash provided |
|
|
|
| by operating activities: |
|
|
|
| Depreciation |
3,104 |
|
3,474 |
| Amortization |
3,198 |
|
3,675 |
| Stock-based compensation expense (benefit) |
677 |
|
(246) |
| Loss on disposition of equipment |
74 |
|
10 |
| Impairment of long-lived assets and intangibles |
- |
|
607 |
| Provision for doubtful accounts |
29 |
|
572 |
| Changes in assets and liabilities: |
|
|
|
| Accounts receivables, net |
(2,563) |
|
(1,108) |
| Inventories, net |
(411) |
|
411 |
| Prepaid expenses and other assets |
(1,159) |
|
(448) |
| Income tax receivable and deferred income taxes, net |
2,292 |
|
(2,987) |
| Accounts payable |
622 |
` |
(2,222) |
| Accrued compensation and benefits |
765 |
|
(623) |
| Other accrued liabilities |
(489) |
|
813 |
| Income taxes payable |
111 |
|
(343) |
| Deferred revenue |
3,692 |
|
3,802 |
| Net cash flow provided by operating activities |
13,923 |
|
1,408 |
| |
|
|
|
| Cash flows from investing activities: |
|
|
|
| Purchase of equipment and leasehold improvements |
(1,284) |
|
(3,045) |
| Purchase of investments |
(71,242) |
|
(50,951) |
| Proceeds from disposals of fixed assets |
14 |
|
26 |
| Proceeds from sales and maturities of investments |
67,790 |
|
55,721 |
| Net cash provided by (used in) investing activities |
(4,722) |
|
1,751 |
| |
|
|
|
| Cash from financing activities: |
|
|
|
| Proceeds from exercises of stock options |
5,278 |
|
574 |
| Repurchase of common stock |
(11,301) |
|
(4,942) |
| Excess tax benefits from stock-based compensation |
1,117 |
|
28 |
| Net cash used in financing activities |
(4,906) |
|
(4,340) |
| |
|
|
|
| Net increase (decrease) in cash |
4,295 |
|
(1,181) |
| |
|
|
|
| Effect of exchange rate changes on cash |
(20) |
|
38 |
| |
|
|
|
| Cash and cash equivalents at beginning of period |
6,420 |
|
7,563 |
| |
|
|
|
| Cash and cash equivalents at end of period |
$ 10,695 |
|
$ 6,420 |
| |
|
|
|
| Cash paid during the period for income taxes |
$ 141 |
|
$ 404 |
|
