Captaris Reports First Quarter 2007 Financial Results
Total Revenue of $20.5 Million up 5% Year-Over-Year
Bellevue, Wash. — May 3, 2007 — Captaris, Inc. (NASDAQ: CAPA), a leading provider of software products that automate document-centric processes, today reported financial results for its
first quarter ended March 31, 2007.
Total revenue for the first quarter was $20.5 million, a 5% increase over the prior year’s first quarter. Revenue by category
compared to the first quarter of 2006 was as follows:
- Software revenue was $7.1 million, a decrease of $194,000 or 3%
- Maintenance, support and service revenue was $9.4 million, an increase of $1.1 million or 13%
- Hardware revenue was $4.0 million, an increase of $63,000 or 2%
Gross profit was $14.3 million, up $335,000 from the same quarter last year, and gross margin was 69.5%, down from 71.1% in
the same quarter last year.
Operating expenses were $15.3 million for the first quarter of 2007, an increase of approximately $1.2 million, or 8%, from
total operating expenses of $14.1 million for the same quarter last year. The increase in operating expenses in the first
quarter of 2007 compared to the first quarter of 2006 was primarily due to increased sales and marketing costs and about $540,000
of organizational transition costs. Of this amount, $476,000 was recorded in general and administrative expense and the balance
was recorded in selling and marketing expense. Operating expenses in the first quarter of 2007 and 2006 included $1.0 million
of cash receipts related to the 2003 sale of the CallXpress product line which were recorded in each quarter as a credit to
operating expenses.
“We believe we are beginning to see the favorable impact of the strategic investments we made in our revenue generating functions
over the last few quarters and are optimistic we can generate continued positive sales momentum going forward,” said David
P. Anastasi, President and CEO of Captaris. “We have expanded our front line sales staff and capabilities to improve execution
and maximize the increased opportunity we are seeing for strategic partnership transactions. We are pleased with the strong
sales performance from our larger channel partners and are seeing early indications of improvement in our emerging and lower
tier channels. Our recently announced agreement to acquire Castelle will add a proven leader in the fax server market and
further expand our broad suite of product offering and distribution capabilities. We believe we are well positioned to achieve
continued improvement in sales execution and operating leverage and are excited about our prospects for further growth going
forward.”
The Company recognized stock-based compensation expense of $195,000 in the first quarter of 2007, compared to $91,000 in the
first quarter of 2006. Amortization of intangible assets for the first quarter of 2007 was $622,000, including $481,000 in
cost of revenue and $141,000 in operating expenses, compared to $835,000 in the first quarter of 2006, including $481,000
in cost of revenue and $354,000 in operating expenses. Depreciation was $726,000 in the first quarter of 2007, compared to
$847,000 in the first quarter of 2006.
Operating loss in the first quarter of 2007 was $1.1 million, compared to an operating loss of $208,000 in the first quarter
of 2006.
The Company reported a net loss for the first quarter of 2007 of $265,000, or $0.01 per basic and diluted share, compared
to net income of $81,000, or break even per share, in the same quarter last year.
Cash flow from operations was $2.1 million in the first quarter of 2007, compared to $4.6 million in the first quarter in
2006.
Consolidated cash, cash equivalents and investment balances as of March 31, 2007 totaled $58.9 million, a decrease of $460,000
from December 31, 2006, and an increase of $3.2 million from $55.7 as of March 31, 2006. Deferred revenue at March 31, 2007
was $27.8 million, an increase of $1.9 million over the preceding quarter and an increase of $5.1 million from March 31, 2006.
Stock Repurchase
During the quarter, the Company repurchased 361,900 shares of its outstanding common stock at a cost of approximately $2.6
million and an average purchase price of $7.32 per share. Captaris may repurchase shares under its stock repurchase program
subject to overall market conditions, stock prices and its cash position and requirements. On March 31, 2007, the total number
of outstanding common shares was 27.4 million. As of March 31, 2007, $10.0 million was available for repurchase under the
Company's stock repurchase program.
Conference Call
The Company will discuss its 2007 first quarter results and business outlook for the second quarter of 2007 on its regularly
scheduled conference call today, May 3, at 1:45 pm PDT/ 4:45 p.m. EDT. 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) 218-0204 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, May 10th at 11:59 PDT. The required pass code is 11085876#.
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
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 Global Market under
the symbol CAPA. For more information please visit www.Captaris.com.
The following are registered trademarks and trademarks of Captaris: Captaris, Alchemy, RightFax and Captaris Workflow. All
other brand names and trademarks are the property of their respective owners.
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 our ability to generate continued positive sales momentum, 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 and, with respect to our plan to acquire Castelle, the risk that the transaction will not
close or that the closing may be delayed, the potential failure to successfully integrate Castelle, its products and its employees
into Captaris and achieve expected synergies and the failure to retain Castelle employees. More information about factors
that potentially could affect Captaris’ financial results is included in Captaris’ 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.
| Captaris, Inc. |
|
|
|
|
| Condensed Consolidated Balance Sheets |
|
|
|
|
| (in thousands) |
|
|
|
|
| (Unaudited) |
|
|
|
|
| |
|
|
March 31, |
|
December 31, |
| |
|
|
2007 |
|
2006 |
| Assets |
|
|
|
|
| Current assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ 7,389 |
|
$ 10,695 |
| Short-term investments, available-for-sale |
|
5,448 |
|
7,084 |
| Accounts receivable, net |
|
19,881 |
|
21,347 |
| Inventories, net |
|
600 |
|
961 |
| Prepaid expenses and other assets |
|
3,370 |
|
2,971 |
| Income tax receivable and deferred tax assets, net |
2,600 |
|
3,052 |
| |
Total current assets |
|
39,288 |
|
46,110 |
| |
|
|
|
|
|
| Long-term investments, available-for-sale |
|
46,066 |
|
41,584 |
| Restricted cash |
|
1,000 |
|
1,000 |
| Other long-term assets |
|
313 |
|
303 |
| Equipment and leasehold improvements, net |
|
5,412 |
|
4,340 |
| Intangible assets, net |
|
5,947 |
|
6,570 |
| Goodwill |
|
|
32,292 |
|
32,199 |
| Deferred tax assets, net |
|
4,721 |
|
3,842 |
| |
Total assets |
|
$ 135,039 |
|
$ 135,948 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Liabilities and Shareholders' Equity |
|
|
|
|
| Current liabilities: |
|
|
|
|
| Accounts payable |
|
$ 4,877 |
|
$ 5,308 |
| Accrued compensation and benefits |
|
3,634 |
|
4,522 |
| Other accrued liabilities |
|
1,714 |
|
1,920 |
| Income taxes payable |
|
148 |
|
192 |
| Deferred revenue |
|
21,652 |
|
20,328 |
| |
Total current liabilities |
|
32,025 |
|
32,270 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Accrued liabilities - noncurrent |
|
624 |
|
307 |
| Deferred revenue - noncurrent |
|
6,146 |
|
5,544 |
| |
Total liabilities |
|
38,795 |
|
38,121 |
| |
|
|
|
|
|
| Shareholders' equity: |
|
|
|
|
| Common stock |
|
274 |
|
275 |
| Additional paid-in capital |
|
45,306 |
|
46,614 |
| Retained earnings |
49,472 |
|
49,790 |
| Accumulated other comprehensive income |
|
1,192 |
|
1,148 |
| |
Total shareholders' equity |
|
96,244 |
|
97,827 |
| |
|
|
|
|
|
| |
Total liabilities and shareholders' equity |
|
$ 135,039 |
|
$ 135,948 |
| Captaris, Inc. |
|
|
|
| Condensed Consolidated Statements of Operations |
|
|
|
| (in thousands, except per share data) |
|
|
|
| (Unaudited) |
|
|
|
| |
Quarter Ended |
| |
March 31, |
| |
2007 |
|
2006 |
| |
|
|
|
| Net revenue: |
|
|
|
| Software revenue |
$ 7,093 |
|
$ 7,287 |
| Maintenance, support and services revenue |
9,379 |
|
8,308 |
| Hardware revenue |
4,041 |
|
3,978 |
| Net revenue |
20,513 |
|
19,573 |
| |
|
|
|
| Cost of revenue |
6,258 |
|
5,653 |
| |
|
|
|
| Gross profit |
14,255 |
|
13,920 |
| |
|
|
|
| Operating expenses: |
|
|
|
| Research and development |
3,186 |
|
3,169 |
| Selling and marketing |
8,278 |
|
7,297 |
| General and administrative |
4,716 |
|
4,308 |
| Amortization of intangible assets |
141 |
|
354 |
| Gain on sale of discontinued CallXpress product line |
(1,000) |
|
(1,000) |
| |
|
|
|
| Total operating expenses |
15,321 |
|
14,128 |
| |
|
|
|
| Operating loss |
(1,066) |
|
(208) |
| |
|
|
|
| Other income (expense): |
|
|
|
| Interest |
575 |
|
472 |
| Other, net |
144 |
|
(22) |
| Other income |
719 |
|
450 |
| |
|
|
|
Income (loss) from continuing operations before income tax
expense (benefit)
|
(347) |
|
242 |
| Income tax expense (benefit) |
(84) |
|
209 |
| |
|
|
|
| Income (loss) from continuing operations |
(263) |
|
33 |
| |
|
|
|
| Discontinued operations: |
|
|
|
Gain (loss) from sale of MediaTel assets, net of income tax
expense (benefit)
|
(2) |
|
48 |
| Income (loss) from discontinued operations |
(2) |
|
48 |
| |
|
|
|
| Net income (loss) |
$ (265) |
|
$ 81 |
| |
|
|
|
| Basic net income (loss) per common share: |
|
|
|
| Income (loss) from continuing operations |
$ (0.01) |
|
$ 0.00 |
| Income (loss) from discontinued operations |
(0.00) |
|
0.00 |
| Net income (loss) |
$ (0.01) |
|
$ 0.00 |
| |
|
|
|
| Diluted net income (loss) per common share: |
|
|
|
| Income (loss) from continuing operations |
$ (0.01) |
|
$ 0.00 |
| Income (loss) from discontinued operations |
(0.00) |
|
0.00 |
| Net income (loss) |
$ (0.01) |
|
$ 0.00 |
| |
|
|
|
| Weighted average basic common shares |
27,476 |
|
28,347 |
| Weighted average diluted common shares |
27,476 |
|
28,580 |
| Captaris, Inc. |
|
|
|
| Condensed Consolidated Statements of Cash Flows |
|
|
|
| (in thousands) |
|
|
|
| (Unaudited) |
|
|
|
| |
Quarter Ended |
| |
March 31, |
| |
2007 |
|
2006 |
| |
|
|
|
| Cash flows from operating activities: |
|
|
|
| Net income (loss) |
$ (265) |
|
$ 81 |
| Adjustments to reconcile net income (loss) to net cash provided |
|
|
|
| by operating activities: |
|
|
|
| Depreciation |
726 |
|
847 |
| Amortization |
622 |
|
835 |
| Stock-based compensation expense |
195 |
|
91 |
| (Gain) loss on disposition of assets |
(46) |
|
9 |
| Provision for doubtful accounts |
49 |
|
59 |
| Changes in assets and liabilities: |
|
|
|
| Accounts receivables, net |
1,352 |
|
4,453 |
| Inventories, net |
362 |
|
(382) |
| Prepaid expenses and other assets |
(401) |
|
(426) |
| Income tax receivable and deferred income taxes, net |
(426) |
|
254 |
| Accounts payable |
(778) |
` |
(298) |
| Accrued compensation and benefits |
(882) |
|
(907) |
| Other accrued liabilities |
(243) |
|
(169) |
| Income taxes payable |
(39) |
|
(339) |
| Deferred revenue |
1,914 |
|
449 |
| Net cash flow provided by operating activities |
2,140 |
|
4,557 |
| |
|
|
|
| Cash flows from investing activities: |
|
|
|
| Purchase of equipment and leasehold improvements |
(1,149) |
|
(66) |
| Purchase of investments |
(10,171) |
|
(9,787) |
| Proceeds from disposals of assets |
55 |
|
- |
| Proceeds from sales and maturities of investments |
7,328 |
|
8,632 |
| Net cash used in investing activities |
(3,937) |
|
(1,221) |
| |
|
|
|
| Cash from financing activities: |
|
|
|
| Proceeds from exercises of stock options |
1,009 |
|
328 |
| Repurchase of common stock |
(2,649) |
|
(884) |
| Excess tax benefits from stock-based compensation |
134 |
|
215 |
| Net cash used in financing activities |
(1,506) |
|
(341) |
| |
|
|
|
| Net increase (decrease) in cash |
(3,303) |
|
2,995 |
| |
|
|
|
| Effect of exchange rate changes on cash |
(3) |
|
(15) |
| |
|
|
|
| Cash and cash equivalents at beginning of period |
10,695 |
|
6,420 |
| |
|
|
|
| Cash and cash equivalents at end of period |
$ 7,389 |
|
$ 9,400 |
|
