Captaris Reports Second Quarter 2007 Financial Results
Cash from Operations was $4.7 Million
Bellevue, Wash. — August 2, 2007 — Captaris, Inc. (NASDAQ: CAPA), a leading provider of software products that automate document-centric processes, today reported financial results for its
second quarter ended June 30, 2007.
Total revenue for the second quarter was $23.0 million, compared to $22.6 million in the prior year’s second quarter. Revenue
by category compared to the second quarter of 2006 was as follows:
- Software revenue was $8.4 million, an increase of $133,000 or 2%
- Maintenance, support and service revenue was $9.8 million, an increase of $838,000 or 9%
- Hardware revenue was $4.8 million, a decrease of $635,000 or 12%
Gross profit was $16.1 million, compared to $15.9 million in the prior year’s second quarter, and gross margin was 70.0%,
compared to 70.1% in the same quarter last year.
Total operating expenses were $16.8 million for the second quarter of 2007, compared to $16.1 million in the prior year’s
second quarter. The increase in operating expenses in the second quarter of 2007 was due to higher investment in sales and
research and development, deployment of new internal systems, and stock-based compensation expense. In the quarter, the Company
began selectively outsourcing engineering tasks with the goal of decreasing time to market for new products.
David P. Anastasi, President and CEO of Captaris, stated, “We are encouraged by the growth of our services revenue, our expansion
in international markets and the cash we generated from operations. We are progressing with our integration of Castelle, expanding
our product offering and creating opportunity to expand our overall customer portfolio. Going forward, we remain focused on
enhancing our management team and successful execution of our sales and marketing initiatives that leverage our large customer
base and broad network of partners to increase channel productivity and generate sustainable revenue growth.”
The Company recognized stock-based compensation expense of $337,000 in the second quarter of 2007, compared to $151,000 in
the second quarter of 2006. Amortization of intangible assets for the second 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 second quarter of 2006, including $481,000
in cost of revenue and $354,000 in operating expenses. Depreciation was $590,000 in the second quarter of 2007, compared to
$811,000 in the second quarter of 2006.
The Company reported a net loss for the second quarter of 2007 of $165,000, or $0.01 per basic and diluted share, compared
to net income of $28,000, or break-even per share, in the second quarter last year, and compared to a net loss of $265,000,
or $0.01 per share in the first quarter of 2007.
On a year-to-date basis, total revenue of $43.5 million was up $1.3 million, or 3.0%, and operating expenses of $32.1 million
were up $1.8 million, or 6.0%, compared to the same period in 2006. Net loss for the first six months of 2007 was $430,000,
or a loss of $0.02 per basic and diluted share, compared to net income of $109,000, or break even per share, for the same
period in 2006.
Cash flow from operations was $4.7 million in the second quarter of 2007, compared to $1.9 million in the prior year’s second
quarter. Cash flow from operations for the first six months of 2007 was $6.8 million, compared to $6.4 million for the same
period in 2006.
Consolidated cash, cash equivalents and investment balances as of June 30, 2007 totaled $61.2 million, an increase of $2.3
million from March 31, 2007, and an increase of $4.8 million from $56.4 million as of June 30, 2006. Deferred revenue at June
30, 2007 was $27.2 million, compared to $27.8 million in the preceding quarter and $23.4 million at June 30, 2006.
Stock Repurchase
During the quarter, the Company repurchased 400,000 shares of its outstanding common stock at a cost of approximately $2.2
million and an average purchase price of $5.61 per share. In the last four quarters, the Company repurchased 2.3 million shares
at a cost of approximately $13.8 million.
Captaris may repurchase shares under its stock repurchase program subject to overall market conditions, stock prices and its
cash position and requirements. On June 30, 2007, the total number of outstanding common shares was approximately 27.2 million.
As of June 30, 2007, $14.2 million was available for repurchase under the Company's stock repurchase program.
Conference Call
The Company will discuss its 2007 second quarter results and business outlook for the third quarter of 2007 on its regularly
scheduled conference call today, August 2nd, 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) 218-0204 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, August 9th at 11:59 PT. The required pass code is 11089939#.
About Captaris, Inc.
Captaris, Inc. is a leading provider of software products that automate business processes, manage documents electronically
and provide efficient information delivery. The products of Captaris and its subsidiary Castelle, including Captaris RightFax,
Captaris Workflow, Captaris Alchemy and the Castelle FaxPress line of products, are 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. FaxPress
is a trademark of Castelle. 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 regarding 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 2007, 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.
| Captaris, Inc. |
|
|
|
|
| Condensed Consolidated Balance Sheets |
|
|
|
|
| (in thousands) |
|
|
|
|
| (Unaudited) |
|
|
|
|
| |
|
|
June 30, |
|
December 31, |
| |
|
|
2007 |
|
2006 |
| Assets |
|
|
|
|
| Current assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ 17,659 |
|
$ 10,695 |
| Short-term investments, available-for-sale |
|
3,421 |
|
7,084 |
| Accounts receivable, net |
|
15,324 |
|
21,347 |
| Inventories, net |
|
613 |
|
961 |
| Prepaid expenses and other current assets |
|
4,000 |
|
2,971 |
| Income tax receivable and current deferred tax assets, net |
2,321 |
|
3,052 |
| |
Total current assets |
|
43,338 |
|
46,110 |
| |
|
|
|
|
|
| Long-term investments, available-for-sale |
|
40,129 |
|
41,584 |
| Restricted cash |
|
1,000 |
|
1,000 |
| Other long-term assets |
|
312 |
|
303 |
| Equipment and leasehold improvements, net |
|
6,020 |
|
4,340 |
| Intangible assets, net |
|
5,325 |
|
6,570 |
| Goodwill |
|
|
32,916 |
|
32,199 |
| Long-term deferred tax assets, net |
|
5,278 |
|
3,842 |
| |
Total assets |
|
$ 134,318 |
|
$ 135,948 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Liabilities and Shareholders' Equity |
|
|
|
|
| Current liabilities: |
|
|
|
|
| Accounts payable |
|
$ 4,731 |
|
$ 5,308 |
| Accrued compensation and benefits |
|
3,583 |
|
4,522 |
| Other accrued liabilities |
|
1,915 |
|
1,920 |
| Income taxes payable |
|
294 |
|
192 |
| Deferred revenue |
|
21,029 |
|
20,328 |
| |
Total current liabilities |
|
31,552 |
|
32,270 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Other long-term accrued liabilities |
|
618 |
|
307 |
| Long-term deferred revenue |
|
6,130 |
|
5,544 |
| |
Total liabilities |
|
38,300 |
|
38,121 |
| |
|
|
|
|
|
| Shareholders' equity: |
|
|
|
|
| Common stock |
|
272 |
|
275 |
| Additional paid-in capital |
|
44,585 |
|
46,614 |
| Retained earnings |
|
49,307 |
|
49,790 |
| Accumulated other comprehensive income |
|
1,854 |
|
1,148 |
| |
Total shareholders' equity |
|
96,018 |
|
97,827 |
| |
|
|
|
|
|
| |
Total liabilities and shareholders' equity |
|
$ 134,318 |
|
$ 135,948 |
| |
|
|
|
|
|
| Captaris, Inc. |
|
|
|
|
|
|
|
| Condensed Consolidated Statements of Operations |
|
|
|
|
|
|
|
| (in thousands, except per share data) |
|
|
|
|
|
|
|
| (Unaudited) |
|
|
|
|
|
|
|
| |
Quarter Ended |
|
Six Months Ended |
| |
June 30, |
|
June 30, |
| |
2007 |
|
2006 |
|
2007 |
|
2006 |
| |
|
|
|
|
|
|
|
| Net revenue: |
|
|
|
|
|
|
|
| Software revenue |
$ 8,363 |
|
$ 8,230 |
|
$ 15,456 |
|
$ 15,517 |
| Maintenance, support and services revenue |
9,838 |
|
9,000 |
|
19,217 |
|
17,308 |
| Hardware revenue |
4,765 |
|
5,400 |
|
8,806 |
|
9,378 |
| Net revenue |
22,966 |
|
22,630 |
|
43,479 |
|
42,203 |
| |
|
|
|
|
|
|
|
| Cost of revenue |
6,893 |
|
6,761 |
|
13,151 |
|
12,414 |
| |
|
|
|
|
|
|
|
| Gross profit |
16,073 |
|
15,869 |
|
30,328 |
|
29,789 |
| |
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
| Research and development |
3,633 |
|
3,189 |
|
6,819 |
|
6,358 |
| Selling and marketing |
8,900 |
|
8,676 |
|
17,178 |
|
15,973 |
| General and administrative |
4,102 |
|
3,902 |
|
8,818 |
|
8,210 |
| Amortization of intangible assets |
142 |
|
354 |
|
283 |
|
708 |
| Gain on sale of discontinued product line CallXpress |
- |
|
- |
|
(1,000) |
|
(1,000) |
| |
|
|
|
|
|
|
|
| Total operating expenses |
16,777 |
|
16,121 |
|
32,098 |
|
30,249 |
| |
|
|
|
|
|
|
|
| Operating loss |
(704) |
|
(252) |
|
(1,770) |
|
(460) |
| |
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
| Interest income |
548 |
|
441 |
|
1,123 |
|
913 |
| Other income (expense), net |
82 |
|
(69) |
|
226 |
|
(91) |
| Other income |
630 |
|
372 |
|
1,349 |
|
822 |
| |
|
|
|
|
|
|
|
Income (loss) from continuing operations before income tax
expense
|
(74) |
|
120 |
|
(421) |
|
362 |
| Income tax expense |
90 |
|
87 |
|
6 |
|
296 |
| |
|
|
|
|
|
|
|
| Income (loss) from continuing operations |
(164) |
|
33 |
|
(427) |
|
66 |
| |
|
|
|
|
|
|
|
| Discontinued operations: |
|
|
|
|
|
|
|
Gain (loss) from sale of MediaTel assets, net of income tax
expense (benefit)
|
(1) |
|
(5) |
|
(3) |
|
43 |
| Income (loss) from discontinued operations |
(1) |
|
(5) |
|
(3) |
|
43 |
| |
|
|
|
|
|
|
|
| Net income (loss) |
$ (165) |
|
$ 28 |
|
$ (430) |
|
$ 109 |
| |
|
|
|
|
|
|
|
| Basic net income (loss) per common share: |
|
|
|
|
|
|
|
| Income (loss) from continuing operations |
$ (0.01) |
|
$ 0.00 |
|
$ (0.02) |
|
$ 0.00 |
| Income (loss) from discontinued operations |
(0.00) |
|
(0.00) |
|
(0.00) |
|
0.00 |
| Net income (loss) |
$ (0.01) |
|
$ 0.00 |
|
$ (0.02) |
|
$ 0.00 |
| |
|
|
|
|
|
|
|
| Diluted net income (loss) per common share: |
|
|
|
|
|
|
|
| Income (loss) from continuing operations |
$ (0.01) |
|
$ 0.00 |
|
$ (0.02) |
|
$ 0.00 |
| Income (loss) from discontinued operations |
(0.00) |
|
(0.00) |
|
(0.00) |
|
0.00 |
| Net income (loss) |
$ (0.01) |
|
$ 0.00 |
|
$ (0.02) |
|
$ 0.00 |
| |
|
|
|
|
|
|
|
| Weighted average basic common shares |
27,223 |
|
28,191 |
|
27,368 |
|
28,269 |
| Weighted average diluted common shares |
27,223 |
|
28,526 |
|
27,368 |
|
28,546 |
| Captaris, Inc. |
|
|
|
| Condensed Consolidated Statements of Cash Flows |
|
|
|
| (in thousands) |
|
|
|
| (Unaudited) |
|
|
|
| |
Six Months |
| |
June 30, |
| |
2007 |
|
2006 |
| |
|
|
|
| Cash flows from operating activities: |
|
|
|
| Net income (loss) |
$ (430) |
|
$ 109 |
| Adjustments to reconcile net income (loss) to net cash provided |
|
|
|
| by operating activities: |
|
|
|
| Depreciation |
1,317 |
|
1,658 |
| Amortization |
1,244 |
|
1,670 |
| Stock-based compensation expense |
532 |
|
241 |
| (Gain) loss on disposition of assets |
58 |
|
54 |
| Provision for doubtful accounts |
15 |
|
39 |
| Changes in assets and liabilities: |
|
|
|
| Accounts receivables |
5,995 |
|
3,727 |
| Inventories, net |
347 |
|
(207) |
| Prepaid expenses and other assets |
(1,038) |
|
(1,001) |
| Income tax receivable and deferred income taxes, net |
(705) |
|
544 |
| Accounts payable |
(909) |
` |
(178) |
| Accrued compensation and benefits |
(937) |
|
(414) |
| Other accrued liabilities |
(57) |
|
(545) |
| Income taxes payable |
103 |
|
(525) |
| Deferred revenue |
1,290 |
|
1,262 |
| Net cash flow provided by operating activities |
6,825 |
|
6,434 |
| |
|
|
|
| Cash flows from investing activities: |
|
|
|
| Purchase of equipment and leasehold improvements |
(2,433) |
|
(426) |
| Purchase of investments |
(16,569) |
|
(34,240) |
| Proceeds from disposals of assets |
55 |
|
7 |
| Proceeds from sales and maturities of investments |
21,683 |
|
30,005 |
| Net cash provided by (used in) investing activities |
2,736 |
|
(4,654) |
| |
|
|
|
| Cash from financing activities: |
|
|
|
| Proceeds from exercise of common stock options |
2,037 |
|
1,007 |
| Repurchase of common stock |
(4,895) |
|
(2,384) |
| Excess tax benefits from stock-based compensation |
294 |
|
233 |
| Net cash used in financing activities |
(2,564) |
|
(1,144) |
| |
|
|
|
| Net increase in cash |
6,997 |
|
636 |
| |
|
|
|
| Effect of exchange rate changes on cash |
(33) |
|
(44) |
| |
|
|
|
| Cash and cash equivalents at beginning of period |
10,695 |
|
6,420 |
| |
|
|
|
| Cash and cash equivalents at end of period |
$ 17,659 |
|
$ 7,012 |
|
