DOCC Docucorp Intl (MM)

Docucorp(R) International (Nasdaq:DOCC), a leading provider of Customer Communication Management (CCM) solutions, today announced record revenues of $88.3 million for the fiscal year ended July 31, 2006, a 12 percent increase compared to $79.2 million for fiscal year 2005. Net income for fiscal year 2006 increased 28 percent to $3.2 million, or $0.28 per diluted share, compared to net income of $2.5 million, or $0.22 per diluted share, for the same period a year ago. During the fourth quarter of fiscal year 2006, the Company recorded a $1.0 million lease abandonment charge for excess space related to its office facilities in Atlanta. Excluding this non-cash charge, earnings per diluted share for fiscal year 2006 would have been $0.34, an increase of 55 percent. For the fiscal year ended July 31, 2006, ASP hosting revenue increased 25 percent to $33.9 million, professional services revenue increased eight percent to $22.6 million and maintenance revenue increased four percent to $21.9 million. Software license revenue remained virtually unchanged at $10.0 million. For the quarter ended July 31, 2006, the company reported record revenues of $22.7 million, a 17 percent increase compared to $19.4 million for the same period a year ago. Net income for the fourth quarter of fiscal year 2006 was $412,000, or $0.04 per diluted share, compared to $135,000, or $0.01 per diluted share, for the fourth quarter of fiscal year 2005. Without the non-cash lease abandonment charge discussed above, earnings per diluted share for the fourth quarter of fiscal year 2006 would have been $0.09. Increases in fourth quarter and full year net income versus the comparable periods of the prior year were primarily a result of increased profitability related to the growth in ASP, professional services and maintenance revenues, as well as reduced sales and marketing costs and favorable foreign currency fluctuations. These improvements in profitability were partially offset by increased software amortization and third-party software license royalties, and the lease abandonment charge previously discussed. "We are pleased with the record revenues, robust profitability and return to double-digit growth for fiscal 2006," said Michael D. Andereck, president and chief executive officer, Docucorp International. "We will continue to build on the growth of our ASP, professional services and maintenance revenues, while working hard to accelerate software sales in fiscal 2007." About Docucorp Docucorp markets Customer Communication Management (CCM) solutions via a portfolio of information software, business process outsourcing and professional services, which enables companies to create, publish, manage and archive complex, high-volume, personalized information in-house or fully outsource to Docucorp. The company has an installed base of more than 1,300 customers, including some of the world's largest insurance, utility, financial services and health care organizations. Headquartered in Dallas, Docucorp has facilities in Atlanta, Silver Spring, Md., Bedford, N.H., and London, as well as an international presence in the Benelux, Switzerland, Central and Eastern Europe, Middle East and Africa regions. Certain information contained in this news release may include "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than historical facts, included herein are forward-looking statements. These statements involve risks and uncertainties, such as competition, technological developments, loss of significant customers and the other factors discussed in the Company's periodic reports filed with the Securities and Exchange Commission, that could cause the Company's actual results to differ materially from those expressed or implied by these forward-looking statements. Docucorp is a registered trademark of Docucorp International. (C) 2006 Docucorp International. All Rights Reserved. Company, organization and product names mentioned herein are trademarks or registered trademarks of their respective owners. Docucorp and its symbol are trademarks of Docucorp International. -0- *T DOCUCORP INTERNATIONAL, INC. Consolidated Statements of Operations (in thousands except per share amounts) (unaudited) Three Months Ended July 31, Year Ended July 31, ---------------------- -------------------- 2006 2005 2006 2005 ----------- ---------- ---------- --------- Revenues ASP hosting $8,541 $6,851 $33,884 $27,002 Professional services 5,827 4,739 22,562 20,966 License 2,674 2,636 9,961 10,063 Maintenance 5,617 5,211 21,930 21,146 ----------- ---------- ---------- --------- Total revenues 22,659 19,437 88,337 79,177 ----------- ---------- ---------- --------- Cost of revenues ASP hosting 7,763 6,337 30,354 24,195 Professional services 4,320 4,061 17,434 16,563 License 1,519 1,197 5,030 4,199 Maintenance 292 404 1,322 1,524 ----------- ---------- ---------- --------- Total cost of revenues 13,894 11,999 54,140 46,481 ----------- ---------- ---------- --------- Gross profit 8,765 7,438 34,197 32,696 ----------- ---------- ---------- --------- Operating expenses Product development 2,181 2,151 8,964 8,555 Sales and marketing 2,790 2,964 10,776 11,781 General and administrative 2,145 1,895 8,345 7,961 Loss on lease abandonment 1,026 -- 1,100 -- ----------- ---------- ---------- --------- Total operating expenses 8,142 7,010 29,185 28,297 ----------- ---------- ---------- --------- Income from operations 623 428 5,012 4,399 Interest expense (80) (128) (375) (570) Other income (expense), net 172 (153) 536 173 ----------- ---------- ---------- --------- Income before income taxes 715 147 5,173 4,002 Provision for income taxes 303 12 1,953 1,496 ----------- ---------- ---------- --------- Net income $412 $135 $3,220 $2,506 =========== ========== ========== ========= Basic net income per share $0.04 $0.01 $0.29 $0.24 =========== ========== ========== ========= Weighted average basic shares outstanding 10,961 10,794 10,923 10,651 =========== ========== ========== ========= Diluted net income per share $0.04 $0.01 $0.28 $0.22 =========== ========== ========== ========= Weighted average diluted shares outstanding 11,578 11,440 11,522 11,526 =========== ========== ========== ========= DOCUCORP INTERNATIONAL, INC. Consolidated Balance Sheets (in thousands except share and per share amounts) (unaudited) July 31, July 31, Assets 2006 2005 -------- -------- Current assets: Cash and cash equivalents $9,829 $8,381 Accounts receivable, net of allowance of $479 and $293, respectively 16,918 17,132 Current portion of deferred taxes 363 170 Income tax receivable 248 248 Other current assets 2,905 2,559 -------- -------- Total current assets 30,263 28,490 Property and equipment, net of accumulated depreciation of $24,156 and $20,122, respectively 9,674 10,261 Software development costs, net of accumulated amortization of $30,274 and $25,909, respectively 14,301 13,687 Goodwill 9,842 9,842 Identifiable intangibles, net of accumulated amortization of $290 and $113, respectively 730 907 Other assets 499 448 -------- -------- Total assets $65,309 $63,635 ======== ======== Liabilities and stockholders' equity Current liabilities: Accounts payable $3,322 $2,423 Accrued liabilities: Accrued compensation 3,453 3,067 Other 1,625 1,491 Income taxes payable 531 403 Current portion of lease obligations 1,845 1,459 Current portion of long-term debt 3,324 3,617 Deferred revenue 11,709 11,479 -------- -------- Total current liabilities 25,809 23,939 Deferred taxes 4,772 5,178 Long-term lease obligations 1,588 2,303 Long-term debt 137 3,462 Other long-term liabilities 1,501 1,224 Commitment and contingencies Stockholders' equity: Preferred stock, $0.01 par value, 1,000,000 shares authorized; none issued -- -- Common stock, $0.01 par value, 50,000,000 shares authorized; 16,593,849 shares issued 166 166 Additional paid-in-capital 45,915 48,035 Treasury stock at cost, 5,185,109 and 5,458,912 shares, respectively (28,991) (30,347) Retained earnings 14,948 12,268 Unearned compensation -- (2,100) Foreign currency translation adjustment (536) (493) -------- -------- Total stockholders' equity 31,502 27,529 -------- -------- Total liabilities and stockholders' equity $65,309 $63,635 ======== ======== *T