EPS of $0.14 in 2006 compares to a loss of $0.14 Per Share in 2005
BELLEVUE, Wash., Feb. 15 /PRNewswire-FirstCall/ -- 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 http://www.captaris.com/ or at http://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
http://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. NOTE:
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. Condensed Consolidated Balance Sheets (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 (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 (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 DATASOURCE: Captaris,
Inc. CONTACT: Erika Simms, Treasury Analyst of Captaris, Inc.,
+1-425-638-4048, or ; or Investor Relations, Todd Kehrli, or Jim
Byers, both of MKR Group, LLC, +1-323-468-2300, or Web site:
http://www.captaris.com/
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