Total Revenue of $20.5 Million up 5% Year-Over-Year BELLEVUE,
Wash., May 3 /PRNewswire-FirstCall/ -- 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 http://www.captaris.com/ or at http://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 http://www.captaris.com/. NOTE: 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 DATASOURCE: Captaris, Inc. CONTACT: Erika Simms,
Treasury Analyst of Captaris, Inc., +1-425-638-4048, or ; or Todd
Kehrli or Jim Byers, both of MKR Group, Inc., +1-323-468-2300, or ,
for Captaris, Inc. Web site: http://www.captaris.com/
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