EPS of $0.02 BELLEVUE, Wash., Nov. 5 /PRNewswire-FirstCall/ --
Captaris, Inc. (NASDAQ:CAPA), a leading provider of software
products that automate document-centric processes, today reported
financial results for its third quarter ended September 30, 2007.
The results for the quarter included the operations of Castelle
from the date of acquisition, July 10, 2007. Total revenue for the
third quarter was $23.3 million, compared to $24.6 million in the
prior year's third quarter and consistent with the $23 million
estimate stated in our press release on October 11. Third quarter
revenue by category compared to the third quarter of 2006 was as
follows: -- Software revenue was $7.7 million, a decrease of $2.0
million -- Maintenance, support and service revenue was $10.0
million, an increase of $628,000, including $483,000 of Castelle
revenue -- Hardware revenue was $3.9 million, a decrease of $1.6
million -- Appliance revenue, the Castelle product line of hardware
and embedded software, was $1.6 million Gross profit was $16.3
million, compared to $17.1 million in the prior year's third
quarter, and gross margin was 70.1%, compared to 69.7% in the same
quarter last year. Total operating expenses for the third quarter
were $17.9 million, compared to $15.1 million in the prior year's
third quarter. The increase in operating expenses reflects $1.8
million for Castelle, including an in-process research and
development charge of $219,000. David P. Anastasi, President and
CEO of Captaris, stated, "While we are disappointed in our overall
third quarter revenue result, from a slow start in July and August,
we are encouraged by a rebound beginning in September that has
carried over through October. Our overall pipeline is solid and we
remain optimistic that we are experiencing a positive recovery. "We
continue to progress with initiatives designed to strengthen our
distribution capabilities, accelerate product development, and
better position ourselves in key targeted markets. Our product
development is focused on new enhancements to our core platforms
that we believe will provide new revenue streams and expand the
demand for our product offerings. At the same time, we continue
ongoing efforts to realize improved operating efficiencies." The
Company recognized stock-based compensation expense of $439,000 in
the third quarter of 2007, compared to $235,000 in the third
quarter of 2006. Amortization of intangible assets for the third
quarter of 2007 was $890,000, including $508,000 in cost of revenue
and $382,000 in operating expenses, compared to $835,000 in the
third quarter of 2006, including $481,000 in cost of revenue and
$354,000 in operating expenses. Depreciation was $644,000 in the
third quarter of 2007, compared to $749,000 in the third quarter of
2006. The Company reported net income for the third quarter of 2007
of $486,000, or $0.02 per basic and diluted share, compared to net
income of $1.6 million, or $0.06 per basic and diluted share, for
the same period in 2006. Results in 2007 included a $1.6 million
tax benefit due to R&D tax credits and a change in our
estimated effective rate for the year. For the nine months ended
September 30, 2007, net revenue was $66.7 million, consistent with
total revenue for the same period in 2006. Operating expenses for
the nine month period ended September 30, 2007 were $50.0 million,
compared to $45.4 million in the same period in 2006. Net income
for the first nine months of 2007 was $56,000, or breakeven per
basic and diluted share, compared to net income of $1.7 million, or
$0.06 per basic and diluted share, for the same period in 2006.
Cash flow from operations was $2.0 million in the third quarter of
2007, compared to $5.6 million in the prior year's third quarter.
Cash flow from operations for the first nine months of 2007 was
$8.9 million, compared to $12.0 million for the same period in
2006. Consolidated cash, cash equivalents and investment balances
as of September 30, 2007 totaled $46.5 million, compared to $61.2
million as of June 30, 2007 and $56.9 as of September 30, 2006. The
decrease is primarily due to cash paid to acquire of Castelle of
$12.0 million, net of acquired cash. Deferred revenue at September
30, 2007 was $27.7 million compared to $23.8 million at September
30, 2006. Stock Repurchase During the quarter, the Company
repurchased about 600,000 shares of its outstanding common stock at
a cost of $3.1 million, at an average purchase price of $5.23 per
share. In the last four quarters, the Company has repurchased 1.9
million shares at a cost of $11.6 million. Captaris may repurchase
shares under its stock repurchase program subject to overall market
conditions, stock prices and its cash position and requirements. On
September 30, 2007, the total number of outstanding common shares
was approximately 26.7 million. As of September 30, 2007, $11.0
million was available for repurchase under the Company's stock
repurchase program. Conference Call The Company will discuss its
2007 third quarter results and business outlook for the fourth
quarter of 2007 on its regularly scheduled conference call today,
November 5th, at 7:30 a.m. PT (10:30 a.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 Monday, November 12th at
11:59 PT. The required pass code is 11098215#. 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
http://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) September 30, December 31, 2007 2006 Assets Current
assets: Cash and cash equivalents $11,230 $10,695 Short-term
investments, available-for-sale 2,819 7,084 Accounts receivable,
net 16,206 21,347 Inventories, net 1,837 961 Prepaid expenses and
other current assets 3,683 2,971 Income tax receivable and current
deferred tax assets, net 2,880 3,052 Total current assets 38,655
46,110 Long-term investments, available-for-sale 32,474 41,584
Restricted cash 1,000 1,000 Other long-term assets 498 303
Equipment and leasehold improvements, net 7,376 4,340 Intangible
assets, net 12,596 6,570 Goodwill 37,521 32,199 Long-term deferred
tax assets, net 6,021 3,842 Total assets $136,141 $135,948
Liabilities and Shareholders' Equity Current liabilities: Accounts
payable $6,087 $5,308 Accrued compensation and benefits 4,310 4,522
Other accrued liabilities 2,172 1,920 Income taxes payable 571 192
Deferred revenue 21,898 20,328 Total current liabilities 35,038
32,270 Other long-term accrued liabilities 702 307 Long-term
deferred revenue 5,805 5,544 Total liabilities 41,545 38,121
Shareholders' equity: Common stock 267 275 Additional paid-in
capital 42,023 46,614 Retained earnings 49,794 49,790 Accumulated
other comprehensive income 2,512 1,148 Total shareholders' equity
94,596 97,827 Total liabilities and shareholders' equity $136,141
$135,948 Captaris, Inc. Condensed Consolidated Statements of
Operations (in thousands, except per share data) (Unaudited)
Quarter Ended Nine Months Ended September 30, September 30, 2007
2006 2007 2006 Net revenue: Software revenue $7,691 $9,647 $23,147
$25,164 Maintenance, support and services revenue 10,013 9,385
29,230 26,693 Hardware revenue 3,914 5,528 12,720 14,906 Appliance
revenue 1,647 - 1,647 - Net revenue 23,265 24,560 66,744 66,763
Cost of revenue 6,947 7,441 20,098 19,855 Gross profit 16,318
17,119 46,646 46,908 Operating expenses: Research and development
4,453 3,029 11,272 9,387 Selling and marketing 8,452 7,806 25,630
23,779 General and administrative 4,352 3,929 13,170 12,139
Amortization of intangible assets 382 354 665 1,062 In progress
research and development 219 - 219 - Gain on sale of discontinued
product line CallXpress - - (1,000) (1,000) Total operating
expenses 17,858 15,118 49,956 45,367 Operating loss (1,540) 2,001
(3,310) 1,541 Other income (expense): Interest income 467 481 1,590
1,394 Other income (expense), net (47) (146) 179 (237) Other income
420 335 1,769 1,157 Income (loss) from continuing operations before
income tax expense (1,120) 2,336 (1,541) 2,698 Income tax expense
(benefit) (1,606) 693 (1,600) 989 Income from continuing operations
486 1,643 59 1,709 Discontinued operations: Gain (loss) from sale
of MediaTel assets, net of income tax expense (benefit) - (16) (3)
27 Income (loss) from discontinued operations - (16) (3) 27 Net
income $486 $1,627 $56 $1,736 Basic net income per common share:
Income from continuing operations $0.02 $0.06 $0.00 $0.06 Income
(loss) from discontinued operations - (0.00) (0.00) 0.00 Net income
$0.02 $0.06 $0.00 $0.06 Diluted net income per common share: Income
from continuing operations $0.02 $0.06 $0.00 $0.06 Income (loss)
from discontinued operations - (0.00) (0.00) 0.00 Net income $0.02
$0.06 $0.00 $0.06 Weighted average basic common shares 26,968
27,859 27,212 28,131 Weighted average diluted common shares 27,504
28,472 27,965 28,617 Captaris, Inc. Condensed Consolidated
Statements of Cash Flows (in thousands) (Unaudited) Nine Months
Ended September 30, 2007 2006 Cash flows from operating activities:
Net income $56 $1,736 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation 1,961 2,407
Amortization 2,134 2,505 Stock-based compensation expense 971 476
In process research and development 219 - (Gain) loss on
disposition of assets (7) 55 Provision for doubtful accounts 39 113
Changes in assets and liabilities: Accounts receivables 5,937 3,046
Inventories, net (138) (187) Prepaid expenses and other assets
(678) (916) Income tax receivable and deferred income taxes, net
(2,005) 3,070 Accounts payable 222 (802) Accrued compensation and
benefits (806) 70 Other accrued liabilities (71) (466) Income taxes
payable 114 (647) Deferred revenue 908 1,586 Net cash flow provided
by operating activities 8,856 12,046 Cash flows from investing
activities: Purchase of equipment and leasehold improvements
(4,156) (530) Purchase of investments (19,528) (51,965) Purchase of
Castelle, net of cash acquired (11,974) - Proceeds from disposals
of assets 55 7 Proceeds from sales and maturities of investments
32,903 48,878 Net cash used in investing activities (2,700) (3,610)
Cash from financing activities: Proceeds from exercise of common
stock options 2,160 1,250 Repurchase of common stock (8,039)
(7,754) Excess tax benefits from stock- based compensation 308 271
Net cash used in financing activities (5,571) (6,233) Net increase
in cash 585 2,203 Effect of exchange rate changes on cash (50) (45)
Cash and cash equivalents at beginning of period 10,695 6,420 Cash
and cash equivalents at end of period $11,230 $8,578 DATASOURCE:
Captaris, Inc. CONTACT: Erika Simms, Treasury Analyst of Captaris,
Inc., +1-425-638-4048, ; or Todd Kehrli or Jim Byers, Investor
Relations of MKR Group, Inc., +1-323-468-2300, , for Captaris, Inc.
Web site: http://www.captaris.com/
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