Revenue Increases 15% Sequentially BELLEVUE, Wash., Aug. 8
BELLEVUE, Wash., Aug. 8 /PRNewswire-FirstCall/ -- 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, 2008.
Total revenue for the quarter was $32.1 million, a 40% increase over the
prior year's second quarter and 15% higher than the first quarter of 2008.
The increase from the prior year's second quarter was primarily attributable
to the acquisitions of Castelle and CDT. Revenue by category compared to the
second quarter of 2007 was as follows:
-- Software revenue was $11.3 million, an increase of $2.9 million, or
35%
-- Maintenance, support and services revenue was $14.9 million, an
increase of $5.1 million or 52%
-- Hardware revenue was $3.8 million, a decrease of $1.0 million or 20%
-- Appliance revenue, the FaxPress product line of hardware and embedded
software, was $2.1 million
"We have made a significant improvement in our financial results from the
first quarter by focusing on growing revenues and controlling costs and we
will continue to work on identifying cost synergies and driving improvements
in our overall business model," said David P. Anastasi, President and CEO of
Captaris. "We have previewed and launched new products created by bringing
together our existing offerings with technology acquired from our CDT and
Castelle acquisitions. Initial results are encouraging and we have received
positive feedback from both our customers and partners."
Gross profit was $21.8 million, an increase of $5.7 million from the
second quarter of 2007. Gross margin was 67.9%, compared to 70.0% in the same
quarter last year. The decline in the gross margin was due to including the
operating results of CDT and Castelle, which have lower gross margins than the
Company's legacy business, and the increased amortization expense from those
acquisitions of $665,000.
Total operating expenses for the quarter were $25.6 million, compared to
$16.8 million in the second quarter of 2007. R&D expenses increased $2.6
million, including $2.1 million due to acquisitions and $519,000 for the
consolidation and outsourcing of the Company's software development
activities. Sales and marketing expenses increased $3.5 million, including
$2.9 million from the acquisitions and $1.4 million for additional sales
resources, offset by a reduction of $778,000 in marketing. G&A expenses
increased $2.2 million, including $1.3 million for the acquisitions, $440,000
associated with the evaluation of strategic alternatives and related
shareholder matters and a decrease in capitalized labor costs of $452,000.
Operating results also include a $54,000 charge for acquired in-process
development expense associated with the acquisition of CDT.
Amortization of intangible assets for the quarter was $1.8 million,
including $1.1 million in cost of revenue and $694,000 in operating expenses,
compared to $623,000 for the same quarter last year, including $481,000 in
cost of revenue and $142,000 in operating expenses. Depreciation expense was
$829,000 in the second quarter of 2008 compared to $590,000 in the second
quarter of 2007. Stock based compensation expense was $356,000 in the second
quarter of 2008 compared to $339,000 in the second quarter of 2007.
The decrease in other income for the quarter ended June 30, 2008 compared
to the same quarter last year was primarily due to less net interest income
earned as a result of cash used for the acquisition of CDT combined with the
net cost of the Company's foreign currency hedging activities.
The Company reported a net loss for the second quarter of 2008 of $2.7
million, or $0.10 per basic and diluted share, compared to a net loss of
$165,000, or $0.01 per basic and diluted share for the second quarter of 2007.
On a year-to-date basis, total revenue of $60.0 million was an increase of
$16.5 million or 38% from the same period last year. Net loss for the first
six months of 2008 was $9.4 million, or a loss of $0.35 per basic and diluted
share, compared to a net loss of $430,000, or a loss of $0.02 per basic and
diluted share, for the same period in 2007.
Consolidated cash, cash equivalents and investment balances as of June 30,
2008 totaled $29.7 million, compared to $46.2 million as of December 31, 2007.
On January 4, 2008, the Company purchased Captaris Document Technologies GmbH
("CDT") (formerly Oce Document Technologies GmbH) for a net cash payment of
$17.9 million. Cash used in operations for the six months ended June 30, 2008
was $6.6 million including a $3.1 million loss on a foreign exchange contract
settled in April 2008. In early January 2008, the Company established a
credit facility and during the six months ended June 30, 2008 obtained cash
advances, net of repayments, totaling $8.1 million.
Deferred revenue at June 30, 2008 was $31.1 million compared to $28.7
million at December 31, 2007.
Stock Repurchase
During the quarter ended June 30, 2008, the Company did not repurchase any
shares of its outstanding common stock. On June 30, 2008, approximately 26.5
million shares of common stock were outstanding and $9.5 million was available
for share repurchase under the Company's stock repurchase program. Captaris
may repurchase shares under its stock repurchase program subject to overall
market conditions, stock prices and its cash position and requirements.
Evaluation of Strategic Alternatives
In March 2008, the Company announced that the Board of Directors decided
to evaluate strategic alternatives to further enhance shareholder value. The
cost of this evaluation was $440,000 in the second quarter of 2008 and $1.1
million for the first half of 2008. This evaluation is ongoing and
developments will be disclosed as the Board deems appropriate.
Conference Call
The Company will discuss its 2008 second quarter financial results and
business outlook on its regularly scheduled conference call today, August 8th,
at 7:30 a.m. PT (10:30 a.m. ET). A live webcast of the conference call can be
accessed from the Captaris Web site at http://www.captaris.com under About Us
-- Investor Relations. The live call may also be accessed by dialing into the
call at 1-800-218-0713 and providing the Company name "Captaris." An audio
replay of the conference call can be accessed at 1-800-405-2236. The replay
will be available starting two hours after the call and remain in effect until
Friday, August 15th at 11:59 PT. The required pass code is 11117557#.
About Captaris, Inc.
Captaris, Inc. is a leading provider of software products that automate
document-centric business processes. Captaris specializes in document
capture, recognition, routing, workflow and delivery. Captaris integrated
solutions provide interoperability with leading line of business applications
and technology platforms. Captaris products include RightFax, Captaris
Workflow, Alchemy, FaxPress, DOKuStar, RecoStar, and Single Click Entry which
are distributed through a global network of leading technology partners.
Captaris customers include the entire Fortune 100 and the majority of 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. http://www.Captaris.com.
(C)2008 All rights reserved. No part of this publication may be
reproduced, transmitted, transcribed, stored in a retrieval system, or
translated into any language in any form by any means without the written
permission of Captaris. The following are registered trademarks and
trademarks of Captaris Inc. and its subsidiaries: Captaris, the Captaris logo,
Alchemy(R), Captaris Workflow(TM), RightDocs(TM), RightFax(R), RightFlow(TM)
and RightStar(TM) in the US and/or other jurisdictions. FaxPress(TM) is a
registered trademark of Castelle. RecoStar, DOKuStar, DOKuStar Capture Suite,
Single Click Entry, and Invoice CENTER are registered trademarks and
trademarks of Captaris Document Technologies GmbH. 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 the expected impact of
cost synergies, improvements to our overall business model and acceptance of
new and existing products. 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, including the recent
acquisition of Captaris Document Technologies GmbH, 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' 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.
Consolidated Balance Sheets
(in thousands)
June 30,December 31,
2008 2007
Assets (unaudited)(audited)
Current assets:
Cash and cash equivalents $29,667 $46,182
Restricted cash - 1,000
Accounts receivable, net 22,08919,348
Inventories 2,647 1,681
Prepaid expenses and other current assets 2,981 4,564
Income tax receivable and current
deferred tax assets, net 3,612 3,527
Total current assets 60,99676,302
Other long-term assets 1,151 847
Equipment and leasehold improvements, net 10,508 7,735
Intangible assets, net 30,33911,748
Goodwill56,76737,522
Long-term deferred tax assets, net 4,130 5,344
Total assets $163,891 $139,498
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $8,669$8,621
Accrued compensation and benefits 6,733 5,528
Other accrued liabilities 2,985 1,706
Income taxes payable 74 327
Deferred revenue 25,82122,747
Total current liabilities 44,28238,929
Other long-term accrued liabilities 1,044 696
Long-term deferred revenue 5,321 5,962
Pension and other long-term employee
benefit obligations19,913 -
Bank loan8,072 -
Total liabilities 78,63245,587
Shareholders' equity:
Common stock265 264
Additional paid-in capital 42,11840,971
Retained earnings40,59949,961
Accumulated other comprehensive income2,277 2,715
Total shareholders' equity 85,25993,911
Total liabilities and
shareholders' equity$163,891 $139,498
Captaris, Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
2008 20072008 2007
Net revenue:
Software revenue $11,274 $8,363 $20,129 $15,456
Maintenance, support and services
revenue 14,927 9,838 29,312 19,217
Hardware revenue3,799 4,7657,4618,806
Appliance revenue 2,098 -3,115-
Net revenue 32,098 22,966 60,017 43,479
Cost of revenue 10,307 6,893 20,060 13,151
Gross profit 21,791 16,073 39,957 30,328
Operating expenses:
Research and development 6,193 3,633 12,5446,819
Selling and marketing 12,392 8,900 24,614 17,178
General and administrative 6,265 4,102 12,7268,818
Amortization of intangible assets694 1421,358 283
In-process research and development 54 -1,278-
Gain on sale of discontinued product
line CallXpress - -- (1,000)
Total operating expenses25,598 16,777 52,520 32,098
Operating loss (3,807) (704) (12,563) (1,770)
Other income (expense):
Interest income 197 548 4681,123
Interest expense(736) - (1,176) -
Other income (expense), net (544) 82 (70) 226
Other income (expense) (1,083)630 (778) 1,349
Loss from continuing operations
before income tax (benefit) expense (4,890)(74) (13,341)(421)
Income tax (benefit) expense (2,175) 90 (3,980) 6
Loss from continuing operations (2,715) (164) (9,361)(427)
Discontinued operations:
Loss on sale of MediaTel assets,
net of income tax benefit - (1) (1) (3)
Loss from discontinued operations - (1) (1) (3)
Net loss$(2,715) $(165) $(9,362) $(430)
Basic and diluted net loss per common share:
Loss from continuing operations $(0.10) $(0.01) $(0.35) $(0.02)
Loss from discontinued operations- (0.00) (0.00) (0.00)
Net loss$(0.10) $(0.01) $(0.35) $(0.02)
Weighted average shares used in computation of:
Basic net loss per share26,532 27,223 26,469 27,368
Diluted net loss per share 26,532 27,223 26,469 27,368
Captaris, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six Months Ended
June 30,
2008 2007
Cash flows from operating activities:
Net loss $(9,362)$(430)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation1,766 1,317
Amortization3,547 1,244
Stock-based compensation expense 752 532
Gain on foreign currency revaluation (3,765)-
Loss on derivative instrument 991 -
Pension and long-term employee benefit expense 1,029 -
Provision for doubtful accounts 16915
In-process research and development 1,278 -
Loss on disposition of assets 11558
Deferred income tax benefit(3,980) (605)
Changes in assets and liabilities (net of
acquired assets and liabilities):
Accounts receivable2,695 5,995
Inventories (387) 347
Prepaid expenses and other assets 1,362(1,038)
Income tax receivable - (100)
Accounts payable (1,676) (909)
Accrued compensation and benefits (981) (937)
Other accrued liabilities (450) (57)
Income taxes payable (8) 103
Pension liability (145)-
Deferred revenue 412 1,290
Net cash flow (used in) provided
by operating activities (6,638)6,825
Cash flows from investing activities:
Purchase of equipment and leasehold
improvements (3,793) (2,433)
Purchase of investments - (16,569)
Purchase of Captaris Document
Technologies GmbH (17,926)-
Proceeds from disposals of assets 3555
Proceeds from sales and maturities of
investments 421,683
Net cash (used in) provided by
investing activities(21,680)2,736
Cash flows from financing activities:
Proceeds from bank loan 13,073 -
Repayments on bank loan (5,000)-
Proceeds from release of restricted cash 1,000 -
Proceeds from exercise of common
stock options 520 2,037
Repurchase of common stock (138) (4,895)
Excess tax benefits from stock-based
compensation14 294
Net cash provided by (used in)
financing activities 9,469(2,564)
Net (decrease) increase in cash (18,849)6,997
Effect of exchange rate changes on cash 2,334 (33)
Cash and cash equivalents at
beginning of period 46,18210,695
Cash and cash equivalents at end of period$29,667 $17,659
SOURCE Captaris, Inc.
