Docucorp Announce Record Revenues in Q3, Earnings Down
Press release from the issuing company
DALLAS--May 21, 2003-- Docucorp International, a leading provider of enterprise information solutions, today announced record revenues of $20.1 million for the third quarter of fiscal year 2003, which represents a 9 percent increase from $18.4 million for the third quarter of the prior year. The company reported earnings of $1 million, or $0.07 per diluted share, for the quarter compared to $1.6 million, or $0.10 per diluted share, for the same period a year ago.
For the nine months ended April 30, 2003, revenues were $55.6 million, up 4 percent from the same period in fiscal year 2002. Net income for the first nine months of fiscal year 2003 was $2.9 million, or $0.20 per diluted share, compared to $4.2 million, or $0.29 per diluted share, for the same period a year ago.
Revenue growth for the current quarter reflects significant growth in Docucorp's professional services and ASP operations. When compared to the same quarter of fiscal year 2002, professional services revenue increased 29 percent to $6.8 million and ASP revenue increased 20 percent to $6.1 million. The increase in professional services revenue resulted from increased utilization rates and the recognition of revenue previously deferred related to one large consulting contract. Growth in ASP revenue for the quarter is the result of new hosting agreements that went into production during the quarter, as well as growth from existing customers. Software license revenue was $2.3 million for the third quarter of fiscal year 2003 compared to $1.0 million in the prior quarter of this fiscal year, and $3.3 million for the third quarter of fiscal year 2002.
"One of the benefits to Docucorp's business model is its diversified revenue streams, which played a key role in the company's ability to deliver record revenues this quarter," said Michael D. Andereck, president and chief executive officer of Docucorp. "While software license revenue remained less than robust, it more than doubled when compared to the second quarter. Considering the difficult business environment, I am very pleased with the financial results for the quarter."
The decrease in earnings per share was primarily the result of the revenue mix and an increased effective tax rate. Revenues for the three and nine months ended April 30, 2003 included significantly less high-margin software license revenue than in the prior year. The effective tax rate increased to 51 percent in the current quarter, primarily as a result of European losses, for which the company does not recognize a tax benefit.
During May, Docucorp implemented organizational changes that resulted in the elimination of approximately 5 percent of the company's total staffing. The organizational changes will make the company more profitable and efficient, and will not impact service levels or product delivery schedules. The financial impact for the fourth quarter and the year ending July 31, 2003 is not expected to be material because much of the cost savings will be offset by a one-time charge for severance costs. However, on an ongoing basis, the organizational changes are expected to save the company approximately $2 million annually.
"I believe these organizational changes are prudent in the current environment, and they position us well for the future. Docucorp has been, and will continue to be, a company responsive to the needs of our clients, stockholders and employees," said Andereck.
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