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Docucorp Announces Q3 Results: Revenue Down, Record Revenues over 9 Month Period

Press release from the issuing company

DALLAS--May 25, 2005-- Docucorp International, a leading provider of enterprise information solutions, today announced revenues of $19.8 million for the third quarter of fiscal year 2005, a seven percent increase compared to $18.5 million for the third quarter of the prior year. The company reported net income of $468,000, or $0.04 per diluted share, for the quarter compared to net income of $707,000, or $0.06 per diluted share, for the same period a year ago. For the nine months ended April 30, 2005, the company reported record revenues of $59.7 million compared to $57.1 million for the same period of fiscal year 2004. Net income for the first nine months of fiscal year 2005 was $2.4 million, or $0.21 per diluted share, compared to $3.8 million, or $0.33 per diluted share, for the first nine months of fiscal year 2004. Compared to the third quarter of the prior fiscal year, software license revenue increased 52 percent to $2.8 million, and ASP hosting revenue increased 12 percent to $6.6 million. Professional services revenue decreased four percent to $5.2 million, and maintenance revenue decreased two percent to $5.2 million. Third quarter net income was less than the same period of the prior year primarily due to lower margin in the company's ASP business, increased product development costs, increased software amortization, expenses associated with Sarbanes-Oxley compliance, and costs associated with the relocation of the company's corporate headquarters. "We are pleased with the improvements in our software license sales and specifically the European software license sales," said Michael D. Andereck, president and chief executive officer, Docucorp International. "Our European operations realized record revenues for the quarter and have experienced their fourth consecutive quarter of sequential revenue growth." "Considering the acquisition of Newbridge Corporation late in the first quarter of the current fiscal year, I am disappointed in our ASP revenue growth, as well as the ASP margin," said Andereck. "However, I remain confident in our ability to grow our ASP revenue as evidenced by our recently announced signing of a multi-million dollar contract with Capgemini Energy Limited Partnership." "We remain committed to growing our revenues and enhancing our profitability for the benefit of our stockholders, employees and partners," said Andereck. "Our focus during the recent quarter was on generating sales and improving the sales organization. While we clearly made progress, we need to continue to concentrate on accelerating sales."