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Optio Software Reports Fiscal 2007 Q3 Increase in RevenuesALPHARETTA, Ga. --(Business Wire)-- Optio(R) Software (OTCBB:OPTO), a leading provider of business process improvement solutions dedicated to helping customers manage and control the complete lifecycle of document-intensive processes, today reported an increase in revenues and subscription licensing contracts as part of its financial results for the fiscal 2007 third quarter and nine-month period ended October 31, 2006. Revenue Total revenue for the third quarter of 2007 increased seven percent to $7.6 million from $7.1 million in the prior fiscal year quarter. Software license revenues increased six percent to $2.2 million in the three months ended October 31, 2006 from $2.1 million in the three months ended October 31, 2005. Optio's subscription licensing contracts contributed $597,000 of revenue to the quarter ended October 31, 2006, up from $542,000 of revenue from the quarter ended October 31, 2005. "Optio's Q3 net increase is largely due to improved performance in field sales activities on a year over year basis including a major contract for our Healthcare forms automation solutions. An increase in subscription licenses also positively impacted our Q3 results," said C. Wayne Cape, Optio's President and Chief Executive Officer. "In response to current market trends and our customers' ongoing needs, we have recently announced our new ProCentra(TM) product line, focused on the control and strategic business process management of document-intensive processes, such as maintenance renewal and invoice dispute resolution," added Cape. "Optio's 'next generation' solution suite increases our breadth and depth of service in the enterprise document automation and electronic health record industries. Looking forward, we're encouraged by the market interest for both our current and future software solution suites." Key Metrics Services and maintenance revenues rose to $4.8 million in the three months ended October 31, 2006 from $4.5 million in the three months ended October 31, 2005. Additionally, Days' Sales Outstanding (DSO) increased from 40 days to 46 days in comparison to the previous quarter. Cost of Revenue For the third quarter, total cost of revenue increased slightly to $1.9 million from $1.8 million reported during the same quarter in the prior fiscal year. Operating Expenses Total operating expenses decreased to $4.6 million in the three months ended October 31, 2006 from $5.3 million in the three months ended October 31, 2005, primarily due to the inclusion of a $900,000 gain on the reversal of the valuation reserve of the M2 Systems promissory note in the three months ended October 31, 2006. On November 6, 2006, after the sale of the stock of M2 Systems, Optio received $2,758,000, representing full repayment of the M2 Systems note receivable, plus accrued interest. Such repayment represents an early retirement of the note, originally due December 1, 2007. This repayment indicated an increased value in the collateral of the note and as a result, the carrying value of the M2 Systems note was effectively written up to its full face value. The impairment charge previously recorded by Optio relating to the M2 Systems note was eliminated. Optio recognized income of $900,000 that was a reduction of the Company's third quarter operating expenses. Net Income Net income for the third quarter of fiscal 2007 was $1.1 million and diluted earnings per share (EPS) were $0.04, an increase from net income of $6,000 and diluted EPS of $0.00 in the prior-year's quarter. Nine Months Ended October 31, 2006 Total revenue for the nine months ended October 31, 2006 was $21.2 million, compared with $21.4 million in the nine months ended October 31, 2005. Software license revenues were $5.7 million in the nine months ended October 31, 2006, compared to $6.8 million in the nine months ended October 31, 2005. Optio's subscription licensing revenue increased to $1.7 million in the nine months ended October 31, 2006 from $1.6 million in the nine months ended October 31, 2005. Services and maintenance revenues increased to $13.8 million in the nine months ended October 31, 2006 from $13.0 million in the nine months ended October 31, 2005. Total cost of revenue increased slightly to $5.5 million in the nine months ended October 31, 2006 from $5.3 million in the nine months ended October 31, 2005. Operating expenses for the nine months ended October 31, 2006 were $15.3 million, including the $900,000 gain on the reversal of the valuation reserve of the M2 Systems note, down from $16.0 million in the nine months ended October 31, 2006. For the nine months ended October 31, 2006, net income was $585,000 or $0.02 diluted EPS, an increase from a net income of $160,000 and diluted EPS of $0.01 in the nine months ended October 31, 2005. Third Quarter Highlights and Business Metrics Several significant software license transactions were closed during the quarter, including a $600,000 forms library and documents-on-demand contract to Triad Hospitals, a business process improvement (BPI) solution to Stewart & Stevenson, and a document automation and output management solution to Motorola GmbH, which will be rolled out to its European facilities within the next several months. Optio closed the quarter with $8.0 million in cash and cash equivalents, consistent with the $8.0 million in cash as of Jan. 31, 2006. The company had no outstanding balance on its line of credit as of October 31, 2006. About Optio Software, Inc. Optio Software, with 25 years of experience and more than 5,000 clients, worldwide, provides software solutions dedicated to automating, managing and controlling the entire lifecycle of document-intensive processes, while extending the value of their Enterprise Resource Planning (ERP) and Hospital Information Systems (HIS) applications. More than 5,000 organizations rely on Optio Software for innovative business process improvement solutions that allow them to reduce transactional activities and focus on core responsibilities. Headquartered in Alpharetta, Ga., Optio Software maintains European, Middle Eastern and African headquarters in Paris, France and sales offices in the United States, Germany and the United Kingdom. For more information about Optio Software or to contact a local Optio sales consultant, reach us at 770.576.3500 or visit our website at www.optio.com. (C) Copyright 2006, Optio Software, Inc. All Rights Reserved. Optio is a registered trademark of Optio Software, Inc. Other companies and products mentioned in this document are the property of their respective owners. Forward-Looking Statements This press release includes statements and other matters that could be considered to be forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from expectations. Such forward-looking statements are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995 and are made based on management's current expectations or beliefs as well as assumptions made by, and information currently available to, management. Optio's actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, risks associated with Optio's reliance on strategic marketing and reseller relationships, the collectibility of Optio's accounts receivable, fluctuations in operating results because of acquisitions or dispositions, failure to integrate new products and newly acquired companies, diversion of management resources relating to acquisitions, reduction in cash reserves relating to acquisitions, challenges relating to acquisitions and the possibility that this may cause Optio to no longer be profitable, the negative effect on Optio's earnings relating to the amortization or potential write-down of acquired assets or goodwill, failure to retain the business relationships with existing customers of acquisitions, changes in competition, changes in economic conditions in the U.S. and in other countries in which Optio currently does business (both general and relative to the technology industry), delays or inability to develop new or unique software, market acceptance of new products, the failure of new products to operate as anticipated, expectation of achieving and sustaining operating profits and earnings, including the timing of such cash flow and company performance, disputes regarding Optio's intellectual property, risks relating to the delisting of our stock, possible adverse results of pending or future litigation, or risks associated with Optio's international operations. These and additional factors are set forth in "Item 1.A. Risk Factors" included in Optio's most recent Annual Report on Form 10-K. You should carefully review these risks and additional risks described in other documents Optio files from time to time with the Securities and Exchange Commission, including the Quarterly Report of Form 10-Q that Optio will file on or before December 15, 2006.
OPTIO SOFTWARE, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Nine Months Ended
October 31, October 31,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Revenue:
License fees $2,201 $2,078 $5,742 $6,833
Subscription fees 597 542 1,712 1,577
Services, maintenance,
and other 4,776 4,460 13,750 12,965
----------- ----------- ----------- -----------
7,574 7,080 21,204 21,375
Cost of revenue:
License fees 112 187 390 544
Services, maintenance,
and other 1,830 1,609 5,151 4,785
----------- ----------- ----------- -----------
1,942 1,796 5,541 5,329
----------- ----------- ----------- -----------
5,632 5,284 15,663 16,046
Operating expenses:
Sales and marketing 2,619 2,852 7,701 8,461
Research and
development 1,385 1,311 4,082 3,905
General and
administrative 1,272 957 3,794 3,001
Gain on reversal of
impairment of M2 Note (900) - (900) -
Depreciation and
amortization 266 202 650 633
----------- ----------- ----------- -----------
4,642 5,322 15,327 16,000
----------- ----------- ----------- -----------
Income (loss) from
operations 990 (38) 336 46
Other income (expense):
Interest income 119 69 327 185
Interest expense (2) (10) (4) (14)
Other - (1) (3) (15)
----------- ----------- ----------- -----------
117 58 320 156
----------- ----------- ----------- -----------
Income before income
taxes 1,107 20 656 202
Income tax expense 19 14 71 42
----------- ----------- ----------- -----------
Net income $1,088 $6 $585 $160
=========== =========== =========== ===========
Net income per share -
basic $0.05 $0.00 $0.03 $0.01
=========== =========== =========== ===========
Net income per share -
diluted $0.04 $0.00 $0.02 $0.01
=========== =========== =========== ===========
Weighted average shares
outstanding - basic 22,301,466 21,093,459 22,149,422 20,918,084
=========== =========== =========== ===========
Weighted average shares
outstanding - diluted 24,662,565 23,809,293 24,731,182 24,033,407
=========== =========== =========== ===========
OPTIO SOFTWARE, INC.
Condensed Consolidated Balance Sheets
(in thousands)
October 31, January 31,
2006 2006
----------- -----------
ASSETS
Current Assets:
Cash, cash equivalents and marketable
securities $8,011 $7,954
Accounts receivable, net 4,103 4,811
Notes receivable from M2 2,723 323
Other current assets 786 725
----------- -----------
Total current assets 15,623 13,813
Property and equipment, net 2,776 613
Notes receivable - 1,720
Goodwill and other intangible assets, net 3,633 3,461
Other assets 95 91
----------- -----------
Total Assets $22,127 $19,698
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,283 $922
Other accrued liabilities 1,279 2,218
Deferred revenue 6,929 7,373
Current portion of accrued lease
incentive liability 122 -
Current portion of debt and capital
lease obligations 69 1
----------- -----------
Total current liabilities 9,682 10,514
Long-term portion of debt and capital lease
obligations 340 -
Long-term accrued expenses 394 63
Long-term portion of accrued lease
incentive liability 836 -
Shareholders' equity 10,875 9,121
----------- -----------
Total liabilities and shareholders' equity $22,127 $19,698
=========== ===========
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