Thursday February 25, 7:51 am Eastern Time
Company Press Release
Scan-Optics, Inc. Announces Fourth
Quarter And Year End Results
MANCHESTER, Conn.--(BUSINESS WIRE)--February 25, 1999 - Scan-Optics, Inc. (Nasdaq National Market: SOCR - news), a leader in high performance document imaging systems, information management solutions and associated hardware and software services, today reported its thirteenth consecutive quarter of profitability.
For the 1998 fourth quarter ended December 31, total revenues were $19,553,000. In the 1997 comparable period, revenues were $15,289,000. Pre-tax income was $1,931,000 in the fourth quarter of 1998, compared to $2,149,000 for the same period of 1997. Net income for the quarter was $1,457,000 or $.21 per diluted share, compared to $2,395,000 or $.33 per diluted share for the same period of 1997.
Total revenues for the 1998 fiscal year ended December 31 were $53,971,000. In the 1997 comparable period, revenues were $56,608,000. Pre-tax income was $3,234,000 for the 1998 fiscal year, compared to $5,691,000 for the same period of 1997. Net income was $2,129,000 or $.30 per diluted share for fiscal 1998, compared to $5,790,000 or $.82 per diluted share, for fiscal 1997.
James C. Mavel, Chairman, Chief Executive Officer and President, said, ''We entered 1998 facing two significant challenges: to diversify our sources of revenue in order to offset the completion of an order to the Japanese Ministry of Health which contributed approximately $20 million in revenues in 1997, and to replace the anticipated slowdown in revenue from certain international markets due to economic conditions. The Company has historically generated over 50% of its revenue from international markets. In the North American market for our products and services, we achieved a 56% growth rate for 1998, approximately 5 times the estimated growth of the imaging market itself.
''We are very pleased to report that due to the Company's successful efforts in the face of these challenges, Scan-Optics achieved a number of financial milestones in the fourth quarter and laid a solid foundation for continued growth in 1999. In 1998 we produced a record level of new orders totaling $48 million, an increase of 44% compared to new orders in 1997. Revenues exceeded the prior year's fourth quarter by 28% despite the inclusion in the 1997 fourth quarter of $3.5 million in sales to the Japanese Ministry of Health. Earnings showed significant improvement in the fourth quarter with the highest net income and EPS performance by Scan-Optics in 1998. It should be noted that the Company utilized its remaining United States tax operating loss carryforwards in
1997, and in 1998 achieved an effective income tax rate of 34%.
Scan-Optics' strategy to diversify its revenue base from its historical hardware scanning core was reflected by the growth in its field services business, which produced 18% revenue growth in 1998 compared to 1997, primarily due to the acquisition of a third party maintenance business and the formation of Access Services mid-year.
The Company also added contract manufacturing to its operations in 1998, which produced revenues of $575,000. The strategy to become a ''total solutions company'' generated the most dramatic growth with a 115% increase in professional services and software revenue as compared to 1997, primarily in the Healthcare/Insurance and Government lines of business.
Mr. Mavel noted, ''The mid-year additions of Southern Computer Systems and Access Services were both accretive to our Company earnings and also increased the potential for continued expansion of our software and services business. The employees that joined the dedicated and productive Scan-Optics team add significant skills to our Company and will play a major role in supporting the needs of our customers as we continue to add value to ''solutions at work.''
''We are proud to have completed this year successfully as evidenced by the nearly completed closing of the revenue gap we faced and the Company's diversified backlog for 1999. We believe Scan-Optics has been repositioned as the value based solution provider that the market is demanding. Our plan is to continue to invest in new product development and to expand our solution content through both internal development and acquisition for the benefit of all our stakeholders.''
Scan-Optics, Inc., with headquarters in Manchester, Connecticut, is recognized internationally as
an innovator and solution provider in the information management and imaging business. It designs,
manufactures and services products and systems for character recognition, imaging processing and
display, data capture, data entry, and multi-user business computers. Scan-Optics' systems and
software are marketed worldwide to commercial and government customers directly and through
distributors. The Company has sales and service offices located throughout the United States and
abroad. Additional information is available at www.scanoptics.com.
Statements about the Company's future expectations, including future revenues and earnings, and
all other statements in this press release other than historical facts are ''forward-looking
statements'' within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934, and as that term is defined in the Private Securities Litigation
Reform Act of 1995. The Company intends that such forward-looking statements be subjected to
the safe harbors created thereby. Since these forward-looking statements involve risks and
uncertainties and are subject to change at any time, the Company's actual results could differ
materially from expected results.
SCAN-OPTICS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONSIONS
(thousands, except share data)
Three Months Ended Year Ended
December 31 December 31
1998 1997 1998 1997
Revenues
Net sales $ 12,127 $ 10,769 $ 32,413 $ 41,361
Service revenues 6,994 3,595 20,577 14,124
Other operating revenues 432 925 981 1,123
Total revenues 19,553 15,289 53,971 56,608
Costs and Expenses
Cost of sales 7,420 6,017 19,335 25,066
Service expenses 4,757 2,821 14,693 10,400
Sales and marketing
expenses 2,530 2,214 7,011 7,297
Research and development
expenses 1,801 1,212 5,560 4,552
General and administrative
expenses 945 909 3,903 3,737
Interest expense 201 - 397 14
Total costs and expenses 17,654 13,173 50,899 51,066
Operating income 1,899 2,116 3,072 5,542
Other income, net 32 33 162 149
Income before income taxes 1,931 2,149 3,234 5,691
Income taxes (benefit) 474 (246) 1,105 (99)
Net Income $ 1,457 $ 2,395 $ 2,129 $ 5,790
Basic earnings per share $ .21 $ .35 $ .31 $ .87
Basic weighted-average
shares 6,958,344 6,786,076 6,921,331 6,632,248
Diluted earnings per
share $ .21 $ .33 $ .30 $ .82
Diluted weighted-average
shares 7,032,457 7,241,450 7,102,658 7,070,013 |
