Docucorp International (DOCC) 8-K Docucorp Announces Fourth Quarter and Year-end Financial Results

Exhibit 99.1

News Release

Contact:
	Ed Holcomb
	Corporate Controller
	214-891-6546
	eholcomb@docucorp.com
For Release:
	FOR IMMEDIATE RELEASE

Docucorp Announces Fourth Quarter and Year-end Financial Results

DALLAS — September 15, 2005 —Docucorp^® International (Nasdaq: DOCC), a leading provider of Customer Communication Management (CCM) solutions, today announced record revenues of $79.2 million for fiscal year 2005, compared to revenues of $75.7 million for fiscal year 2004. The company reported net income of $2.5 million, or $0.22 per diluted share, for fiscal year 2005 compared to net income of $5.4 million, or $0.47 per diluted share, for the same period a year ago.

     For the year, Docucorp’s ASP hosting revenue increased 16 percent to $27.0 million, and professional services revenue increased two percent to $21.0 million. Maintenance revenue was $21.1 million, compared to $21.2 million for fiscal 2004, and license revenue decreased four percent to $10.1 million.

     For the quarter ended July 31, 2005, the company reported revenues of $19.4 million, compared to $18.6 million for the same period a year ago. Net income for the fourth quarter was $135,000, or $0.01 per diluted share, compared to net income of $1.6 million, or $0.14 per diluted share, for the fourth quarter of fiscal year 2004.

     Fourth quarter net income was less than the same period of the prior year due primarily to lower margin in the company’s ASP business, increased software amortization, expenses associated with Sarbanes-Oxley compliance, and foreign currency exchange losses.

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DOCUCORP, FOURTH QUARTER 2005 RESULTS ADD #1

Additionally, stock-based compensation charges related to accelerated vesting of stock options and other one-time charges were incurred in the quarter.

     “I am pleased that we achieved record revenues for fiscal 2005; however, I am disappointed in the decrease in profitability,” said Michael D. Andereck, president and chief executive officer, Docucorp International. “We have taken a number of steps to improve profitability, and in fiscal 2006, we believe our net income will be positively impacted by: increased visibility and backlog of professional services projects; additional maintenance revenue; improving ASP margins; the absence of a number of one-time charges incurred during fiscal 2005; the elimination of costs associated with non-performing sales representatives; and the avoidance of future expense associated with previously granted stock options.”

     “We experienced a number of positive trends in the fourth quarter of fiscal 2005, including continued momentum in Europe, increased traction in financial services, and selling our largest Policy Xpress™ software license,” said Andereck. “We will continue to build on these successes, as well as focus our efforts on strengthening the sales and marketing organization, increasing profitability and accelerating growth.”

About Docucorp
Docucorp markets Customer Communication Management (CCM) solutions via a portfolio of information software, business process outsourcing and professional services, which enables companies to create, publish, manage and archive complex, high-volume, personalized information in-house or fully outsource to Docucorp. The company has an installed base of more than 1,300 customers, including some of the largest insurance, utility, financial services and health care organizations. Headquartered in Dallas, Docucorp has facilities in Atlanta, Silver Spring, Md., Bedford, N.H., and London, as well as international offices in the Benelux, DACH, Central and Eastern Europe, Middle East and Africa regions.

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DOCUCORP, FOURTH QUARTER 2005 RESULTS ADD #2

Certain information contained in this news release may include “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than historical facts, included herein are forward-looking statements. These statements involve risks and uncertainties, such as competition, technological developments, loss of significant customers and the other factors discussed in the Company’s periodic reports filed with the Securities and Exchange Commission, that could cause the Company’s actual results to differ materially from those expressed or implied by these forward-looking statements.
Docucorp is a registered trademark of Docucorp International.

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Consolidated Statements of Operations and Balance Sheet data follow.

	One Lincoln Centre
	5400 LBJ Freeway
	Suite 300
	Dallas, Texas 75240
	214-891-6500
	fax: 214-987-8187
	http://www.docucorp.com
©	2005 Docucorp International. All Rights Reserved.
	Company, organization and product names mentioned herein are trademarks or registered trademarks of their respective owners. Docucorp and its symbol are trademarks of Docucorp International.

DOCUCORP INTERNATIONAL, INC.
Consolidated Statements of Operations
(in thousands except per share amounts)
(unaudited)

	Three Months
	Ended July 31,						Year Ended July 31,
	2005			2004			2005			2004
Revenues
ASP hosting	$	6,851		$	5,554		$	27,002		$	23,332
Professional services		4,739			5,042			20,966			20,637
License		2,636			2,873			10,063			10,480
Maintenance		5,211			5,147			21,146			21,221
Total revenues		19,437			18,616			79,177			75,670
Cost of revenues
ASP hosting		6,337			4,431			24,195			19,023
Professional services		4,061			4,061			16,563			16,985
License		1,197			936			4,199			3,232
Maintenance		404			316			1,524			1,340
Total cost of revenues		11,999			9,744			46,481			40,580
Gross profit		7,438			8,872			32,696			35,090
Operating expenses
Product development		2,151			1,929			8,555			7,974
Sales and marketing		2,964			2,828			11,781			11,167
General and administrative		1,895			1,324			7,961			6,523
Total operating expenses		7,010			6,081			28,297			25,664
Income from operations		428			2,791			4,399			9,426
Interest expense		(128	)		(140	)		(570	)		(620	)
Other income (expense), net		(153	)		105			173			385
Income before income taxes		147			2,756			4,002			9,191
Provision for income taxes		12			1,153			1,496			3,825
Net income	$	135		$	1,603		$	2,506		$	5,366
Basic net income per share	$	0.01		$	0.15		$	0.24		$	0.53
Weighted average basic shares outstanding		10,794			10,468			10,651			10,154
Diluted net income per share	$	0.01		$	0.14		$	0.22		$	0.47
Weighted average diluted shares outstanding		11,440			11,455			11,526			11,360

DOCUCORP INTERNATIONAL, INC.
Consolidated Balance Sheets
(in thousands except share and per share amounts)
(unaudited)

	July 31,			July 31,
	2005			2004
Assets
Current assets:
Cash and cash equivalents	$	8,381		$	12,336
Accounts receivable, net of allowance of $293 and $375, respectively		17,132			16,752
Current portion of deferred taxes		170			112
Income tax receivable		248			817
Other current assets		2,559			2,461
Total current assets		28,490			32,478
Property and equipment, net of accumulated depreciation of $20,122 and $16,664, respectively		10,261			8,073
Software development costs, net of accumulated amortization of $25,909 and $22,096, respectively		13,687			12,269
Goodwill, net of accumulated amortization of $4,940		9,842			5,846
Identifiable intangibles, net of accumulated amortization of $113 and $0, respectively		907			—
Other assets		448			573
Total assets	$	63,635		$	59,239
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,423		$	1,473
Accrued liabilities:
Accrued compensation		3,067			2,104
Other		1,491			1,783
Income taxes payable		403			158
Current portion of lease obligations		1,459			626
Current portion of long-term debt		3,617			3,550
Deferred revenue		11,479			12,038
Total current liabilities		23,939			21,732
Deferred taxes		5,178			4,835
Long-term lease obligations		2,303			1,716
Long-term debt		3,462			6,804
Other long-term liabilities		1,224			1,353
Commitment and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized; none issued		—			—
Common stock, $0.01 par value, 50,000,000 shares authorized; 16,593,849 shares issued		166			166
Additional paid-in-capital		48,035			47,350
Treasury stock at cost, 5,458,912 and 6,050,429 shares, respectively		(30,347	)		(33,635	)
Retained earnings		12,268			9,821
Unearned compensation		(2,100	)		(402	)
Foreign currency translation adjustment		(493	)		(501	)
Total stockholders’ equity		27,529			22,799
Total liabilities and stockholders’ equity	$	63,635		$	59,239