Docucorp International (DOCC) 8-K Docucorp Announces Third Quarter Results

Exhibit 99.1

News Release

Contact:
	J. Robert Gary
	Chief Financial Officer
	214-891-6587
	bgary@docucorp.com
For Release:
	FOR IMMEDIATE RELEASE

Docucorp Announces Third Quarter Results

DALLAS — May 24, 2006 —Docucorp^® International (Nasdaq: DOCC), a leading provider of Customer Communication Management (CCM) solutions, today announced revenues increased 13 percent to a record $22.4 million for the third quarter of fiscal year 2006, as compared to $19.8 million for the third quarter of the prior year. Net income for the quarter was $1.1 million, or $0.09 per diluted share, compared to net income of $468,000, or $0.04 per diluted share, for the same period a year ago.

     For the nine months ended April 30, 2006, the company reported record revenues of $65.7 million, a 10 percent increase compared to $59.7 million for the same period a year ago. Net income for the first nine months of fiscal year 2006 was $2.8 million, or $0.24 per diluted share, compared to $2.4 million, or $0.21 per diluted share, for the first nine months of fiscal year 2005.

     Compared to the third quarter of the prior fiscal year, ASP hosting revenue increased 28 percent to $8.4 million, professional services revenue increased 13 percent to $5.9 million, and maintenance revenue increased three percent to $5.4 million. Software license revenue remained virtually unchanged at $2.8 million.

     “During the third quarter, we continued to see solid improvement in our ASP hosting and professional services revenues, as well as record revenues from our EMEA operations,” said Michael D. Andereck, president and chief executive officer, Docucorp International. “We are

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DOCUCORP, THIRD QUARTER 2006 RESULTS ADD #1

very pleased with double-digit revenue growth, record revenues, and the substantial increase in net income for the quarter.”

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 an international presence in the Benelux, Switzerland, Central and Eastern Europe, Middle East and Africa regions.

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 follow.

One Lincoln Centre

5400 LBJ Freeway

Suite 300

Dallas, Texas 75240

214-891-6500

fax: 214-987-8187

http://www.docucorp.com

^© 2006 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						Nine Months
	Ended April 30,						Ended April 30,
	2006			2005			2006			2005
Revenues
ASP hosting	$	8,388		$	6,559		$	25,343		$	20,150
Professional services		5,902			5,246			16,735			16,227
License		2,761			2,756			7,287			7,427
Maintenance		5,385			5,218			16,312			15,935
Total revenues		22,436			19,779			65,677			59,739
Cost of revenues
ASP hosting		7,485			6,092			22,591			17,858
Professional services		4,726			4,169			13,114			12,502
License		1,184			1,044			3,511			3,002
Maintenance		329			393			1,029			1,120
Total cost of revenues		13,724			11,698			40,245			34,482
Gross profit		8,712			8,081			25,432			25,257
Operating expenses
Product development		2,284			2,180			6,784			6,404
Sales and marketing		2,700			3,040			7,986			8,817
General and administrative		2,108			2,064			6,273			6,065
Total operating expenses		7,092			7,284			21,043			21,286
Income from operations		1,620			797			4,389			3,971
Interest expense		(84	)		(118	)		(295	)		(442	)
Other income, net		188			82			365			326
Income before income taxes		1,724			761			4,459			3,855
Provision for income taxes		638			293			1,650			1,484
Net income	$	1,086		$	468		$	2,809		$	2,371
Basic net income per share	$	0.10		$	0.04		$	0.26		$	0.22
Weighted average basic shares outstanding		10,856			10,741			10,910			10,609
Diluted net income per share	$	0.09		$	0.04		$	0.24		$	0.21
Weighted average diluted shares outstanding		11,501			11,621			11,504			11,561

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

	April 30,			July 31,
	2006			2005
Assets
Current assets:
Cash and cash equivalents	$	9,915		$	8,381
Accounts receivable, net of allowance of $428 and $293, respectively		17,386			17,132
Current portion of deferred taxes		170			170
Income tax receivable		248			248
Other current assets		2,898			2,559
Total current assets		30,617			28,490
Property and equipment, net of accumulated depreciation of $23,142 and $20,122, respectively		9,208			10,261
Software development costs, net of accumulated amortization of $29,051 and $25,909 respectively		14,225			13,687
Goodwill		9,842			9,842
Identifiable intangibles, net of accumulated amortization of $248 and $113, respectively		772			907
Other assets		446			448
Total assets	$	65,110		$	63,635
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,152		$	2,423
Accrued liabilities:
Accrued compensation		3,671			3,067
Other		1,354			1,491
Income taxes payable		65			403
Current portion of lease obligations		1,542			1,459
Current portion of long-term debt		3,619			3,617
Deferred revenue		12,193			11,479
Total current liabilities		25,596			23,939
Deferred taxes		5,459			5,178
Long-term lease obligations		1,227			2,303
Long-term debt		747			3,462
Other long-term liabilities		1,467			1,224
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		46,006			48,035
Treasury stock at cost, 5,290,557 and 5,458,912 shares, respectively		(29,574	)		(30,347	)
Retained earnings		14,536			12,268
Unearned compensation		—			(2,100	)
Foreign currency translation adjustment		(520	)		(493	)
Total stockholders’ equity		30,614			27,529
Total liabilities and stockholders’ equity	$	65,110		$	63,635