Exhibit 99.1
[scan-optics, inc. LOGO OMITTED]
For Immediate Release
Contact:Annmarie Gordon (860) 645-7878/email: agordon@scanoptics.com
Susan Lucek, (860) 645-7878/email: slucek@scanoptics.com
Scan-Optics Announces Third Quarter Results
Manchester, CT - November 10, 2004 - Scan-Optics, Inc. (OTC BB: SOCR),
a leader in information capture and customer service solutions for government,
insurance, order fulfillment, proxy, health claims, test scoring and other
paper-intensive businesses, today announced financial results for the third
quarter of 2004.
For the third quarter ended September 30, 2004, total revenues were
$6.2 million, compared to $7.4 million in the 2003 third quarter. The Company
reported a net loss for the quarter of $.7 million, or $.02 per diluted share,
compared to net income of $12,000, or breakeven per diluted share, for the third
quarter of 2003. The Company's quarterly operating results continue to be
significantly adversely affected compared to 2003 by certain non-recurring and
transitional events, including the settlement of outstanding litigation, the
phasing out of the sale of the Company's mature line of 9000 Series scanners,
the phased market introduction of varied models of the Company's new generation
of SO Series scanners, and the development of new channels of distribution for
the Company's hardware and software.
For the nine months ended September 30, 2004, total revenues were $20.4
million, with a net loss of $3.0 million, or $.21 per diluted share, compared to
revenues of $23.6 million and net income of $.4 million, or $.05 per diluted
share, in the first nine months of 2003.
In discussing the results, James C. Mavel, Chairman, Chief Executive
Officer and President of Scan-Optics, stated, "The third quarter and nine month
year-to-date revenue results showed growth in our services segments while the
new SO Series product begins to build traction. The market reaction to the SO
Series is extremely positive. Along with several new orders, we have been very
active in placing evaluation systems with many existing and new customers, and
the reception to this system has been exceptional. In addition to our prior
introduction of an image-only model of the SO Series, we recently shipped the
first in-line OCR model, which is an upgrade of the image-only systems."
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Third Quarter 2004 Results
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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, image processing and
display, data capture, data entry, and storage and retrieval. Scan-Optics
systems and software are marketed worldwide to commercial and government
customers directly and through distributors. Through its Manufacturing Services
Division, Scan-Optics also provides contract-manufacturing services to
customers, outsourcing the manufacturing of complex, electro-mechanical
assemblies. Scan-Optics has sales and service offices located throughout the
United States and abroad. Additional information concerning the Company is
available at www.scanoptics.com.
Statements about Scan-Optics' future expectations, including future
revenues and earnings, and all other statements in this press release other than
historical facts are "forward-looking statements" made under safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and involve a
number of risks and uncertainties that could materially affect future results.
Among these risk factors are changes in general economic and business conditions
in the United States and foreign markets, which impact capital investments by
customers, the cyclical nature of funding within federal and state government
agencies, adverse changes in the Company's banking, lending and financing
relationship, insufficient cash resources, increased competition from similar
products, the implementation of other technologies which may provide alternative
solutions, ability to complete projects in a timely manner, and other risk
factors and cautionary statements listed from time to time in the Company's
periodic reports filed with the Securities and Exchange Commission, including
but not limited to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2003.
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Third Quarter 2004 Results
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SCAN-OPTICS, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended
September 30 September 30
(thousands, except share data) 2004 2003 2004 2003
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Revenues
Hardware and software $ 1,935 $ 3,451 $ 7,911 $ 11,752
Professional services 1,440 1,241 4,447 3,864
Access services 2,812 2,673 8,040 7,966
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Total revenues 6,187 7,365 20,398 23,582
Costs of Revenue
Hardware and software 1,527 2,410 6,046 7,348
Professional services 626 645 2,264 2,097
Access services 2,174 2,172 7,011 6,683
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Total costs of revenue 4,327 5,227 15,321 16,128
Gross Margin 1,860 2,138 5,077 7,454
Operating Expenses
Sales and marketing 871 767 2,363 2,614
Research and development 381 207 1,561 986
General and administrative 1,060 900 3,558 2,729
Interest 187 185 545 667
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Total operating expenses 2,499 2,059 8,027 6,996
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Operating income (loss) (639) 79 (2,950) 458
Other income (loss), net (14) (56) 16 5
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Income (loss) before income taxes (653) 23 (2,934) 463
Income taxes 10 11 60 41
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Net Income (Loss) $ (663) $ 12 $ (2,994) $ 422
==================================== ======================================
Basic earnings (loss) per share $ (0.02) $ 0.00 $ (0.21) $ 0.06
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Basic weighted-average shares 27,606,601 7,026,232 13,961,741 7,026,232
Diluted earnings (loss) per share $ (0.02) $ 0.00 $ (0.21) $ 0.05
==================================== ======================================
Diluted weighted-average shares 27,606,601 8,171,929 13,961,741 7,715,708
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