EX-99 3 exhibit99.txt EXHIBIT 99.1 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 - October 29, 2003 - 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 2003 third quarter. For the third quarter ended September 30, 2003, total revenues were $7.4 million, compared to $7.2 million in the 2002 third quarter. Scan-Optics reported net income for the quarter of $12,000, which resulted in breakeven per diluted share, compared to $.2 million, or $.03 per diluted share in the 2002 third quarter. For the nine months ended September 30, 2003, total revenues were $23.6 million, with net income of $.4 million, or $.05 per diluted share, compared to revenues of $22.8 million and net income of $.6 million, or $.08 per diluted share, in the first nine months of 2002. In discussing the results, James C. Mavel, Chairman, Chief Executive Officer and President of Scan-Optics, stated, "We continue to be pleased with the growth in revenue. Although certain general economic indicators seem to be improving, giving cause for cautious optimism, we will continue to focus on the expense side of our management activity as we progress into the fourth quarter. Despite a difficult economic environment affecting our business opportunities, we did generate new orders in the test and assessment market and our initiative in Business Process Outsourcing continues to generate significant pre-sales activity." -more- Scan-Optics, Inc. Third Quarter 2003 Results Page Two 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 Scan-Optics' Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
Scan-Optics, Inc. Third Quarter 2003 Results Page Three SCAN-OPTICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended September 30 September 30 (thousands, except share data) 2003 2002 2003 2002 ----------------------------------------------------------------------------------------------------------------------------- Revenues Hardware and software $ 3,451 $ 2,799 $ 11,752 $ 9,095 Professional services 1,241 1,628 3,864 4,962 Access services 2,673 2,741 7,966 8,777 -------------------------------- --------------------------------- Total revenues 7,365 7,168 23,582 22,834 Costs of Revenue Hardware and software 2,410 1,785 7,348 5,999 Professional services 645 754 2,097 2,182 Access services 2,172 2,105 6,683 6,671 -------------------------------- --------------------------------- Total costs of revenue 5,227 4,644 16,128 14,852 Gross Margin 2,138 2,524 7,454 7,982 Operating Expenses Sales and marketing 766 874 2,613 2,539 Research and development 208 323 987 1,389 General and administrative 900 879 2,729 2,754 Interest 185 203 667 642 ------------------------------------- -------------------------------------- Total operating expenses 2,059 2,279 6,996 7,324 ------------------------------------- -------------------------------------- Operating income 79 245 458 658 Other income (expense), net (56) (5) 5 7 ------------------------------------- -------------------------------------- Income before income taxes 23 240 463 665 Income tax expense 11 20 41 61 ------------------------------------- -------------------------------------- Net Income $ 12 $ 220 $ 422 $ 604 ===================================== ====================================== Basic earnings per share $ 0.00 $ 0.03 $ 0.06 $ 0.09 ===================================== ====================================== Basic weighted-average shares 7,026,232 7,026,232 7,026,232 7,026,232 Diluted earnings per share $ 0.00 $ 0.03 $ 0.03 $ 0.08 ===================================== ====================================== Diluted weighted-average shares 8,171,929 7,229,109 7,715,708 7,314,788