Daegis Inc. Reports Fiscal 2014 Fourth Quarter and Full Year Results

  Daegis Inc. Reports Fiscal 2014 Fourth Quarter and Full Year Results    *Fourth Quarter GAAP Net Income of $163,000   *Cash at $7.2 million at April 30, 2014  Business Wire  IRVING, Texas -- June 17, 2014  Daegis Inc. (NASDAQ: DAEG), a global archiving, eDiscovery and software development and migration tools company, today announced financial results for its fiscal 2014 fourth quarter and full year ended April 30, 2014.  Fourth Quarter Fiscal 2014 Financial Highlights    *Fourth quarter total revenue of $7.4 million, compared to $9.8 million     year over year.   *Fourth quarter GAAP net income of $163,000 or $0.01 per share, compared to     GAAP net income of $188,000 or $0.01 per share for the same period last     year.   *Fourth quarter Adjusted EBITDA of $1.6 million, compared to $1.5 million     last year and up sequentially from $1.0 million in the third quarter. ^     (1)   *Non-GAAP net income of $1.1 million or $0.07 per share, compared to     $610,000 or $0.03 per share last year. ^ (1)   *Cash at April 30, 2014 was $7.2 million, compared to $5.5 million at April     30, 2013.   *Total debt outstanding at April 30, 2014 was $15.0 million, a decrease of     $2.7 million from April 30, 2013.  Full Year Fiscal 2014 Financial Highlights    *Total revenue of $31.0 million, compared to $40.2 million last year.   *GAAP net loss of $1.6 million or $0.10 per share, compared to GAAP net     income of $532,000 or $0.01 per share in the prior year.   *Adjusted EBITDA of $4.3 million, compared to $6.5 million last year. ^ (1)   *Non-GAAP net income of $1.7 million or $0.10 per share, compared to     Non-GAAP net income of $3.2 million or $0.19 per share last year. ^ (1)  Commenting on the results, Daegis Inc. Chief Executive Officer Tim Bacci said, “Daegis accomplished several key objectives in fiscal 2014 to advance its long-term strategy. We successfully aligned archive and eDiscovery into a cohesive, complete solution for information governance and eDiscovery, and launched our new mobile enterprise development solution, TD Mobile. We made decisions to increase the operational efficiency of our business which significantly improved the health of our financials in the fourth quarter. We are excited about our product offerings and opportunities and remain confident that we’ll demonstrate growth in the second half of calendar 2014.”  Fourth Quarter and Full Year 2014 Comparative Financial Summary  $ In Millions,         Q4           Q4           % or $           FY            FY          % or $ except per     FY2014    FY2013    Change^(2)    2014       2013     Change^(2) share and % data Total          $7.4      $9.8      ($2.4)        $31.0      $40.2    ($9.2) Revenue Total Archive and    $4.4      $6.6      ($2.2)        $19.3      $26.1    ($6.8) Discovery Revenue Total Database and            $3.0      $3.2      ($0.2)        $11.6      $14.1    ($2.4) Migration Revenue GAAP Net Income         $0.2      $0.2      $0.0          ($1.6)     $0.5     ($2.1) (Loss) GAAP Net Income (Loss) Per     $0.01     $0.01     $0.00         ($0.10)    $0.01    ($0.11) Share – Diluted Adjusted       $1.6      $1.5      $0.1          $4.3       $6.5     ($2.2) EBITDA^(1) Adjusted EBITDA         22%       16%       6%            14%        16%      (2%) Margin^(1) Non-GAAP Net Income     $1.1      $0.6      $0.5          $1.7       $3.2     ($1.6) (Loss) ^ (1) Non-GAAP Net Income (Loss) Per     $0.07     $0.03     $0.04         $0.10      $0.19    ($0.09) Share - Diluted^(1)  ^(1) See reconciliation table below regarding the presentation of Adjusted EBITDA and Non-GAAP net income. ^(2) The calculation of percentage or dollar change is based on unrounded numbers.  Investor Conference Call  Management will host a conference call June 17, 2014, at 4:00 p.m. CT (5:00 p.m. ET) to review the financial results. The call can be accessed by dialing (888) 505-4375 or (719) 325-2281 for international callers. Additionally, the conference call will be webcast on the Daegis website at www.daegis.com. A replay of the call will be available through June 27, 2014 by dialing (888) 203-1112 or (719) 457-0820 for international callers and using the following passcode: 8990389#.  About Daegis Inc.  Daegis Inc. (NASDAQ: DAEG) is a global archiving, eDiscovery and software development tools company. Daegis delivers leading-edge archive and eDiscovery software throughDaegis Edge, an end-to-end platform for managing the eDiscovery life cycle,Daegis Acumen technology assisted review and Daegis AXS-One enterprise information archiving. Daegis also offers specialized services including data collection, analytics consulting, project management and managed document review. TheGupta TechnologiesandComposer Technologiesbusinesses serve customers around the globe with development tools for mobile and web application development, databases and application migration software. Visit our websites to learn more.  Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that these statements involve risks and uncertainties and actual events or results may differ materially. When the words “believes,” “expects,” “plans,” “projects,” “estimates” and similar expressions are used, they identify forward-looking statements. These forward-looking statements are based on management’s current beliefs and assumptions and information currently available to management and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Examples of forward-looking statements in the press release include the statements made by Mr. Bacci. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are general market and economic conditions, our ability to execute our business strategy and integrate acquired businesses, the effectiveness of our sales team and approach, our ability to target, analyze and forecast the revenue to be derived from a client and the costs associated with providing services to that client, the date during the course of a fiscal year that a new client is acquired, the length of the integration cycle for new clients and the timing of revenues and costs associated therewith, our client concentration given that the Company is currently dependent on a few large client relationships, potential competition in the marketplace, the ability to retain and attract employees, market acceptance of our service programs and pricing options, our ability to maintain our existing technology platform and to deploy new technology, our ability to sign new clients and control expenses, the possibility of the discontinuation of some client relationships, the financial condition of our clients' business and other factors detailed in the Company's filings with the Securities and Exchange Commission.   DAEGIS INC. UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands)                                                                                                               April 30,         April 30,                                                   2014            2013     ASSETS Current assets: Cash                                             $ 7,178           $ 5,459 Accounts receivable, net                           6,657             10,594 Prepaid expenses                                   617               754 Other current assets                               358               449 Assets held for sale                              —               926      Total current assets                               14,810            18,182                                                                     Property and equipment, net                        1,053             1,934 Goodwill                                           11,706            11,706 Intangibles, net                                   5,614             7,152 Other assets                                      470             733      Total assets                                     $ 33,653         $ 39,707                                                                       LIABILITIES AND STOCKHOLDERS' EQUITY                                                                     Current liabilities: Accounts payable                                 $ 308             $ 243 Current portion of long-term debt                  3,123             2,519 Accrued compensation and related expenses          1,185             2,697 Other accrued liabilities                          971               863 Deferred revenue                                   8,590             8,449 Liabilities held for sale                         —               526      Total current liabilities                          14,177            15,297                                                                     Long-term debt, net of current portion             11,848            15,170 Deferred tax liabilities, net                      1,032             923 Common stock warrant liability                     276               204 Other long-term liabilities                       1,095           1,429    Total liabilities                                 28,428          33,023                                                                       Commitments and contingencies                                                                     Stockholders’ equity: Preferred stock                                    —                 2 Common stock                                       17                15 Additional paid-in capital                         100,152           100,053 Accumulated other comprehensive income             280               280 Accumulated deficit                               (95,224 )        (93,666 ) Total stockholders’ equity                        5,225           6,684    Total liabilities and stockholders’ equity       $ 33,653         $ 39,707                                                                                                                                          DAEGIS INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)                                                                                                 Three Months Ended                Twelve Months Ended                        April 30,                         April 30,                         2014         2013             2014         2013                                                                             Revenues: Archive and            $ 4,384        $ 6,598            $ 19,320       $ 26,126 eDiscovery Database and            2,986        3,172            11,638       14,067  migration Total revenues          7,370        9,770            30,958       40,193                                                                           Operating expenses: Direct costs of Archive and              1,618          2,188              7,929          10,091 eDiscovery revenue Direct costs of database and             524            775                1,881          3,027 migration revenue Product                  1,215          2,067              5,898          7,478 development Selling, general and                      3,507          3,978              15,080         18,282 administrative Sale of intangible trade        —            —                —            (1,000 ) name Total operating         6,864        9,008            30,788       37,878  expenses Income from             506          762              170          2,315   operations                                                                          Other income (expense): Gain (loss) from change in fair value of common          (21    )       62                 (72    )       365 stock warrant liability Interest expense         (293   )       (383   )           (1,332 )       (1,632 ) Other, net              60           (145   )          9            (234   ) Total other             (254   )      (466   )          (1,395 )      (1,501 ) income (expense)                                                                          Income (loss) before income            252            296                (1,225 )       814 taxes Provision for           89           108              333          282     income taxes Net income             $ 163         $ 188             $ (1,558 )     $ 532     (loss)                                                                          Income (loss) per share: Basic                  $ 0.01         $ 0.01             $ (0.10  )     $ 0.01 Diluted                $ 0.01         $ 0.01             $ (0.10  )     $ 0.01                                                                          Weighted-average shares used in computing income (loss) per share: Basic                    16,384         14,718             16,110         14,718 Diluted                  16,386         14,736             16,110         14,728                                                                                                                                DAEGIS INC. RECONCILIATION OF GAAP OPERATING INCOME TO ADJUSTED EBITDA (In thousands, except per share data)                                                                                           Three Months Ended              Twelve Months Ended                      April 30,                       April 30,                       2014        2013             2014         2013                                                                                                                                              GAAP income (loss) from          $ 506        $ 762              $ 170          $ 2,315 operations                                                                      Amortization of intangible          384          384                1,538          1,538 assets Stock based compensation           34           100                165            593 expenses Depreciation           207          281                947            1,123 Charges related to alignment of          485         -                1,451        935     business units^(1) Total adjustments to GAAP income           1,110       765              4,101        4,189   from operations                                                                      Adjusted             $ 1,616      $ 1,527           $ 4,271       $ 6,504   EBITDA                                                                                                                                                                                                                                                                                                                                                          RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (In thousands, except per share data)                                                                      GAAP net             $ 163        $ 188              $ (1,558 )     $ 532 income (loss)                                                                      Amortization of intangible          384          384                1,538          1,538 assets Stock based compensation           34           100                165            593 expenses (Gain) loss from change in fair value of          21           (62    )           72             (365   ) common stock warrant liability Charges related to alignment of          485         -                1,451        935     business units^(1) Total adjustments to        924         422              3,226        2,701   GAAP net income (loss)                                                                      Non-GAAP net         $ 1,087      $ 610             $ 1,668       $ 3,233   income                                                                      Non-GAAP diluted income       $ 0.07       $ 0.03            $ 0.10        $ 0.19    per share                                                                      Weighted average shares used in computing income per share: Dilutive               16,386       14,736             16,110         14,728                                                                      (1) Prior year alignment costs have been reported to conform with the current year presentation.                      Use of Non-GAAP Financial Information  Daegis utilizes financial measures not calculated in accordance with generally accepted accounting principles in the United States ("GAAP") to supplement the Company's unaudited condensed consolidated financial statements and provide investors with an alternative method for assessing our operating results. We also believe these Non-GAAP measures provide investors with a more informed baseline for modeling the Company's future financial performance. Management uses the Non-GAAP financial measures to make operational decisions, to evaluate the Company's performance and to forecast. We believe that our investors should have access to, and that we are obligated to provide, the same set of tools that we use in analyzing our results. The presentation of these Non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from Non-GAAP financial measures used by other companies. In addition, these Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP.  Our Non-GAAP measures adjust GAAP income (loss) from operations and GAAP net income (loss) for non-cash stock based compensation expenses, amortization of intangible assets, depreciation and non-recurring charges. For more information on these Non-GAAP financial measures including how they are calculated, please see the tables in this release captioned “Reconciliation of GAAP to Non-GAAP Net Income” and “Reconciliation of GAAP Operating Income to Adjusted EBITDA” which includes a reconciliation of the GAAP results to Non-GAAP and Adjusted EBITDA results.  Contact:  Daegis Deb Thornton, 916-218-4779 dthornton@daegis.com  
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