Optio Software Reports Third Quarter Financial Results

Optio Maintains Year-to-Date Profitability


ATLANTA, Dec. 5, 2003 (PRIMEZONE) -- Optio Software, Inc. (OTCBB:OPTO), a leading provider of infrastructure software that enhances the form, content, distribution and availability of business critical documents and information, today announced financial results for its third quarter ended October 31, 2003.

Third Quarter Results

For the three months ended October 31, 2003, Optio incurred a net loss of $357,000, including a $900,000 impairment charge for a note receivable, representing a loss of $0.02 per basic and diluted share. This compares to a loss of $426,000 or a loss of $0.02 per basic and diluted share for the same period last year.

Total revenues for the third quarter of 2004 were $6.4 million, compared to $6.7 million reported in the second quarter of 2004 and $7.1 million reported in the third quarter last year. License revenues in the third quarter of 2004 were $2.1 million compared to $2.5 million for the second quarter of 2004 and $2.6 million for the prior year's third quarter. Services and maintenance revenues in the third quarter of 2004 were $4.3 million compared to $4.2 million in the second quarter of 2004 and $4.5 million in the third quarter last year.

Operating expenses were $5.2 million, including a $900,000 impairment charge for a note receivable. This compares to operating expenses of $4.7 million for the second quarter of 2004 and $5.7 million in the third quarter of 2003.

Optio currently holds a note receivable from M2 Systems Corporation ("M2") with a principal and interest balance of $3.6 million. Under the terms of the note, M2 was required to make a payment of $100,000 on December 1, 2003. M2 has failed to make such payment and, as such, Optio believes that an impairment charge to write-down the note receivable to the fair value of the collateral supporting the note is necessary.

Optio's cash increased to $4.4 million as of October 31, 2003 from $4.0 million as of July 31, 2003. The company had no outstanding balance on its line of credit at October 31, 2003.

The company's days' sales outstanding (DSOs) improved to 53 days in the current quarter compared with 54 days in the prior quarter.

Nine Months Year-to-Date Results

Total revenue for the nine months ended October 31, 2003 was $19.6 million, compared with $21.3 million for the same period last year. Software license revenue for the nine months ended October 31, 2003 was $6.6 million, compared to $8.0 million for the same period in the prior year, while services and maintenance revenue was $13.0 million in the first nine months of fiscal year 2004, as compared to $13.3 in the first nine months of fiscal year 2003.

For the nine months ended October 31, 2003, total operating expenses declined from $19.2 million in the nine months ended October 31, 2002 to $14.5 million in the nine months ended October 31, 2003, including the $900,000 impairment charge for the M2 note receivable.

Net income for the first nine months of fiscal year 2004 was $484,000 or $0.03 per basic share and $0.02 per diluted share, a significant improvement from a $4.0 million net loss, including a $43,000 loss from discontinued operations, for the nine months ended October 31, 2002.

Highlights

Customer transactions and recent highlights:


  -- Announced the release of Optio Print Manager(tm). In the first
     seven weeks of its release, five major corporations selected
     this solution to strengthen their document printing
     infrastructure and reduce costs. Optio Print Manager extends the
     reach of Optio's solutions by providing assured delivery of
     printed documents and reports across enterprise network
     environments that span departments, locations, factories,
     divisions and multinational boundaries. It also enables
     organizations to easily manage enterprise print resources and
     load balance print jobs from a centralized management console.

  -- Announced the formation of the Optio Software Customer Advisory
     Board. The focus of the customer advisory board is to gather
     input and suggestions regarding ways that Optio might enhance
     the overall customer experience, share its strategic vision in
     an open discussion format with key customers, understand
     business, economic and technology trends that influence customer
     requirements, and learn about innovative solutions created
     through the use of Optio solutions.

  -- Announced the achievement of certification for Oracle(r)
     Warehouse Management (Oracle WMS) and Oracle Mobile Supply Chain
     Application (Oracle MSCA) applications. The certification
     process for Optio's e.ComIntegrate(tm) offering includes the
     successful demonstration of facilities such as: visual design
     and mapping of Oracle data into Oracle WMS and Oracle MSCA
     labels, data passing using XML, inclusion of multiple format
     barcodes, support for a variety of printer types (direct thermal
     / thermal transfer), enhancing data with identifiers and other
     key capabilities.

  -- Significant new customers include Hamilton Sunstrand, ReView
     Video LLC, Midmark Corporation and Johns Hopkins University
     Applied Physics Laboratory.

"We are pleased with the company's ability to continue year to date profitability, improve our cash position and reduce days sales outstanding," said C. Wayne Cape, Optio's Chairman, President and CEO. "With the introduction of new products that complement our core offerings, valuable input from our Customer Advisory Board and expansion of our strategic relationships, we look forward to the opportunities they will provide us in the future."

About Optio Software, Inc.

Optio Software, Inc. provides infrastructure software that improves the quality of an organization's communications with customers, suppliers, partners and employees by capturing information from critical data sources and applications, customizing that information for the specific needs of those varied audiences, and delivering and exchanging that information over a global network of digital destinations and formats. Optio's customers span the manufacturing, distribution, healthcare, financial service and public sector. Founded in 1981, Optio Software is headquartered in Atlanta, Georgia, with satellite offices in France, Germany and the United Kingdom. For more information, please visit: www.optiosoftware.com .

Forward-Looking Statements

This press release includes statements and other matters that could be considered to be forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from expectations. Such forward-looking statements are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995 and are made based on management's current expectations or beliefs as well as assumptions made by, and information currently available to, management. Factors that might cause or contribute to such differences include, but are not limited to, risks associated with Optio's reliance on strategic marketing and reseller relationships, the collectibility of Optio's accounts receivable and note receivable (specifically, the M2 note receivable), fluctuations in operating results because of acquisitions or dispositions, changes in competition, changes in economic conditions in the U.S. and in other countries in which Optio currently does business (both general and relative to the technology industry), delays or inability in developing new or unique software, market acceptance of new products, the failure of new products to operate as anticipated, expectation of achieving and sustaining operating profits and earnings, including the timing of such cash flow and company performance, disputes regarding Optio's intellectual property, risks relating to the delisting of our stock, possible adverse results of pending or future litigation, or risks associated with Optio's international operations. In addition, other written or oral statements that constitute forward-looking statements may be made by or on behalf of Optio. These and additional factors are set forth in "Safe Harbor Compliance Statement for Forward-Looking Statements" included as Exhibit 99.1 to Optio's most recent Quarterly Report on Form 10-Q. You should carefully review these risks and additional risks described in other documents Optio files from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q that Optio has filed.


                          OPTIO SOFTWARE, INC.
                  Consolidated Statements of Operations
                  (in thousands, except per share data)

 
                     Three Months Ended          Nine Months Ended
                        October 31,                 October 31,
                -------------------------   -------------------------
                   2003           2002         2003           2002
                -----------   -----------   -----------   -----------
 Revenue:
  License
   fees         $     2,052   $     2,577   $     6,635   $     7,983
  Services,
   maintenance,
   and
   other              4,326         4,517        12,967        13,292
                -----------   -----------   -----------   -----------
                      6,378         7,094        19,602        21,275

 Cost of revenue:
  License
   fees                  59           104           285           362
  Services,
   maintenance,
   and other          1,521         1,746         4,592         6,261
                -----------   -----------   -----------   -----------
                      1,580         1,850         4,877         6,623
                -----------   -----------   -----------   -----------
                      4,798         5,244        14,725        14,652

 Operating
  expenses:
   Sales and
    marketing         2,119         2,929         6,858        10,039
   Research
    and
    development         978         1,015         2,969         3,390
   General
    and         
    administrative    1,076         1,529         3,367         5,097
   Impairment
    of M2
    note
    receivable          900            --           900            --
   Depreciation
    and
    amortization        122           232           443           704
                -----------   -----------   -----------   -----------
                      5,195         5,705        14,537        19,230
                -----------   -----------   -----------   -----------
 Income
  (loss)
  from
  operations           (397)         (461)          188        (4,578)


 Other income
  (expense):
    Interest
     income              41            57           132           179
    Interest
     expense             (5)          (10)          (13)          (30)
    Other                 4           (12)           31            23
                -----------   -----------   -----------   -----------
                         40            35           150           172
                -----------   -----------   -----------   -----------

 Income
  (loss)
  before
  income
  taxes                (357)         (426)          338        (4,406)
 Income tax
  benefit                --            --           146           485
                -----------   -----------   -----------   -----------
 Income
  (loss) from
  continuing
  operations           (357)         (426)          484        (3,921)
                -----------   -----------   -----------   -----------

 Loss from
  discontinued
  operations             --            --            --           (43)
                -----------   -----------   -----------   -----------
 Net income
  (loss)        $      (357)  $      (426)  $       484   $    (3,964)
                ===========   ===========   ===========   ===========
 Net income
  (loss)
  per share -
  basic         $     (0.02)  $     (0.02)  $      0.03   $     (0.21)
                ===========   ===========   ===========   ===========
 Net income
  (loss)
  per
  share -
  diluted       $     (0.02)  $     (0.02)  $      0.02   $     (0.21)
                ===========   ===========   ===========   ===========
 Weighted
  average
  shares
  outstanding
  - basic        19,214,942    19,127,498    19,174,225    18,907,112
                ===========   ===========   ===========   ===========
 Weighted
  average
  shares
  outstanding
  - diluted      19,214,942    19,127,498    20,956,617    18,907,112
                ===========   ===========   ===========   ===========
                                           
                                                     
                            OPTIO SOFTWARE, INC.    
                    Condensed Consolidated Balance Sheets 
                              (in thousands)      
                                                       
                                               October 31,  January 31,
                                                  2003         2003 
                                                -------       -------

 ASSETS

 Current Assets:
    Cash, cash equivalents and marketable
     securities                                 $ 4,374       $ 3,902
    Accounts receivable, net                      3,768         4,112
    Notes receivable from M2                        310           101
    Other current assets                            220         1,605
                                                -------       -------
 Total current assets                             8,672         9,720


 Property and equipment, net                        592           912
 Notes receivable from M2                         2,448         3,571
 Other assets                                       120           240
                                                -------       -------

 Total Assets                                   $11,832       $14,443
                                                =======       =======

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Current liabilities:
    Accounts payable                            $   658       $ 1,656
    Other accrued liabilities                     1,941         3,657
    Deferred revenue                              5,625         5,849
    Current portion of debt and capital
     lease obligations                               74           118
                                                -------       -------
 Total current liabilities                        8,298        11,280


 Long-term portion of debt and capital 
  lease obligations                                 110           167
 Long-term accrued expenses                         101           130
 Deferred revenue                                    --            92

 Shareholders' equity                             3,323         2,774
                                                -------       -------

 Total liabilities and shareholders' equity     $11,832       $14,443
                                                =======       =======


            

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