Captaris, Inc.

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Captaris, Inc.

10885 Northeast 4th Street, Suite 400
Bellevue, Washington 98004 U.S.A.
Telephone: (425) 455-6000
Fax: (425) 638-1500
Web site: http://www.captaris.com

Public Company
Incorporated: 1982 as Applied Voice Technology, Inc.
Employees: 399
Sales: $91.9 million (2006)
Stock Exchanges: NASDAQ
Ticker Symbol: CAPA
NAIC: 511210 Software Publishers

Captaris, Inc., develops software that automates paper and other document-centric processes, offering a selection of products marketed under the names Captaris RightFax, Captaris Workflow, and Captaris Alchemy. The company’s software, which is tailored for paper-intensive businesses such as banking, insurance, and healthcare, is used by all Fortune 100 corporations, helping customers orchestrate the delivery, management, routing, tracking, and archiving of data and documents.

ORIGINS

PURCHASE OF RIGHTFAX IN 1996

ANASTASI ASSUMING CHIEF EXECUTIVE POST: 2000

PRINCIPAL SUBSIDIARIES

PRINCIPAL COMPETITORS

ORIGINS

Captaris took on several guises during its first two decades of business, demonstrating a nimble approach to the markets it served. The company began as Applied Voice Technology, Inc., a firm founded in 1982 in suburban Seattle, Washington. During its first decade in business, the company developed software and hardware for voice and call processing, competing in the computer telephony market. Commonly referred to as CTI, for computer telephony integration, the computer telephony market addressed the need to unite telephones and personal computers, two of the most essential business tools. The first voice- and call-processing systems were rudimentary by later standards, performing the basic functions of call answering, routing, and messaging. Although telephone systems became more sophisticated, thereby increasing the complexity and capabilities of CTI, the technological advances recorded in the personal computer industry were largely responsible for propelling CTI forward, making the integration of telephone and computer a vital and intricate business. Applied Voice, regarded as a pioneer in the CTI field, helped advance the capabilities of CTI during the first chapter in its history, but as changes in the marketplace occurred, the company shifted its strategy, giving birth to Captaris, a leader in automating paper and other document-centric processes that proliferated in the corporate world.

Applied Voice developed from a start-up venture into a $15 million-in-sales company during its first decade in business. CTI was evolving as Applied Voice gained its footing, becoming a prized asset for corporate clientele. Basic applications, such as automatically answering incoming calls, routing the call to the desired party, and allowing the caller to leave a voice message, gave way to more advanced applications. CTI systems were able to manage voice, fax, and e-mail messages from either a telephone or a computer, for instance. Another advanced CTI system automatically identified an inbound telephone caller, determined through a predefined script why the caller was calling, and transferred the caller to a live agent along with a caller’s pertinent information.

Applied Voice helped push the technological envelope of CTI, establishing itself as a recognized force in the years immediately preceding the explosive proliferation of computers in the workplace. The company unveiled its marquee product, CallXpress3, in 1991, a product whose success in the CTI market helped Applied Voice double its annual revenue during the first half of the decade. Designed to support from four to 64 telephone ports, CallXpress3 was developed for business customers requiring high-capacity call answering, routing, and voicemail services, consisting of software programs that operated in an integrated, multitasking environment. CallXpress3 offered a more comprehensive menu of functions than Applied Voice’s basic product, px100, which provided basic voicemail and call answering capabilities. In 1993, the company introduced a product for the middle segment of the market, unveiling PhoneXpress, a product for businesses that did not require the advanced application orientation and capacity of a CallXpress3 system. Each of the company’s three product lines were sold as software kits to dealers who purchased their own hardware or as complete systems equipped with Applied Voice’s hardware platforms.

The introduction of CallXpress3 and PhoneXpress during the early 1990s fueled Applied Voice’s financial growth. The company lifted its sales to $15 million during its first decade in business, and more than doubled the total during the ensuing three years. Perhaps more impressive, Applied Voice’s profits surged during the period, leaping from $103,000 in 1992 to $6 million in 1996. Although CallXpress3 was developed with a telephony orientation, without the original intention to integrate telephone systems with computers, the standard, local-area-network (LAN) capability of CallX-press3 and its software-modular packaging possessed the functions and capability to be incorporated into computer networks. As companies large and small became increasingly reliant on computers to conduct their business, Applied Voice began designing its products specifically for CTI applications, altering its strategy to adapt to the changing needs of its customers. The changes in strategy punctuated the company’s development from Applied Voice Technology, Inc., to AVT Corporation to Captaris, Inc.

PURCHASE OF RIGHTFAX IN 1996

A turning point in Applied Voice’s history occurred in 1996, two years after it had raised roughly $16 million by completing its initial public offering (IPO) of stock. In January, the company purchased Cracchiolo & Feder, Inc., for $4.2 million. Based in Tucson, Arizona, Cracchiolo & Feder was formed as a consulting business in 1987 by Joe Cracchiolo and Brad Feder. The pair developed RightFax, a product that became the leading network-based fax server software. RightFax, which sent faxes from computers, became a central component of Applied Voice’s business, representing a critical part of the company’s overall effort to integrate and deliver information stored in e-mail, fax, and computer applications, as well as other electronic media. Although CallX-press3 and later iterations of the product would continue to support Applied Voice as it developed into Captaris, the company’s unified messaging business eventually was supplanted by a host of document management products. The addition of RightFax steered the company in its new direction, becoming an integral part of its strategy in the 21st century.

COMPANY PERSPECTIVES

Captaris saves money and improves the performance of information investments by empowering organizations to boost productivity and become more efficient through streamlined communications.

In the wake of the Cracchiolo & Feder acquisition, Applied Voice completed several other acquisitions. Some of the additions figured into the company’s long-range plans, while others made short-term contributions to its growth before being divested for strategic reasons. In January 1997, the company purchased Telecom Technologies to gain another telephony-oriented product line, AgentXpressNY, an automatic call distribution system that would be deemed outside the company’s core business by the end of the decade. Of greater relevance to the company’s long-term strategy was the acquisition of American International Facsimile Products Inc., which was purchased before the end of 1997. Based in Portland, Oregon, the company changed its name to CommercePath, Inc., upon being acquired by Applied Voice. The $10.7 million acquisition gave Applied Voice software designed to convert electronic documents into fax documents, which subsequently could be transmitted to a wide audience. A travel agency, for instance, could change the schedule of a cruise via e-mail and then send the changes to other agents via fax.

As Applied Voice exited the 1990s and prepared for the 21st century, the company began to alter its strategy in earnest. In early 1999, the company changed its name to AVT Corporation, adopting what would prove to be a transitional corporate identity. The years of focusing on voice and call processing were nearly over, but before the company severed its ties to the business that supported its operations for nearly 20 years, it acquired MediaTel Corp. In April 1999, AVT acquired the San Francisco, California-based company in an all-stock deal valued at $48 million, recasting the business as MediaLinq. Not long afterwards, AVT began to focus its attention on new markets, shifting its strategy at the behest of a new leader.

ANASTASI ASSUMING CHIEF EXECUTIVE POST: 2000

In November 2000, David P. Anastasi was appointed president and chief executive officer of AVT, taking the helm at a critical point in the company’s development. Anastasi, who earned his graduate degree in international management from the University of San Francisco, spent most of the 1990s serving as an executive at the Public Access and SmartCard Division of U S West. Immediately before joining AVT, he served as president and chief executive officer of Conversational Computing Corporation, a speech recognition technologies company. Anastasi’s first task at AVT was to assess the company’s prospects to determine whether the company should continue pressing forward as a developer of both computer telephony software and document exchange software. Sales were declining as he joined the company, falling from $130 million in 1999 to $100 million in 2000, and its stock value was dropping, plunging from $35 per share to less than $2 per share during an 18-month period, forcing a response from the newly appointed leader. Traditionally, the company had made its living by selling telephony software that enabled voicemail, unified messaging, and fax systems to communicate with one another, treating the various product lines it sold as separate businesses. Anastasi realized a fundamental change in the company’s structure was needed, prompting him to consolidate AVT’s two primary product groups, the Computer Telephony Software Group and the Document Exchange Software Group. The company’s payroll was trimmed by 14 percent amid the restructuring effort.

Before revealing his assessment of AVT’s prospects, Anastasi completed a deal that tipped his hand. In January 2001, he acquired Infinite Technologies Inc. for $24 million. Based in Owing Mills, Maryland, Infinite Technologies developed software that used wireless applications protocol, the so-called WAP platform. In a March 23, 2001, interview with the Puget Sound Business Journal, Anastasi discussed the basic reasoning behind his restructuring efforts, explaining, “We have thoroughly evaluated the market and believe that business as usual will not create sustainable shareholder value.” His response, aside from restructuring the company, was to move it into the wireless realm, a foray that would use Infinite Technologies as a springboard to create a presence in the mobile business solutions market. Anastasi chose to concentrate on the wireless delivery of AVT’s communications software, seeking to integrate the company’s various services into a single software platform that could be available to users via cellular telephones, personal digital assistants, and other wireless devices. “They’re making a big bet on the wireless stuff,” an industry analyst said in a September 7, 2001, interview with the Puget Sound Business Journal. “Their traditional market is clearly on the decline.”

KEY DATES

1982:: Captaris is founded as Applied Voice Technology, Inc.
1991:: CallXpress3 is released.
1994:: The company completes its initial public offering of stock.
1996:: Applied Voice acquires RightFax.
1999:: Applied Voice changes its name to AVT Corporation.
2000:: David P. Anastasi is named chief executive officer and president.
2001:: AVT acquires Infinite Technologies Inc
2002:: AVT changes its name to Captaris, Inc.
2003:: Captaris sells its CallXpress product line.
2004:: The purchase of Information Management Research gives Captaris its Alchemy product line.
2006:: Captaris generates nearly $92 million in revenue.

Captaris, a name adopted in 2002, took shape during the first years of the new decade, as Anastasi attempted to regain the financial strength formerly exuded by the Washington-based enterprise. The company released its first set of wireless products in May 2001 after beta testing its Infinite Server in 36 countries. The new server enabled users to access e-mail, voicemail, faxes, personal calendars, and contact databases for Internet-enabled devices such as cellular telephones and personal digital assistants. Additionally, a text-to-speech module converted e-mail text to speech, enabling users to respond with a voice message. Next, Anastasi orchestrated a series of divestitures and acquisitions that would give Captaris three pillars of support by the time the company marked its 25th anniversary. The deal-making left Captaris focused on three product categories: fax server and document delivery, business process automation, and archiving and records managements, categories served by Captaris RightFax, Captaris Workflow, and Captaris Alchemy, respectively.

Anastasi swapped out assets in 2003, steering Captaris away from its past as he laid the foundation for the company’s future. In September, he sold the CallXpress product line and MediaTel Corp., divesting assets that had supported the company for more than a decade. Before the end of the month, he acquired Teamplate, Inc., a purchase that broadened Captaris’s information delivery product offerings. The deal gave Anastasi products that complemented the company’s existing RightFax product line and strengthened its presence in the business process automation market, a market in which Captaris Workflow competed. Roughly a year later, in October 2004, Anastasi purchased Information Management research, Inc., for approximately $32 million. Based in Englewood, Colorado, Information Management Research marketed a product line under the name Alchemy that helped companies capture, archive, and retrieve business information. The addition of the Englewood company served as the basis for Captaris’s third major product line, Captaris Alchemy.

The deals completed in 2003 and 2004 gave Captaris the product profile it offered at its 25th anniversary. Anastasi completed no significant acquisitions or divestitures in 2005 and 2006. The change in strategy created a smaller company, but Anastasi and his management team were convinced the reorientation of the company would lead to a more vibrant financial future. Captaris generated $86 million in revenue in 2005 and nearly $92 million in 2006, recording volumes substantially below the record high of $130 million in 1999. In the years ahead, the company’s senior executives hoped to set new financial records as they helped corporate customers manage their paper-based processes.

Jeffrey L. Covell

PRINCIPAL SUBSIDIARIES

Information Management Research, Inc.; Raven Acquisition Corp.; MediaTel Corporation; Captaris International Inc.; Captaris International, PTY Limited (Australia); Captaris GmbH (Deutschland) (Germany); Captaris International B.V. (Netherlands); Captaris Canada Corporation (NSULC).