STOCKREPORTS		 Caere Corporation NASDAQ Symbol CAER
19-JUL-97 Industry:
Computer (Software & Services)		 Summary: This company produces desktop document management products, as well as OCR and bar code capture systems.

Recent Price 8.25
52 Wk Range 12.50 - 6.75		 Yield Nil
12-Mo. P/E NM

Quantitative Evaluation:
Outlook (1 Lowest - 5 Highest)
5
Fair Value
9.64
Risk
HIGH
Earn/Div Rank
B-
Technical Evaluation:
BULLISH since 04/97
Rel. Strength Rank (1 Lowest - 99 Highest)
57
Insider Activity
Favorable

Business Profile 21-MAY-97

In 1994, the company began bundling its software with scanners from other manufacturers. Although bundled products carry lower selling prices and supplant retail sales, CAER expects to aggressively market upgrade products to the increased customer base. The objective of this "bundle and upgrade" strategy is to increase unit sales of bundled product, which, in turn, is expected to stimulate unit sales of upgrade products. The company incurred losses in the past two quarters on one-time charges for purchased in-process R&D associated with two acquisitions. In January 1997, the company signed an agreement with Hewlett-Packard to develop and market scanning products using CAER's OCR technology.

Operation Review 21-MAY-97

Net revenues in the first quarter of 1997 fell 7.3%, year to year, reflecting lower software sales on decreased bundled revenues resulting from a shift in manufacturing responsibility from the company to manufacturing partners. Gross margins widened, as this shift also reduced manufacturing costs; gross profit still declined 4.2%. Overall profitability was penalized by a $2.9 million one-time charge for the purchase of in-process R&D associated with the Formonix acquisition, and a net loss of $1,941,000 ($0.15 a share) contrasted with income of $1,300,000 ($0.10). Absent this one-time charge, income in the 1997 quarter would have been $0.08 a share.

Stock Performance 18-JUL-97n

In the past 30 trading days, CAER's shares have declined 1%, compared to a 7% rise in the S&P 500. Average trading volume for the past five days was 88,860 shares, compared with the 40-day moving average of 128,653 shares.

Key Stock Statistics

Dividend Rate/Share Nil
Shs. outstg. (M) 13.2
Avg. daily vol. (M) 0.112
Tang. Bk. Value/Share 4.33
Beta 1.10
Shareholders 500
Market cap. (B) $0.109
Inst. holdings 40%
Value of $10,000 invested 5 years ago:$ 10,333

Fiscal Year Ending Dec. 31

Revenue (Million $)
1997 1996 1995 1994 1993 1992
Q1 12.57 13.56 12.22 4.47 8.06 9.30
Q2 NA 13.99 13.17 4.92 7.56 10.10
Q3 NA 13.40 13.06 4.91 7.81 11.30
Q4 NA 13.58 13.49 4.67 9.80 12.30
Year NA 54.53 51.94 59.13 33.23 43.10

Earning Per Share ($)
1997 1996 1995 1994 1993 1992
Q1 -0.15 0.10 0.04 -0.01 0.02 0.15
Q2 NA 0.11 0.06 0.05 0.02 0.16
Q3 NA 0.11 0.07 0.20 -13.54 0.19
Q4 NA -0.31 0.02 -0.05 0.02 0.20
Year NA 0.03 0.18 0.18 -0.10 0.68

Dividend Data: Caere has not paid cash dividends on its common stock, and intends to retain earnings for operational needs. A two-for-one stock was effected in December 1992.

Business Summary 21-MAY-97

Caere Corporation designs, develops, makes and markets optical character recognition (OCR) software and hardware for converting scanned and faxed images into computer usable text, as well as desktop forms and information management products. The company's products are low-cost, quick and accurate alternatives to manual data entry for many applications.

The company's products are sold to two general markets: the information management market, offering a range of products that allow personal computer users to manage documents and faxes; and the data capture market, including bar-code scanners and OCR readers, for retail establishments, government agencies, banks, utilities and other organizations.

Software includes the flagship product, OmniPage Professional, a customizable, full-featured page recognition software product. This and other OmniPage products transfer scanned text into popular word processing, spreadsheet, database and desktop publishing programs. WordScan Plus and Recognita Plus are full-featured page recognition products that integrate with the most popular products being used in Windows. PageKeeper is a text search and retrieval product that can electronically file both text and images, and thus store documents in their original format. OmniForm converts paper documents to electronic forms with the click of a button. OmniForm Internet Publisher is the first paper-to-electronics forms solution for intranets and the Internet.

Hardware products for the data capture market include bar code scanners and OCR readers for transaction processing applications such as high-volume data entry and check verification. Customers of these products include retail establishments, government agencies, banks, utility companies, and other organizations. Additionally, the Millenium Series provides both hardware and software solutions for high-volume commercial OCR applications. Historically, a significant portion of the company's OCR data capture business has come from OEMs who incorporate the technology into their own products.

Software sales to Ingram Micro accounted for 28%, 22% and 23% of net revenues in 1996, 1995 and 1994, respectively; sales to Softbank Services Group represented 15%, 9% and 2%. International revenues came to 30%, 29% and 31% of net revenues in the respective years.

Important Developments

Apr. '97 Caere acquired Formonix Inc., developer of the company's Omniform product, for common stock valued at $3.2 million. The acquisition resulted in a one-time charge for in-process research and development of approximately $2.9 million in the first quarter of 1997. The January 1997 acquisition of Recognita Rt. resulted in a one-time charge for purchased R&D of $4.4 million in the fourth quarter of 1996.

Capitalization

Long Term Debt: None (3/97).

Per Share Data ($)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Tangible Bk. Val. 4.41 4.67 4.43 4.52 4.75 3.96 3.41 2.89 1.40 NA
Cash Flow 0.23 0.35 0.33 0.11 0.83 0.63 0.56 0.46 0.22 NA
Earnings 0.03 0.18 0.18 -0.10 0.68 0.54 0.50 0.42 0.19 NA
Dividends Nil Nil Nil Nil Nil Nil Nil Nil Nil NA
Payout Ratio Nil Nil Nil Nil Nil Nil Nil Nil Nil NA
Prices - High 14 18 1/4 19 5/8 24 1/2 21 12 13 7/8 9 5/8 NA NA
- Low 6 3/8 7 1/8 6 1/4 5 1/2 7 5 7/8 5 7/8 6 NA NA
P/E Ratio - High NM NM NM NM 31 22 28 23 NA NA
- Low NM NM NM NM 10 11 12 14 NA NA

Income Statement Analysis (Million $)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Revs. 54.5 51.9 59.1 33.2 43.1 32.4 27.6 19.6 11.9 NA
Oper. Inc. 7.6 4.4 7.8 -0.2 12.0 8.1 6.9 3.7 1.3 NA
Depr. 2.7 2.3 1.9 2.1 1.5 0.9 0.6 0.4 0.3 NA
Int. Exp. Nil Nil Nil Nil Nil Nil NA 0.0 NA NA
Pretax Inc. 0.5 2.8 4.0 -2.1 11.6 8.9 8.4 4.1 1.4 NA
Eff. Tax Rate 20% 15% 40% NM 36% 36% 38% 21% 12% NA
Net Inc. 0.4 2.4 2.4 -1.0 7.4 5.7 5.2 3.2 1.2 NA

Balance Sheet & Other Fin. Data (Million $)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
Cash 44.3 47.8 51.1 35.5 37.4 31.0 26.0 24.6 4.3 NA
Curr. Assets 57.2 59.6 63.2 46.0 49.1 41.3 34.5 28.9 9.3 NA
Total Assets 63.2 69.3 67.9 51.2 56.4 45.4 37.5 30.9 10.7 NA
Curr. Liab. 7.4 6.9 9.4 3.8 4.9 4.3 2.4 2.1 1.6 NA
LT Debt Nil Nil Nil Nil Nil Nil Nil 0.1 0.1 NA
Common Eqty. 55.7 62.0 57.8 46.6 50.8 41.1 35.0 28.8 9.0 NA
Total Cap. 55.7 62.4 58.5 47.4 51.5 41.1 35.2 28.9 9.1 NA
Cap. Exp. 1.5 3.9 1.4 1.0 2.1 1.0 1.4 0.9 0.4 NA
Cash Flow 3.1 4.7 4.3 1.1 8.9 6.6 5.8 3.6 1.5 NA

Curr. Ratio 7.7 8.6 6.7 12.2 10.1 9.6 14.6 14.0 5.8 NA
% LT Debt of Cap. Nil Nil Nil Nil Nil Nil Nil 0.3 1.5 NA
% Net Inc.of Revs. 0.7 4.7 4.0 NM 17.2 17.6 18.9 16.5 10.4 NA
% Ret. on Assets 0.6 3.5 3.6 NM 14.4 13.7 15.0 13.6 12.8 NA
% Ret. on Equity 0.7 4.0 4.1 NM 15.9 14.9 16.1 15.1 14.9 NA

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--100 Cooper Court, Los Gatos, CA 95030. Tel--(408) 395-7000. Website--http://www.caere.com Chrmn & CEO--R. G. Teresi. EVP, CFO & Secy--Blanche M. Sutter. Dirs--J. K. Dutton, R. J. Frankenberg, R. G. Teresi, F. W. Zuckerman. Transfer Agent & Registrar--Boston EquiServe. Incorporated--in California in 1973; reincorporated in Delaware in 1989. Empl-- 272. S&P Analyst: Adam Penn


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