BancTec expects merger-related charges to result in net loss for 1995 fourth quarter.

DALLAS--(BUSINESS WIRE)--Jan. 10, 1996--BancTec (NYSE-BTC) announced today that its preliminary estimates indicate that the Company will book estimated pre-tax charges of $85 million ($60 million after-tax) related to the previously announced merger and integration of Recognition International Inc. (RII) with BancTec, and other charges to reposition the combined companies.

The Company said it expects to take the charges in the fourth quarter of 1995, and will report a net loss of between $59 and $61 million, or $2.80 to $2.90 per share, for the quarter which ended December 31. Final results for the quarter and fiscal year are anticipated to be available after March 1, 1996, after final closing of the books and completion of the external audit.

In addition, the Company said fourth quarter results were affected by a delay in the shipment of several large integrated systems now expected to be delivered in the first half of 1996, cost overruns on certain systems development contracts which have now been completed and which produced important new software product technology, startup costs for several new large network service contracts, and higher than expected research and development costs related to hardware products to be introduced in 1996.

"We are satisfied with the progress of the integration, and we believe we are well on the way to achieving our targeted cost savings," said Grahame N. Clark, Jr., chairman and chief executive officer. "We anticipate annualized pretax savings of more than $30 million when we complete the consolidation of our manufacturing and service facilities by the end of the third quarter of fiscal 1996. We expect to begin realizing a major portion of the savings beginning in the first quarter."

He noted that while the total costs of the merger and integration of RII are expected to be somewhat higher than originally estimated, "I am confident that we have taken all appropriate actions to position BancTec favorably for the future. We have seen an increase in the level of order bookings since the date of the merger."

"We have already reduced our total number of employees by 350 as a result of the consolidation, and expect to achieve another reduction of 150 employees by the end of the third quarter of 1996," Clark indicated. "In addition, we have transferred a number of RII employees into vacant positions in BancTec operations to take advantage of new business opportunities that have developed since the merger."

The pre-tax charges of $85 million will include costs incurred and accruals for: (1) severance of employees of $17 million, (2) excess inventory and inventory related to discontinued products of $17 million, (3) goodwill and intangible assets which have no future benefit of $17 million, (4) costs incurred in the completion of the merger of $5 million, (5) certain fixed assets related to facilities consolidation of $6 million, (6) certain RII trade accounts receivable and anticipated losses on contracts for undelivered products of $11 million, and, (7) other costs related to idle facilities, personnel relocation expenses and other miscellaneous costs of $12 million.

Clark pointed out that as previously announced, BancTec has rounded out its management team by hiring Raj Rajaji as senior vice president, chief financial officer and treasurer, John Torkelson as vice president and general manager of BancTec's Plexus business unit, and Charlotte Fritchie as vice president, systems installation and support. He said, "We now have in place an organization that takes advantage of the strengths of RII and BancTec. I remain excited by the opportunities presented with the acquisition of Recognition International and I am confident that BancTec will continue its historic growth through the combination of internally generated growth and acquisitions."

BancTec acquired Recognition International Inc., a supplier of document recognition and imaging systems, workflow and image software and related services, on October 12, 1995 for 0.59 share of BancTec stock for each share of Recognition stock.

BancTec, headquartered in Dallas, is a leading provider of electronic and document-based financial transaction processing systems, workflow and imaging products, application software and support services. The Company develops solutions for the banking, financial services, insurance, health care, government, utility, telecommunications, grocery and retail industries. BancTec also designs and manufactures document processing equipment for OEM customers and provides network support services for local area networks and personal computers. Revenues for the Company will be in excess of $500 million.

BancTec shares trade on the New York Stock Exchange under the symbol "BTC", with 20,150,791 shares outstanding.

CONTACT: BancTec Corporate Communications

John Moss, Director, 214/450-7941