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CSI Reports Record Results for Second Quarter Fiscal 2012

Marks 29th Consecutive Quarter of Revenue Growth

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PADUCAH, Ky., Oct. 14, 2011 /PRNewswire/ -- Computer Services, Inc. (CSI) (OTCQX: CSVI) today reported record revenues and record net income for the second quarter and six months ended August 31, 2011.

(Logo:  http://photos.prnewswire.com/prnh/20080418/CSILOGO )

Second quarter revenues rose 3.8% to $43.5 million in fiscal 2012 compared with $41.9 million in the second quarter of fiscal 2011.  Net income rose 3.4% to $6.4 million, and net income per diluted share increased 4.9% to $0.43 compared with the prior year's second quarter.

"This quarter marked CSI's 29th consecutive quarter of revenue growth," stated Chief Executive Officer Steven A. Powless.  "We believe our results highlight our recurring revenue model and the largely non-discretionary nature of our products and services.  

"After the close of the quarter, we acquired HEIT Consulting, Inc. ("HEIT") of Ft. Collins, Colorado in a stock purchase transaction.  We expect HEIT to add to our revenue growth in the second half of this fiscal year and be accretive to our earnings in fiscal 2013," continued Mr. Powless.  "HEIT is a provider of cloud-based managed compliance, security and IT services with approximately 400 customers.  We believe the acquisition will become an integral part of our strategy to expand services to our core bank customers and expand the compliance and security services we offer through ATTUS Technologies."  

Second Quarter Results

Second quarter consolidated revenues rose 3.8% to $43.5 million compared with $41.9 million in the second quarter ended August 31, 2010.  Processing revenues increased 4.3% to $30.4 million and accounted for 69.9% of total revenues compared with $29.1 million, or 69.5% of total revenues, in the second quarter of last year.  The growth in processing revenues benefitted from sales to new customers, cross-sales to existing customers and increases in transaction volumes from existing customers, partially offset by the effect of customers lost primarily due to mergers and government actions, and customers migrating to in-bank check imaging systems.  Other revenues rose 2.5% to $13.1 million in the second quarter of fiscal 2012 compared with $12.8 million in the second quarter of fiscal 2011.  

Second quarter operating income rose 2.5% to $10.6 million compared with $10.3 million in the second quarter of the prior year.  Operating margin for the second quarter was 24.3% compared with 24.6% in the second quarter of fiscal 2011.  The slight decline in CSI's operating margin in the latest quarter was primarily due to increased personnel costs associated with planned staffing additions as part of CSI's Strategic Growth Initiative.  

Net income rose 3.4% to $6.4 million in the second quarter compared with $6.2 million in the prior-year period.  Net income per fully diluted share was up 4.9% to $0.43 compared with $0.41 in the same quarter last year.  Weighted average shares outstanding were down 1.0% to 14.8 million since last year primarily due to CSI shares repurchased under the Company's stock repurchase program.  CSI has repurchased approximately 195,000 shares during the past year, including 11,591 in the second quarter of fiscal 2012.  CSI had approximately $2.9 million available under existing stock purchase authorizations outstanding as of August 31, 2011.

CSI's cash and cash equivalents rose to $16.4 million as of August 31, 2011, up from $10.1 million at May 31, 2011.  The growth in cash was largely attributable to cash flow from operations that totaled $12.7 million in the second quarter of fiscal 2012.  

"We continued to strengthen CSI's balance sheet with our increased cash position and reduction of debt," continued Mr. Powless.  "Our cash position grew by $12.9 million in the first half of fiscal 2012 and we paid off all but $202,000 of debt.  After the close of the quarter, we used a portion of our cash position and untapped lines of credit to fund the HEIT acquisition.  

"We plan to continue using our strong cash flow from operations to fund future growth, including investments in new software and hardware platforms, and potential acquisitions.  Our Board of Directors is also committed to funding our stock repurchase program as market conditions permit while distributing a portion of our earnings to shareholders in the form of cash dividends.  Last quarter, the Board approved a 13.6% increase in our cash dividend to $0.125 per share, representing the 23rd consecutive annual increase in CSI's cash dividend.  We remain committed to building long-term shareholder value by investing in our company and distributing a portion of our earnings to shareholders through our stock buyback and dividend programs."

Six Month Results

Consolidated revenues for the first six months of fiscal 2012 rose 2.8% to a record $83.9 million compared with $81.7 million for the same period in fiscal 2011.  CSI's growth in revenues benefited from growth in processing and other revenues.

Operating income rose 3.6% to $19.9 million for the first six months of fiscal 2012 compared with $19.2 million for the same period last year.  Operating margin rose to 23.6% in the first six months of fiscal 2012 compared with 23.5% in the same period of fiscal 2011 due to higher sales and improved product mix.  

Net income for the first six months of fiscal 2012 rose 4.5% to $12.0 million compared with $11.5 million in the first six months of fiscal 2011.  Net income per diluted share increased 6.5% to $0.82 for the latest six month period compared with $0.77 for the same period last year.

About Computer Services, Inc.

Computer Services, Inc. (CSI) delivers core banking, payments processing, Internet, card services, risk assessment, fraud prevention, network management, regulatory compliance and document delivery solutions to financial institutions and corporate entities across the nation.  Technology planning, personal account management and world-class customer service explain why CSI is known as one of the nation's premier providers of technology solutions for the financial services industry.  CSI's stock is traded on OTCQX under the symbol CSVI.  For more information about CSI, visit www.csiweb.com.

Forward-Looking Statements

This news release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. All statements except historical statements contained herein constitute "forward-looking statements." Forward-looking statements are inherently uncertain and are based only on current expectations and assumptions that are subject to future developments that may cause results to differ materially. Readers should carefully consider: (i) economic, competitive, technological and governmental factors affecting CSI's operations, customers, markets, services, products and prices; and (ii) other factors discussed in CSI's Information and Disclosure Statements and other documents posted from time to time on the OTCQX website, including without limitation, the description of the nature of CSI's business and its management discussion and analysis of financial condition and results of operations for reported periods.  Unless required by law, CSI undertakes no obligation to update, and is not responsible for updating, the information contained in this release beyond the publication date, whether as a result of new information or future events, or to conform the statement to actual results or changes in CSI's expectations, or otherwise or for changes made to this document by wire services or Internet services.

COMPUTER SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(Unaudited)

(in thousands, except share and per share data)














Three Months Ended August 31,


Six Months Ended August 31,




2011


2010


2011


2010











Processing revenues

$      30,399


$      29,135


$      60,037


$      57,985

Other revenues

13,114


12,788


23,908


23,672


Total revenues

43,513


41,923


83,945


81,657

Operating expenses

32,961


31,629


64,095


62,493


Operating income

10,552


10,294


19,850


19,164

Interest income (expense), net

5


(44)


(19)


(107)


Income before income taxes

10,557


10,250


19,831


19,057

Provision for income taxes

4,144


4,048


7,784


7,527












Net income

$        6,413


$        6,202


$      12,047


$      11,530











Earnings per share









Basic

$          0.44


$          0.43


$          0.83


$          0.79


Diluted

$          0.43


$          0.41


$          0.82


$          0.77











Shares used in computing earnings per









common and common equivalent share










Basic

14,607,050


14,653,934


14,595,200


14,660,459



Diluted

14,767,710


14,915,615


14,755,017


14,929,297



COMPUTER SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share data)














08/31/2011


02/28/2011


08/31/2010





(Unaudited)


(Audited)


(Unaudited)

ASSETS








Current assets








Cash and cash equivalents

$      16,397


$     3,527


$        4,657



Accounts receivable

19,949


19,018


17,413



Income tax receivable

-


2,042


-



Prepaid expenses and other current assets

5,050


5,933


4,420




Total current assets

41,396


30,520


26,490


Property and equipment, net

31,337


30,008


35,910


Software and software licenses, net

16,952


18,245


13,118


Goodwill

48,761


48,761


48,761


Intangible assets

1,297


1,500


1,852


Other assets

6,734


7,088


4,357










Total assets


$    146,477


$ 136,122


$    130,488



















LIABILITIES AND SHAREHOLDERS' EQUITY







Current liabilities








Accounts payable and accrued expenses

$      13,083


$   12,271


$      11,857



Deferred revenue

7,414


6,575


5,996



Income taxes payable

2,616


-


249



Notes payable

168


191


170



Earn-out provision related to acquisition

2,000


2,000


2,000




Total current liabilities

25,281


21,037


20,272


Long-term liabilities








Notes payable

34


3,099


5,214



Deferred income taxes

4,060


4,269


840



Earn-out provision related to acquisition

-


-


2,000



Other long-term liabilities

1,224


1,014


945




Total long-term liabilities

5,318


8,382


8,999













Total liabilities

30,599


29,419


29,271











Shareholders' equity








Preferred stock; shares authorized, 5,000,000; none issued

-


-


-



Common stock, no par; shares authorized, 20,000,000 in fiscal 2012 and









2011; shares issued and outstanding, 14,604,749 at August 31, 2011,









14,581,602 at February 28, 2011, and 14,613,521 at August 31, 2010

17,916


16,523


16,481



Retained earnings

101,114


93,055


87,560



Restricted stock

(3,152)


(2,875)


(2,824)




Total shareholders' equity

115,878


106,703


101,217










Total liabilities and shareholders' equity

$    146,477


$ 136,122


$    130,488



SOURCE Computer Services, Inc.



RELATED LINKS
http://www.csiweb.com

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