CSI Reports Record First Quarter Results

PADUCAH, Ky., June 30 /PRNewswire-FirstCall/ -- Computer Services, Inc. (CSI) (OTCQX: CSVI) today reported record revenues of $39.7 million and record net income of $5.3 million, or $0.36 per share, for the first quarter ended May 31, 2010.  

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CSI's first quarter revenues for fiscal 2011 were a record $39.7 million and rose 7.9% compared with $36.8 million for first quarter 2010. Net income for first quarter 2011 rose 7.1% to $5.3 million compared with first quarter 2010 income of $5.0 million. Net income per fully diluted share increased 9.1% to $0.36 compared with $0.33 for the prior year's first quarter.  

"CSI's continued growth in the first quarter benefited from higher core processing revenues and the October 2009 acquisition of Myriad Systems (MSI)," stated President and Chief Executive Officer Steven A. Powless.  "This was our 25th consecutive quarter of revenue growth and highlights the benefits of our long-term customer contracts and high retention rates.  

"The MSI acquisition contributed to our growth in processing and other revenues in the first quarter," continued Mr. Powless.  "We have made solid progress in integrating MSI while expanding cross sale opportunities with our existing bank customers.  We expect that MSI will provide additional opportunities to grow revenues in fiscal 2011 while providing more diversification of our revenue base."

First Quarter Results

Consolidated revenues rose 7.9% to $39.7 million for first quarter 2011 compared with $36.8 million for first quarter 2010.  Processing revenues rose 9.0% to $28.9 million compared with $26.5 million for first quarter 2010.  The growth in processing revenues benefited from a 2.4% internal growth rate and the MSI acquisition.  The internal growth for processing revenues was primarily driven by sales to new customers, cross-sales to existing customers and increases in transaction volumes from existing customers, offset partially by customers lost primarily due to mergers and customers migrating to in-bank check imaging systems.  Other revenues increased 5.1% to $10.9 million compared with first quarter 2010 and rose due to the MSI acquisition, offset partially by a 0.2% decline in internal growth due to lower capital investments in technology by bank customers.

Operating income rose 8.1% to $8.9 million for first quarter 2011 compared with $8.2 million for first quarter 2010. Operating margin for first quarter 2011 was 22.3%, the same as the first quarter last year. The increase in operating income benefited from a higher sales base and improved operating costs.  A primary driver in reducing operating costs has been the shift in customers adopting remote data capture technology that has reduced processing transactions and expenses at CSI's fixed data centers.  CSI expects to continue to benefit from this trend as it consolidates additional data centers, resulting in lower personnel and operating costs.

Net income for first quarter 2011 rose 7.1% to $5.3 million compared with $5.0 million for first quarter 2010.  Net income per diluted share increased 9.1% to $0.36 for first quarter 2011 on 14.9 million weighted average diluted shares outstanding compared with $0.33 for first quarter 2010 on 15.1 million weighted average diluted shares outstanding.  

"Our financial position remains strong as our cash position rose by $5.4 million in the latest quarter, and we continued to pay down debt," continued Mr. Powless.  "We expect to use our strong financial position to make additional investments of approximately $13 million in our infrastructure in fiscal 2011, including a new mainframe processor at a cost of approximately $6 million.  We believe these investments will be an important part of CSI maintaining its competitive edge while providing a base to support our continued growth."

CSI's cash flow from operations rose to $13.0 million in first quarter 2011, and cash and cash equivalents increased to $8.7 million at May 31, 2010, compared with $6.8 million at May 31, 2009.  During the first quarter of fiscal 2011, CSI repurchased $635,000 in common stock and reduced outstanding debt by $3.1 million.  

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 the 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.  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.

SOURCE Computer Services, Inc.