PADUCAH, Ky., April 29, 2015 /PRNewswire/ -- Computer Services,
Inc. (CSI) (OTCQX: CSVI) today reported record revenues and
net income in the fiscal year ended February
28, 2015. CSI's record results in fiscal 2015 marked
the company's 15th consecutive year of revenue growth
and 18th consecutive year of growth in net income. CSI
also concluded the year by celebrating its 50th year of
operations.
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CSI's revenues in fiscal 2015 were a record $221.4 million and rose 4.0% compared with
$212.9 million in fiscal 2014. Net
income in fiscal 2015 was a record $27.8
million, a 4.4% increase compared with fiscal 2014 income of
$26.7 million. Net income per fully
diluted share increased 6.5% to $1.97 compared with $1.85 in the prior fiscal year.
Fourth quarter revenues rose 2.1% to a record $55.3 million in fiscal 2015 compared with
$54.1 million in the fourth quarter
of fiscal 2014. Net income was $6.7
million, or $0.48 per fully
diluted share, in the fourth quarter of fiscal 2015 compared with
$7.4 million, or $0.52 per fully diluted share, in the fourth
quarter of fiscal 2014.
"In fiscal 2015, we completed our most successful year in CSI's
50 years of operations," stated Chief Executive Officer
Steven A. Powless. "We reported
record revenues and net income, and we continued to invest in CSI
to support our future growth. We also increased our cash
dividends paid to shareholders in fiscal 2015, marking our
43rd consecutive year of raising our cash dividend.
"Our excellent results continue to benefit from new core
customer sales and high renewal rates that we are achieving on
long-term contracts. We believe our customers' high satisfaction
levels with our service highlight the strength of our recurring
revenue base from long-term contracts," continued Mr. Powless.
Fiscal 2015 Results
Consolidated revenues rose 4.0% to $221.4
million in fiscal 2015 compared with $212.9 million in fiscal 2014. CSI's growth in
revenues reflects new customers added since last year, cross-sales
to existing customers and increased transaction volume. Processing
revenues rose 4.7% to $140.5 million
in fiscal 2015 compared with $134.1 million in fiscal 2014. The growth in
processing revenues included record sales to new customers,
cross-sales to existing customers and increases in transaction
volumes from existing customers, partially offset by the effect of
lost business. Processing revenues included early contract
termination fees of $3.0 million in
fiscal 2015 compared with $3.2
million in fiscal 2014. Other revenues increased 2.7%
to $80.9 million in fiscal 2015
compared with $78.8 million in
fiscal 2014. The increase in other revenues was due primarily to
growth in mobile and Internet banking services, growth in homeland
security and fraud prevention services, and higher eBusiness group
revenues.
"We expect that CSI's processing revenues will be affected by
increased merger and acquisition activity among banks during fiscal
2016," stated Powless. "We benefit from one-time early
termination fees when a customer is acquired, but it also reduces
our recurring revenues due to the contract's termination.
Merger and acquisition activity has picked up over the past year
due to improved bank earnings and the improved economy. We
expect our bank customers to be active in this market as both
buyers and sellers, resulting in higher early contract termination
fees when CSI customers are acquired by non-CSI customer banks, or
increased processing fees generated by our customers when they
acquire non-CSI customer banks."
Operating expenses rose 4.0% to $175.6
million in fiscal 2015 compared with fiscal 2014. The
increase in operating expenses was due primarily to higher cost of
goods sold on higher software, equipment and maintenance contract
sales; higher group medical plan expenses on abnormally high claims
activity in fiscal 2015; and higher commission expenses due to the
expense recognition effects of a change in accounting policy in
fiscal 2014.
"We continued to expand our sales and marketing initiatives in
fiscal 2015," continued Powless. "We expect these investments
will accelerate our revenue and earnings growth potential, as well
as be key in our ability to build shareholder value in the
future."
Operating income rose 3.9% to $45.8
million in fiscal 2015 compared with $44.1 million in fiscal 2014. Operating margins
were 20.7% in both fiscal 2015 and fiscal 2014.
Net income in fiscal 2015 rose 4.4% to $27.8 million compared with $26.7 million in fiscal 2014. Net income
per fully diluted share increased 6.5% to $1.97 in fiscal 2015 compared with $1.85 in fiscal 2014. CSI's higher growth rate in
per share earnings benefited from the company's stock repurchase
program. Weighted average fully diluted shares outstanding declined
1.9% from fiscal year 2014 due to CSI shares repurchased under the
repurchase program.
CSI's cash flow from operations rose to $38.6 million in fiscal 2015. The company
returned $16.4 million to
shareholders during fiscal 2015 in cash dividends and stock
repurchased or redeemed. Cash and cash equivalents increased to
$11.8 million at February 28, 2015.
"CSI's financial position remained strong in fiscal 2015 and
benefited from growth in net income and cash flow from operations,"
stated Powless. "Our Board of Directors remains focused on
building shareholder value through our cash dividend and stock
repurchase programs. During fiscal 2015, we returned
$10.8 million to shareholders in cash
dividends and $5.6 million in stock
repurchases and redemptions. We also invested $11.4 million in new property, equipment,
hardware and software during fiscal 2015 to support our continued
growth."
Fourth Quarter Results
Fourth quarter consolidated revenues rose 2.1% to a record
$55.3 million compared with
$54.1 million in the fourth quarter
ended February 28, 2014. Processing
revenues increased 5.7% to $35.4
million in the fourth quarter of fiscal 2015 compared with
$33.5 million in the fourth quarter
of fiscal 2014. Processing revenues included early contract
termination fees of $864,000 in the
fourth quarter of fiscal 2015 compared with $517,000 in the fourth quarter of fiscal 2014.
Other revenues were down 3.7% to $19.9
million in the fourth quarter of fiscal 2015 compared with
$20.7 million in the fourth quarter
of fiscal 2014. The decrease in other revenues was due primarily to
lower sales from non-recurring revenue streams associated with
equipment, software and related third-party maintenance contracts
during the quarter.
Fourth quarter operating expenses rose 6.4% to $44.5 million compared with $41.8 million in the fourth quarter of fiscal
2014. Effective with the second half of fiscal 2014, commission
expense was matched with the contract period rather than expensed
at the time the contract was signed, which more closely aligns
incurred compensation expenses with the associated revenues over
the life of the related customer contracts. As a result of the
accounting change, the company recognized a $900,000 increase in net commission expense in
the fourth quarter of fiscal 2015. Fourth quarter 2015 operating
expenses also included approximately $700,000 in other nonrecurring operating
expenses, including: an increase in marketing and advertising
expense recognized during the fourth quarter, a write-down of land
available for resale and a write-down of intangible assets
consisting of certain governmental licenses related to our telecom
service offerings.
Operating income in the fourth quarter declined 12.6% to
$10.8 million in fiscal 2015 compared
with $12.3 million in fiscal 2014.
Operating margins decreased to 19.5% in the fourth quarter of
fiscal 2015 compared with 22.7% in the fourth quarter of fiscal
2014. The decline in CSI's operating margin was due primarily to
the forgoing nonrecurring adjustments, which generated differences
relative to the prior fiscal year's fourth quarter.
Income before taxes declined 12.6% to $10.8 million in the fourth quarter of fiscal
2015 compared with $12.3 million in
the same quarter of fiscal 2014. Provision for income taxes
declined to $4.0 million in the
fourth quarter of fiscal 2015 compared with $4.9 million in the fourth quarter of fiscal
2014. The effective income tax rate was 37.6% in the fourth quarter
of fiscal 2015 compared with 39.5% in the fourth quarter of fiscal
2014.
Net income in the fourth quarter of fiscal 2015 declined to
$6.7 million, or $0.48 per fully diluted share, compared with
$7.4 million, or $0.52 per fully diluted share, in the fourth
quarter of fiscal 2014. The decrease in net income was due to a
combination of lower other revenue, higher expenses associated with
the effect of the change in accounting for commission expense and
other nonrecurring operating expenses that reduced operating income
compared with the prior fiscal year's fourth quarter.
About Computer Services, Inc.
Computer Services, Inc. delivers core processing, managed
services, mobile and Internet solutions, payments processing, print
and electronic distribution, and regulatory compliance solutions to
financial institutions and corporate customers across the
nation. Exceptional service, dynamic solutions and superior
results are the foundation of CSI's reputation, and have resulted
in the company's inclusion in such top industry-wide rankings as
the FinTech 100, Talkin' Cloud 100 and MSPmentor Top 501 Global
Managed Service Providers List. 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; (ii) risk factors affecting
the financial services information technology industry generally
including, but not limited to, cybersecurity risks that may result
in increased costs to CSI to protect against the risks, as
well as liability or reputational damage to CSI in the event of a
breach of our security; and (iii) other factors discussed in CSI's
Annual Report, Quarterly Reports, Information and Disclosure
Statements and other documents posted from time to time on the
OTCQX website (www.otcqx.com), 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 report 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
|
(Audited)
|
(in thousands,
except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
February 28,
|
|
Year Ended
February 28,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Processing
revenues
|
$
35,360
|
|
$
33,456
|
|
$
140,479
|
|
$
134,133
|
Other
revenues
|
19,900
|
|
20,658
|
|
80,906
|
|
78,781
|
|
Total
revenues
|
55,260
|
|
54,114
|
|
221,385
|
|
212,914
|
Operating
expenses
|
44,502
|
|
41,808
|
|
175,568
|
|
168,821
|
|
Operating
income
|
10,758
|
|
12,306
|
|
45,817
|
|
44,093
|
Interest expense,
net
|
-
|
|
(4)
|
|
9
|
|
(34)
|
|
Income before income
taxes
|
10,758
|
|
12,302
|
|
45,826
|
|
44,059
|
Provision for income
taxes
|
4,047
|
|
4,859
|
|
17,987
|
|
17,403
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
6,711
|
|
$
7,443
|
|
$
27,839
|
|
$
26,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
$
0.48
|
|
$
0.52
|
|
$
1.97
|
|
$
1.85
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computing earnings per
|
|
|
|
|
|
|
|
|
common and common
equivalent share
|
14,117,076
|
|
14,265,434
|
|
14,160,707
|
|
14,440,668
|
|
|
|
|
|
|
|
|
|
|
COMPUTER SERVICES,
INC. AND SUBSIDIARIES
|
Condensed
Consolidated Balance Sheets
|
(Audited)
|
(in thousands,
except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/28/2015
|
|
02/28/2014
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$ 11,849
|
|
$ 1,078
|
|
|
Accounts
receivable
|
25,723
|
|
25,962
|
|
|
Income tax
receivable
|
2,993
|
|
538
|
|
|
Prepaid expenses and
other current assets
|
10,776
|
|
9,628
|
|
|
|
Total current
assets
|
51,341
|
|
37,206
|
|
Property and
equipment, net of accumulated depreciation
|
33,079
|
|
35,252
|
|
Software and software
licenses, net of accumulated amortization
|
17,773
|
|
17,963
|
|
Goodwill
|
|
60,115
|
|
60,115
|
|
Intangible
assets
|
7,064
|
|
8,264
|
|
Other
assets
|
19,842
|
|
16,120
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ 189,214
|
|
$ 174,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
$ 18,710
|
|
$ 18,536
|
|
|
Deferred
revenue
|
9,515
|
|
9,430
|
|
|
Notes
payable
|
-
|
|
7
|
|
|
Deferred income
taxes
|
193
|
|
-
|
|
|
|
Total current
liabilities
|
28,418
|
|
27,973
|
|
Long-term
liabilities
|
|
|
|
|
|
Deferred income
taxes
|
15,354
|
|
14,418
|
|
|
Other long-term
liabilities
|
1,025
|
|
1,198
|
|
|
|
Total long-term
liabilities
|
16,379
|
|
15,616
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
44,797
|
|
43,589
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
Preferred stock;
shares authorized, 5,000,000; none issued
|
-
|
|
-
|
|
|
Common stock, no par;
shares authorized, 20,000,000 in fiscal 2015 and
|
|
|
|
|
|
|
2014; shares issued
and outstanding, 14,110,849 at February 28, 2015
|
|
|
|
|
|
|
and 14,227,951 at
February 28, 2014
|
21,536
|
|
20,316
|
|
|
Retained
earnings
|
122,881
|
|
111,015
|
|
|
|
Total shareholders'
equity
|
144,417
|
|
131,331
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$ 189,214
|
|
$ 174,920
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/csi-reports-record-fiscal-year-2015-results-300073553.html
SOURCE Computer Services, Inc.