07/07/2014

CSI Reports Record First Quarter Revenues and Net Income

Revenues Increase for 40th Consecutive Quater

PADUCAH, Ky. (July 7, 2014) – Computer Services, Inc. (CSI) (OTCQX: CSVI) today reported record revenues and net income for the first quarter of fiscal 2015, which ended May 31, 2014.

CSI’s revenues grew 5.5% to $54.6 million for the first quarter of fiscal 2015 compared with $51.7 million for the first quarter of fiscal 2014. Net income rose 4.7% to $6.3 million for the first quarter of fiscal 2015 compared with $6.0 million in the first quarter of fiscal 2014. Net income per share increased 7.3% to $0.44 for the first quarter of fiscal 2015 compared with $0.41 for the prior year’s first quarter.

“CSI’s record results benefited from solid growth in revenues from new customers and increased volume from existing customers,” stated Chief Executive Officer Steven A. Powless. “This quarter marked our 40^th consecutive quarter of revenue growth. We continue to benefit from customers signing long-term processing contracts that highlight their confidence in CSI's continuing to deliver high-quality services in the future. Other revenues benefited from growth in transaction volume, as well as increased demand for both regulatory compliance services and Internet and mobile banking products.

“Our outlook for fiscal 2015 remains positive based on our pipeline for new processing business, high contract renewal rate from customers and expanded revenues from regulatory compliance services. We remain focused on driving revenue growth through our expanded national sales network and product innovation, and expanding our market reach as a total solutions provider,” Powless continued.

First Quarter Results

Consolidated revenues rose 5.5% to $54.6 million for the first quarter of fiscal 2015 compared with $51.7 million in the first quarter of fiscal 2014. Processing revenues rose 1.6% to $34.2 million compared with $33.6 million for the first quarter of fiscal 2014. The growth in processing revenues was driven primarily by sales to new customers, cross-sales to existing customers and increases in transaction volume from existing customers, offset partially by the effect of lost business. Other revenues rose 12.8% to $20.4 million compared with the first quarter of fiscal 2014. Other revenues benefited from growth in Internet and mobile banking services, growth in homeland security products and fraud prevention services, and increased demand for our document services.

Operating income rose 5.0% to $10.5 million for the first quarter of fiscal 2015 compared with $10.0 million for the first quarter of fiscal 2014. Operating margin was 19.2% in the first quarter of fiscal 2015 compared with 19.3% for the first quarter of fiscal 2014. The slight decrease in operating margin was due primarily to the ramp up of expenses related to our Strategic Growth Initiative (SGI)that we launched in fiscal 2012. In addition, expenses increased for equipment, increased fees related to growth in our ATM and debit card business, and higher network communications expense.

Net income for the first quarter of fiscal 2015 rose 4.7% to $6.3 million compared with $6.0 million for the first quarter of fiscal 2014. Net income per diluted share increased 7.3% to $0.44 for the first quarter of fiscal 2015 on 14.2 million weighted average diluted shares outstanding compared with $0.41 for the first quarter of fiscal 2014 on 14.6 million weighted average diluted shares outstanding.

“CSI’s balance sheet remained strong on May 31, 2014, with $9.2 million in cash and no long-term debt,” Powless said. “Our cash flow from operations increased to $14.7 million in the first quarter of fiscal 2015. We continue to use our strong financial position and solid cash flow to invest in our business while returning a portion of our earnings to shareholders through our cash dividend program and repurchases of CSI stock. During the first quarter, we invested about $3.1 million in new equipment and software to support our continued growth and returned $3.5 million to shareholders in cash dividends and stock repurchases and redemptions.”

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 for us to protect against the risks, as well as liability or reputational damage to the Company 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.