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First quarter revenues rose 3.2% to $36.8 million in fiscal 2010 compared with $35.7 million in the first quarter of fiscal 2009. Net income rose 11.3% to $5.0 million, and net income per diluted share increased 20% to $0.66 compared with the prior fiscal year's first quarter.
"CSI's record results were due to continued strong growth in cross-sales to existing customers and increased transaction volume combined with good expense control," stated President and Chief Executive Officer Steven A. Powless. "This was our 21st consecutive quarter of improved revenues and net income for CSI. We believe our continued growth is due to our success in expanding our business through complementary acquisitions to broaden our suite of products and services for the financial services industry."
First Quarter Results
Processing revenues increased 4.6% to $26.5 million compared with $25.3 million in the first quarter of last year. The growth in processing revenues benefited from new customer sales, cross-sales to existing customers and higher revenue from transaction based business; partially offset by lower revenue from customers acquired and customers migrating to in-bank check imaging systems. Other revenues decreased 0.3% to $10.4 million in the first quarter of fiscal 2010 compared with same quarter of fiscal 2009. The decline was primarily due to lower software, equipment and maintenance revenues; partially offset by higher telecommunications and eBusiness revenues.
"Our sales growth rate has slowed since last year due to reduced IT spending by our customers in the current weakened economy and to reduced revenues from customers lost through merger and acquisition activity," continued Mr. Powless. "We expect our high retention rate of accounts and our long-term customer contracts to provide CSI with some stability to our revenue base, yet we remain cautious about the outlook for growth in fiscal 2010 due to the soft economy. We anticipate improved sales as the economy improves."
First quarter operating income rose 10.7% to $8.2 million compared with $7.4 million in the first quarter of the prior year. Operating margin improved in the first quarter to 22.3% compared with 20.7% in the first quarter of fiscal 2009. The increase in operating income and margin benefited from higher sales and improved product mix. In addition, operating expenses rose only 1.2% compared to the first quarter of last year, again benefiting from effective cost control programs and improved operating efficiencies.
Net income rose 11.3% to $5.0 million in the first quarter of fiscal 2010 compared with $4.5 million in the prioryear period. Net income for the first quarter of fiscal 2009 included $12,000 in minority interest in the net loss of Heartland. There was no comparable minority interest in the latest quarter since the remaining minority interest in Heartland was purchased by CSI effective June 1, 2008. Net income per fully diluted share increased 20% to $0.66 compared with $0.55 in the same quarter last year and benefited from a 6.3% decrease in average shares outstanding. Since the first quarter of fiscal 2009, CSI has repurchased approximately 549,000 shares.
"CSI generated $12.8 million in cash flow in the first quarter, up from $11.1 million in the first quarter of last year," continued Mr. Powless. "Our strong cash flow has allowed us to continue investing in new products and services and fund our share repurchase program. In the first quarter, we invested $3.9 million in new software and repurchased approximately 121,000 shares of CSI stock for approximately $3.2 million. At the quarter's end, our cash position also improved to $6.8 million, up from $1.3 million at February 28, 2009, and we have only $7.0 million in long-term debt."