COMPUTER PROGRAMS & SYSTEMS INC - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2005.

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to .

Commission file number: 000-49796

COMPUTER PROGRAMS AND SYSTEMS, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		74-3032373
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

6600 Wall Street, Mobile, Alabama		36695
(Address of Principal Executive Offices)		(Zip Code)

(251) 639-8100

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

As of April 29, 2005, there were 10,489,849 shares of the issuer’s common stock outstanding.

COMPUTER PROGRAMS AND SYSTEMS, INC.

Form 10-Q

(For the period ended March 31, 2005)

INDEX


PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1

	Condensed Balance Sheets (unaudited) – March 31, 2005 and December 31, 2004	1

	Condensed Statements of Income (unaudited) – Three months ended March 31, 2005 and 2004	2

	Condensed Statement of Stockholders’ Equity (unaudited) – Three months ended March 31, 2005	3

	Condensed Statements of Cash Flows (unaudited) –Three months Ended March 31, 2005 and 2004	4

	Notes to Condensed Financial Statements (unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	15

Item 4.	Controls and Procedures	15

PART II.	OTHER INFORMATION	15

Item 1.	Legal Proceedings	15

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 3.	Defaults upon Senior Securities	15

Item 4.	Submission of Matters to a Vote of Security Holders	15

Item 5.	Other Information	16

Item 6.	Exhibits	16

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

COMPUTER PROGRAMS AND SYSTEMS, INC.

CONDENSED BALANCE SHEETS (Unaudited)


	March 31, 2005			December 31, 2004
Assets
Current assets:
Cash and cash equivalents	$	11,097,813		$	13,785,377
Investments		6,102,728			—
Accounts receivable, net of allowance for doubtful accounts of $1,377,000 and $1,636,000, respectively		11,779,451			11,764,465
Financing receivables, current portion		1,237,611			974,160
Inventories		1,603,938			1,475,166
Deferred tax assets		1,377,274			1,397,016
Prepaid income taxes		—			171,574
Prepaid expenses		226,645			437,716

Total current assets		33,425,460			30,005,474

Property and equipment
Land		936,026			936,026
Maintenance equipment		3,473,238			3,298,140
Computer equipment		5,249,190			4,854,331
Office furniture and equipment		1,608,753			1,481,314
Automobiles		89,934			89,934

		11,357,141			10,659,745
Less accumulated depreciation		(5,632,207	)		(5,204,730	)

Net property and equipment		5,724,934			5,455,015
Financing receivables		557,751			617,657

Total assets	$	39,708,145		$	36,078,146

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,588,837		$	969,454
Deferred revenue		3,060,840			2,602,235
Accrued vacation		1,754,629			1,630,382
Other accrued liabilities		2,484,060			2,323,433
Income taxes payable		1,380,519			—

Total current liabilities		10,268,885			7,525,504

Deferred tax liabilities		694,288			718,753

Stockholders’ equity:
Common stock, par value $0.001 per share; 30,000,000 shares authorized; 10,489,849 shares issued and outstanding		10,490			10,490
Additional paid-in capital		17,292,079			17,292,079
Deferred compensation		(110,585	)		(123,345	)
Accumulated other comprehensive loss		(27,752	)		—
Retained earnings		11,580,740			10,654,665

Total stockholders’ equity		28,744,972			27,833,889

Total liabilities and stockholders’ equity	$	39,708,145		$	36,078,146

See accompanying notes.

COMPUTER PROGRAMS AND SYSTEMS, INC.

CONDENSED STATEMENTS OF INCOME (Unaudited)


	Three months ended March 31,
	2005		2004
Sales revenues:
System sales	$	12,642,831	$	7,103,937
Support and maintenance		10,192,293		9,254,338
Outsourcing		3,561,455		1,853,935

Total sales revenues		26,396,579		18,212,210

Costs of sales:
System sales		7,955,288		6,433,277
Support and maintenance		4,564,421		4,144,403
Outsourcing		1,961,405		1,138,792

Total costs of sales		14,481,114		11,716,472

Gross profit		11,915,465		6,495,738

Operating expenses:
Sales and marketing		1,834,650		1,284,335
General and administrative		4,868,249		4,072,526

Total operating expenses		6,702,899		5,356,861

Operating income		5,212,566		1,138,877

Other income (expense):
Interest income		109,816		62,068
Miscellaneous income		64,873		9,282

Total other income		174,689		71,350


Income before taxes		5,387,255		1,210,227

Income taxes		2,153,413		455,312

Net income	$	3,233,842	$	754,915

Net income per share - basic	$	0.31	$	0.07

Net income per share - diluted	$	0.31	$	0.07


Weighted average shares outstanding
Basic		10,489,849		10,489,849
Diluted		10,574,145		10,527,101

Dividends declared per share	$	0.22	$	0.12

See accompanying notes.

COMPUTER PROGRAMS AND SYSTEMS, INC.

CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)


	Common Shares	Common Stock		Additional Paid-in Capital		Deferred Compensation			Accumulated Other Comprehensive Loss			Retained Earnings			Total Stockholder’s Equity
Balance at December 31, 2004	10,489,849	$	10,490	$	17,292,079	$	(123,345	)	$	—		$	10,654,665		$	27,833,889

Net Income													3,233,842			3,233,842
Dividends													(2,307,767	)		(2,307,767	)
Unrealized gain/loss on assets held for sale, net of tax of $17,743										(27,752	)					(27,752	)
Amortization of deferred compensation							12,760									12,760

Balance at March 31, 2005	10,489,849	$	10,490	$	17,292,079	$	(110,585	)	$	(27,752	)	$	11,580,740		$	28,744,972

See accompanying notes.

COMPUTER PROGRAMS AND SYSTEMS, INC.

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)


	Three months ended March 31
	2005			2004
Operating Activities
Net income	$	3,233,842		$	754,915
Adjustments to net income:
Provision for bad debt		(259,202	)		143,500
Deferred taxes		13,020			(20,661	)
Deferred compensation		12,760			12,761
Depreciation		427,477			404,333
Changes in operating assets and liabilities:
Accounts receivable		244,216			2,105,263
Financing receivables		(203,545	)		(477,016	)
Inventories		(128,772	)		10,848
Prepaid expenses		211,071			195,486
Accounts payable		619,383			332,921
Deferred revenue		458,605			(195,405	)
Other liabilities		284,874			(353,036	)
Income taxes payable		1,552,093			433,805

Net cash provided by operating activities		6,465,822			3,347,714

Investing Activities
Purchases of property and equipment		(697,396	)		(380,599	)
Purchases of investments		(6,148,223	)		—

Net cash used in investing activities		(6,845,619	)		(380,599	)

Financing Activities
Dividends paid		(2,307,767	)		(1,258,783	)

Net cash used in financing activities		(2,307,767	)		(1,258,783	)

Increase in cash and cash equivalents		(2,687,564	)		1,708,332

Cash and cash equivalents at beginning of period		13,785,377			9,472,743

Cash and cash equivalents at end of period	$	11,097,813		$	11,181,075

Cash paid for income taxes	$	588,300		$	—

See accompanying notes.

COMPUTER PROGRAMS AND SYSTEMS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

1.	BASIS OF PRESENTATION

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