SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
( ) 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 0-12329
LCS INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2648333
- ------------------------ ------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
120 Brighton Road, Clifton, New Jersey 07012
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (973) 778-5588
--------------
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 Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes ( X ) No ( )
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the registrant's Common
Stock, par value of $.01 per share, as of August 3, 1998, was 4,844,149.
<PAGE>
LCS INDUSTRIES, INC.
AND SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
As of June 30, 1998 (Unaudited) and
September 30, 1997
Consolidated Statements of Income
For the Three Months and Nine Months Ended
June 30, 1998 and 1997 (Unaudited)
Consolidated Statements of Cash Flows
For the Nine Months Ended
June 30, 1998 and 1997 (Unaudited)
Notes to Consolidated Financial Statements
(Unaudited)
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
<TABLE>
<CAPTION>
LCS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, September 30,
1998 1997
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ................................... $ 17,595,134 $ 14,619,271
Investments - held-to-maturity .............................. 14,029,589 14,410,101
Accounts receivable (less allowance
for doubtful accounts: June 30 - $532,000
and September 30 - $496,000) ............................ 16,829,448 23,163,774
Prepaid expenses and other current assets ................... 2,011,816 1,460,990
Deferred taxes .............................................. 308,000 684,000
------------ ------------
Total current assets ...................................... 50,773,987 54,338,136
------------ ------------
Investments - available-for-sale, net .......................... 1,516 123,708
Property and equipment, net .................................... 6,440,457 7,093,790
Goodwill (net of accumulated amortization: June
30 - $1,020,967 and September 30 - $806,204) ............... 7,066,214 7,280,977
Other assets ................................................... 849,409 672,656
------------ ------------
$ 65,131,583 $ 69,509,267
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................ $ 10,914,531 $ 14,798,326
Accrued salaries and commissions ............................ 2,300,729 3,127,141
Other accrued expenses ...................................... 3,005,732 3,899,876
Income taxes payable ........................................ 434,629 290,407
Current portion of long-term debt ........................... 1,037,916 1,087,511
Current portion of capital lease obligations ................ 7,557 211,580
Deferred revenue ............................................ -- 4,124,699
------------ ------------
Total current liabilities ................................. 17,701,094 27,539,540
------------ ------------
Long-term debt, net of current portion ......................... 2,673,036 3,444,533
Deferred taxes ................................................. 192,000 249,000
Deferred compensation .......................................... 299,000 --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LCS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(continued)
June 30, September 30,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Stockholders' equity:
Preferred stock $.01 par value; authorized
1,000,000 shares; issued - none
Common stock $.01 par value; authorized
15,000,000 shares; issued June 30 - 5,058,174
shares and September 30 - 4,854,847 shares .............. 50,582 48,548
Common stock issuable ....................................... 1,071,532 1,490,431
Additional paid-in capital .................................. 9,595,817 8,702,971
Retained earnings ........................................... 34,254,027 28,245,206
------------ ------------
44,971,958 38,487,156
Less: Treasury stock, at cost, June 30 - 214,663 shares
and September 30 - 187,766 shares ............... (705,505) (207,953)
Available-for-sale securities valuation adjustment,
net of deferred income taxes .................... -- (3,009)
------------ ------------
Total stockholders' equity ................................ 44,266,453 38,276,194
------------ ------------
$ 65,131,583 $ 69,509,267
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
LCS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended June 30,
(Unaudited)
Three Months Nine Months
------------------------------ ------------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales ............................. $ 22,040,914 $ 24,167,753 $ 71,653,799 $ 75,238,106
Cost of sales ......................... 15,255,841 16,451,458 49,577,715 51,758,748
------------ ------------ ------------ ------------
Gross profit .......................... 6,785,073 7,716,295 22,076,084 23,479,358
Selling and administrative expenses ... 4,106,571 4,410,592 12,282,338 13,349,253
Other (income) expense:
Dividend and interest income ....... (406,533) (365,286) (1,212,783) (1,051,227)
Interest expense ................... 78,212 116,820 257,605 350,859
Loss on investment ................. -- 954,000 (210,000) 954,000
------------ ------------ ------------ ------------
Income before income taxes ............ 3,006,823 2,600,169 10,958,924 9,876,473
Provision for income taxes ............ 1,250,000 1,410,000 4,419,000 4,388,000
------------ ------------ ------------ ------------
Net income ............................ $ 1,756,823 $ 1,190,169 $ 6,539,924 $ 5,488,473
============ ============ ============ ============
Per common and common equivalent share:
Basic earnings ........................ $ .36 $ .26 $ 1.36 $ 1.19
============ ============ ============ ============
Diluted earnings ...................... $ .34 $ .23 $ 1.27 $ 1.07
============ ============ ============ ============
Dividends ............................. $ .038 $ .038 $ .113 $ .10
============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
LCS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended June 30,
(Unaudited)
1998 1997
------------ ------------
<S> <C> <C>
Increase (Decrease) in cash and cash equivalents
Cash flows from operating activities:
Net income ........................................ $ 6,539,924 $ 5,488,473
------------ ------------
Adjustments to reconcile net income to net cash
provided by operating
activities:
Depreciation and amortization ................. 2,075,224 1,913,249
Deferred income taxes ......................... 317,000 99,000
Provision for doubtful accounts receivable .... 110,000 85,000
Deferred compensation ......................... 299,000 --
Gain on sale of available-for-sale securities . -- (474)
------------ ------------
Total adjustments ............................. 2,801,224 2,096,775
Changes in operating assets and liabilities:
Accounts receivable ........................... 6,224,326 2,598,852
Prepaid expenses and other current assets ..... (1,143,890) (548,675)
Accounts payable and accrued expenses ......... (5,552,352) (1,833,229)
Income taxes payable .......................... 407,144 506,725
Deferred revenue .............................. (4,124,699) (2,472,917)
Other assets .................................. (176,753) (102,366)
------------ ------------
Total adjustments and changes ................. (1,565,000) 245,165
------------ ------------
Net cash provided by operating activities ......... 4,974,924 5,733,638
------------ ------------
Cash flows from financing activities:
Changes in note payable, long-term debt and capital
leases (including current portion):
Repayments .................................... (1,583,364) (1,196,582)
Dividends paid .................................... (531,052) (455,635)
Exercise of stock options ......................... 151,460 493,872
Employee Stock Purchase Plan and employment
agreement proceeds ............................ 70,168 85,154
------------ ------------
Net cash used in financing activities ............. (1,892,788) (1,073,191)
------------ ------------
Cash flows from investing activities:
Additions to property and equipment ............... (1,207,128) (1,313,713)
Net sales (purchases) of investments .............. 1,100,855 (3,083,100)
------------ ------------
Net cash used in investing activities ............. (106,273) (4,396,813)
------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LCS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended June 30,
(Unaudited)
1998 1997
------------ ------------
<S> <C> <C>
Cash and cash equivalents:
Net increase in cash and cash equivalents ......... 2,975,863 263,634
Cash and cash equivalents at beginning of period .. 14,619,271 11,893,982
------------ ------------
Cash and cash equivalents at end of period ........ $ 17,595,134 $ 12,157,616
============ ============
<CAPTION>
For the Nine Months Ended June 30, ................... 1998 1997
------------ ------------
Supplementary disclosures of cash flow information:
Cash paid during the period for:
Interest ...................................... $ 204,588 $ 233,830
Income taxes ................................. $ 3,518,950 $ 3,937,260
</TABLE>
Supplemental disclosures of non-cash investing
and financing activities:
Valuation adjustment:
In fiscal 1998, the valuation adjustment account is no longer required as
a result of selling the available-for-sale securities portfolio to which
the valuation adjustment related. For the nine months ended June 30,
1997, the account was adjusted to reflect an increase in market values of
the available-for-sale securities portfolio of $31,216, net of deferred
income taxes.
Stock dividends:
On October 7, 1997, 144 shares of the Company's common stock were paid as
dividends upon exchange of 33 shares of the Company's "old" common stock.
Treasury stock:
For the nine months ended June 30, 1998, 26,897 shares of the Company's
outstanding Common Stock were received in exchange for options exercised
covering 176,000 shares of Common Stock.
Long-term debt and acquisition of business:
As a result of Amendment No. 2 of the Catalog Resources, Inc. purchase
agreement, (as explained in Note 3 to the Consolidated Financial
Statements), additional long-term debt of $506,250 was recorded, offset
by charges to common stock issuable of $418,899 and additional paid-in
capital of $87,351 during fiscal 1998. During the nine month period ended
June 30, 1997, $455,552 of common stock issuable was converted into
38,762 issued shares of the Company's common stock, in accordance with
the terms of the Catalog Resources, Inc. purchase agreement, as amended.
See Notes to Consolidated Financial Statements.
<PAGE>
LCS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1) In the opinion of management, the accompanying unaudited financial statements
include all adjustments (consisting only of normal recurring accruals) which are
necessary for a fair presentation of results for the periods indicated. Certain
information and footnote disclosures normally included in complete financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. Therefore, these financial statements should be read in
conjunction with the financial statements and the footnotes included in the
Company's Annual Report on Form 10-K (as amended by Form 10-K/A-1) for the year
ended September 30, 1997. The results of operations for the nine months ended
June 30, 1998 are not necessarily indicative of the results for the full year.
The September 30, 1997 Balance Sheet was derived from the audited Balance Sheet
at that date.
2) Effective October 1, 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share", issued in
March, 1997. The Statement requires dual presentation of basic and diluted
earnings per share by entities with complex capital structures. Basic earnings
per share includes no dilution and is computed by dividing income available to
common shareholders by the weighted-average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of the Company. The prior year's
earnings per share amounts have been restated to reflect the provisions of SFAS
No. 128.
3) On December 30, 1997, the Company and former shareholders of Catalog
Resources, Inc. agreed to Amendment No. 2 of the purchase agreement dated April
1, 1993 and amended August 1, 1994. This Amendment provides for the payment made
January 2, 1998 of $1,012,500 to be 100% in cash compared to the previously
agreed 50% in cash and 50% in Common Stock of the Company, subject to a maximum
number of shares to be issued of 660,000. Accordingly, the current portion of
long-time debt at December 31, 1997 was increased by $506,250 (50% of the
$1,012,500 payment). This was offset by a reduction in common stock issuable of
$418,899, representing the present value at September 30, 1995 of the originally
anticipated stock issuance, and a charge to additional paid-in capital of
$87,351.
As a result of Amendment No. 2, the parties have agreed to reduce the
maximum number of shares issuable under the amended agreement by the shares
which would have been issued on January 2, 1998 based on the provisions of the
original agreement. The revised maximum number of shares issuable is 628,020 of
which 538,287 shares have been previously issued.
4) On January 6, 1998, the Company announced it had entered into an additional
one-year agreement to provide computer services for a major non-U.S.
telecommunications company. Total revenue of $6 million is expected and the
assignment began July 1, 1998 immediately following the conclusion of the
initial three-year project.
5) Other income for the nine months ended June 30, 1998 represents a payment
from McIntyre and King, Ltd. ("M&K") representing final settlement of a portion
of the down-payment made in connection with the 1997 rescinded purchase
agreement. During fiscal 1997, the Company had written off its entire investment
in M&K since any recovery, at that time, was uncertain.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Three Months ended June 30, 1998
Sales declined 9% in the quarter ended June 30, 1998 to $22,041,000
from $24,168,000 for the comparable quarter of the prior year and is accounted
for by decreases of 15% in computer services, 13% in list marketing services and
2% in fulfillment services. The lower computer services revenues continue to
reflect reduced billings, compared to the prior year, for the last phase of the
three-year $40 million contract to build and manage a marketing database for a
major non-U.S. telecommunications company. This contract was completed June 30,
1998. On July 1, 1998, the Company began work under an additional $6.0 million
one-year contract with the same telecommunications company. The list marketing
decline reflects customer attrition and industry softness not fully offset by
new customers. The fulfillment decrease is comprised of a 6% increase in
continuity services offset by a 10% decline in the catalog fulfillment
operation. The continuity services increase resulted primarily from higher
activity levels from existing clients. The decline in the catalog fulfillment
operation resulted from several customers being acquired by third parties, as
previously reported. Recently, contracts with several new customers have been
finalized.
Gross profit decreased 12% to $6,785,000 for the current quarter from
$7,716,000 in the comparable quarter of 1997. Gross profit margin was 31% in the
current quarter compared to 32% in the comparable prior period. The decline in
gross profit amount resulted primarily from the decreased sales volumes.
Selling and administrative expenses decreased 7% to $4,107,000 in the
current quarter from $4,411,000 in the comparable quarter of 1997. Selling and
administrative expenses, as a percentage of sales, were 19% for the current
quarter and 18% in 1997. The decrease in the amount of selling and
administrative expenses is primarily the result of continued lower executive
compensation and travel expenses. This decrease, however, was not proportional
to the decline in revenues and, as a result, the percentage of these expenses to
revenues increased.
Net dividend and interest of $328,000 was realized in the current
quarter compared to $248,000 in the comparable 1997 quarter. Dividend and
interest income increased $41,000 in the current fiscal quarter as a result of a
higher level of funds available for short-term investment and higher interest
rates during the current quarter. The decrease in interest expense quarter over
quarter of $39,000 resulted primarily from reduced debt and capital lease
obligations. The unsecured line of credit held available to the Company was not
utilized in either quarter.
In the quarter ended June 30, 1997, a loss on investment of $954,000
($901,000 net of taxes) was recorded which represented a non-recurring charge
for the write-off of the Company's investment in McIntyre & King, Ltd. ("M&K").
This charge represented $.18 per share in the quarter. The Company's Board of
Directors decided to sever the relationship with M&K due to unexpected operating
losses that would have required unacceptable demands on management's time and
the financial support required to attempt to return M&K to profitability. As a
result, effective April 5, 1997, the Company agreed to rescind its acquisition
<PAGE>
of M&K. The rescission agreement, dated June 30, 1997, provided for the return
of a portion of the down payment in one year. However, recovery was uncertain
and, therefore, the Company expensed all payments, advances and all related
costs. During the first quarter of the current fiscal year, a payment of
$210,000 was received and recorded as other income in settlement of a portion of
the down payment under the rescinded agreement.
The effective tax rate in the current fiscal quarter was 40 per cent
compared to 54 per cent in the comparable period of the prior fiscal year. In
1997, the Company did not anticipate realizing sufficient capital gains during
the tax carryforward period to offset capital losses related to M&K, therefore,
no tax benefit was recorded.
Net income was $1,757,000 ($.34 per share diluted) in the current
quarter compared to $1,190,000 ($.23 per share diluted) in the comparable 1997
quarter.
Nine Months ended June 30, 1998
Sales decreased 5% for the nine months ended June 30, 1998 to
$71,654,000 from $75,238,000 for the comparable period of the prior year and is
represented by decreases of 17% in computer services and 5% in list marketing
services partially offset by a 1% increase in fulfillment. The lower computer
services revenues continue to reflect reduced billings, compared to the prior
year, for the last phase of the three-year $40 million contract to build and
manage a marketing database for a major non-U.S. telecommunications company.
This contract was completed June 30, 1998. On July 1, 1998, the Company bean
work under an additional $6.0 million one-year contract with the same
telecommunications company. The list marketing decline reflects customer
attrition and industry softness not fully offset by new customers. The
fulfillment decrease is comprised of a 15% increase in continuity services
offset by a 74% decrease in telemarketing services and an 11% decline in the
catalog fulfillment operation. The continuity services increase resulted
primarily from higher activity levels from existing clients. The decrease in
telemarketing services is in line with the Company's program to de-emphasize
this activity. The decline in the catalog fulfillment operation resulted from
several customers being acquired by third parties, as previously reported.
Recently, contracts with several new customers have been finalized.
Gross profit decreased 6% to $22,076,000 for the nine month period
from $23,479,000 in the comparable period of 1997. Gross profit margin was 31%
in each period. The decrease in gross profit amount resulted primarily from the
decreased sales volumes.
Selling and administrative expenses decreased 8% to $12,282,000 from
$13,349,000. Selling and administrative expenses, as a percentage of sales, were
17% in the current nine month period compared to 18% in the comparable prior
year period. The decrease in the amount and percentage of selling and
administrative expenses is primarily the result of lower executive compensation,
travel and communications expenses.
Net dividend and interest of $955,000 was realized in the current
period compared to $700,000 in 1997. Dividend and interest income increased
$162,000 in the current nine month period as a result of a higher level of funds
available for short-term investment coupled with higher interest rates. The
decrease in interest expense period over period of $93,000 resulted primarily
from reduced debt and capital lease obligations. The unsecured line of credit
held available to the Company was not utilized in either period.
During the nine month period, a payment of $210,000 was received from
McIntyre & King, Ltd. ("M&K") and recorded as other income. This payment
represented final settlement of a portion of the down-payment made in connection
with the 1997 rescinded purchase agreement, as previously described. During
fiscal 1997, the Company had written off its entire investment in M&K since any
recovery, at that time, was uncertain.
<PAGE>
The effective tax rate for the nine month period in fiscal 1998 was
40 percent compared to 44 per cent in 1997. In 1997, the Company did not
anticipate realizing sufficient capital gains during the tax carryforward period
to offset capital losses related to M&K, therefore, no tax benefit was recorded.
Net income was $6,540,000 ($1.27 per share diluted) in the current
period compared to $5,488,000 ($1.07 per share diluted) in the comparable 1997
period.
Financial Condition, Liquidity and Capital Resources
Working capital was $33,073,000 at June 30, 1998. The working capital
increase resulted from a decrease in current assets of $3,564,000 while current
liabilities decreased by $9,838,000. The decrease in current assets was
primarily the result of lower accounts receivable-net ($6,334,000),
investments-held-to-maturity ($381,000) and deferred taxes ($376,000) offset by
an increase in cash and cash equivalents ($2,976,000) and prepaid expenses and
other current assets ($551,000). The decrease in current liabilities resulted
primarily from lower deferred revenue ($4,125,000), accounts payable
($3,884,000), other accrued expenses ($894,000) and accrued salaries and
commissions ($826,000).
For the nine month period, cash generated by operations decreased
$759,000 over such amounts generated in the comparable period of the prior year.
This decrease was the result of decreases in adjustments to net income and
changes in operating assets and liabilities ($1,810,000) offset by an increase
in net income ($1,051,000). The decrease in adjustments to net income and
changes in operating assets and liabilities resulted primarily from decreases in
accounts payable and accrued expenses ($3,719,000) and deferred revenue
($1,652,000) partially offset by a decrease in accounts receivable ($3,625,000).
For the nine month period ended June 30, 1998, funds used by
financing activities increased $820,000 compared to the comparable period of the
prior year. The increased usage resulted primarily from increased repayment of
debt ($387,000), reduced receipts from the exercise of stock options ($342,000)
and increased payment of dividends ($75,000). For the same period, cash used by
investing activities decreased $4,291,000 as a result of net investment sales
($4,184,000) and reduced additions to property and equipment ($107,000).
Pursuant to the purchase agreement, as amended, with CRI, the Company
is obligated to pay to CRI's selling shareholders, in cash or stock, up to an
aggregate of $10,000,000. Under such purchase agreement, the Company paid
$1,012,500 (one-half in cash and one-half in stock) on January 1, 1997. Further,
such amounts will be payable each January 1 through 2002 totaling a maximum of
$5,062,500. The discounted value of these future payments was recorded at
September 30, 1995 since it is probable that the future earnings levels will be
attained which will require the maximum payments to be made.
Management believes cash generated from current operations and other
liquid assets combined with the available bank credit line and the five year
term loan mentioned above will be sufficient to meet cash flow needs during the
fiscal year.
<PAGE>
Year 2000 Issues
Certain of the Company's operational computer programs use two digits
to identify a year in the date field which does not consider the impact, if any,
of the upcoming change in the century. The Company anticipates, at a cost not
material to financial results, the timely completion of any programming needed
to address this issue and result in successful computer processing in the year
2000 and beyond.
The Company has not, however, fully completed its review of the Year
2000 issues, particularly, but not limited to, non-operational computer programs
and third party vendor and customer issues. The Company is in the process of
completing that review.
Management cannot provide assurance that the result of its Year 2000
compliance efforts or the cost of such efforts will not differ materially from
estimates. Accordingly, business continuity and contingency plans are currently
being developed to address high risk areas as they are identified.
The above discussion contains statements that are "forward-looking"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Although the Company believes that its estimates are based on reasonable
assumptions, there can be no assurance that actual results will not differ
materially from these estimates.
<PAGE>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 11 - Computation of earnings per share.
(b) Reports on Form 8-K - LCS Industries, Inc. did not file any
reports on Form 8-K during the quarter ended June 30, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: Clifton, New Jersey
August 10, 1998
LCS INDUSTRIES, INC.
(Registrant)
By: /s/ William Rella
-----------------
William Rella
President and
Chief Executive Officer
By: /s/ Pat R. Frustaci
-------------------
Pat R. Frustaci
Vice President-Finance
(Chief Financial Officer)
<PAGE>
LCS INDUSTRIES, INC.
Commission File No. 0-12329
------
Quarterly Report on Form 10-Q
for the
Nine Months Ended June 30, 1998
EXHIBIT
<PAGE>
INDEX TO EXHIBIT
Exhibit
No. Description
--- -----------
11 Statement re: Computation of Per Share Earnings
<TABLE>
<CAPTION>
EXHIBIT 11
LCS INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE AND
COMMON EQUIVALENT SHARE
For the Three and Nine Months Ended June 30,
(Unaudited)
Three Months Nine Months
-------------------------- -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Basic earnings per share:
Weighted average shares outstanding ..... 4,834,721 4,654,374 4,794,477 4,612,317
========== ========== ========== ==========
Net income .............................. $1,756,823 $1,190,169 $6,539,924 $5,488,473
Basic earnings per share ................ $ .36 $ .26 $ 1.36 $ 1.19
========== ========== ========== ==========
Diluted earnings per share:
Weighted average shares outstanding ..... 4,834,721 4,654,374 4,794,477 4,612,317
Weighted average - dilutive stock options 211,216 359,968 280,353 372,048
Shares issuable in connection with the
acquisition of Catalog Resources, Inc. 89,733 121,713 89,733 121,713
---------- ---------- ---------- ----------
5,135,670 5,136,055 5,164,563 5,106,078
========== ========== ========== ==========
Net income .............................. $1,756,823 $1,190,169 $6,539,924 $5,488,473
Diluted earnings per share and common
equivalent share ..................... $ .34 $ .23 $ 1.27 $ 1.07
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 17,595,134
<SECURITIES> 14,029,589
<RECEIVABLES> 17,361,448
<ALLOWANCES> 532,000
<INVENTORY> 186,780
<CURRENT-ASSETS> 50,773,987
<PP&E> 20,139,329
<DEPRECIATION> 13,698,872
<TOTAL-ASSETS> 65,131,583
<CURRENT-LIABILITIES> 17,701,094
<BONDS> 0
0
0
<COMMON> 50,582
<OTHER-SE> 44,215,871
<TOTAL-LIABILITY-AND-EQUITY> 65,131,583
<SALES> 0
<TOTAL-REVENUES> 71,653,799
<CGS> 0
<TOTAL-COSTS> 49,577,715
<OTHER-EXPENSES> 12,282,338
<LOSS-PROVISION> 110,000
<INTEREST-EXPENSE> 257,605
<INCOME-PRETAX> 10,958,924
<INCOME-TAX> 4,419,000
<INCOME-CONTINUING> 6,539,924
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,539,924
<EPS-PRIMARY> 1.36
<EPS-DILUTED> 1.27
</TABLE>
