PADUCAH, Ky., June 28 /PRNewswire-FirstCall/ -- Computer Services, Inc. (CSI) (OTC Pink Sheets: CSVI) today reported record revenues and net income for the first quarter ended May 31, 2006.

First quarter revenues rose 18% to $28.6 million in fiscal 2007 compared with $24.2 million in the first quarter of fiscal 2006. Net income rose 8% to $3.6 million, and net income per diluted share increased 10% to $0.44 compared with the prior year.

"This quarter's results can be attributed to three areas of our business. New bank sales and cross sales continue to grow CSI's core bank processing services. The demand for ATTUS Technology's compliance solutions in the financial services industry continues to grow in and beyond the community banking market. And we are realizing contributions from McCoy Myers that was acquired in November 2005," stated President and Chief Executive Officer Steven A. Powless. "We are optimistic about the opportunities to cross-sell CSI's services to McCoy Myers' customers this year."

First Quarter Results

First quarter consolidated revenues rose 18% to $28.6 million compared with $24.2 million for the first quarter ended May 31, 2005. Processing revenues increased 14.8% to $23.7 million compared with $20.7 million in the first quarter of last year. CSI recorded double-digit growth in card services revenue, software royalties and maintenance, and eBusiness. ATTUS' revenues rose 50% from the prior year first quarter. This increase reflects increased sales of software solutions to support compliance regulations such as OFAC, FinCEN, and Reg CC, increased transaction based revenue for these compliance solutions, increased subscribers to Knowledge Bank compliance training tools, and outsourced OFAC batch processing. McCoy Myers revenues totaled $3.5 million in the first quarter of fiscal 2007.

First quarter operating income rose 10% to $6.1 million compared with $5.6 million in the first quarter of the prior year. Operating margin for the first quarter was 21.5% compared with 23% in the first quarter of fiscal 2006. The decline in operating margin was primarily due to the inclusion of McCoy Myers.

Pre-tax income increased 5.7% to $6.0 million compared with $5.7 million in the first quarter of last year. Net income rose 8% to $3.6 million compared with $3.3 million in the prior-year period. Net income per fully diluted share was $0.44 compared with $0.40 in the same quarter last year.

"We had higher interest expense in the first quarter of fiscal 2007 due to borrowings used to fund the McCoy Myers acquisition," stated Mr. Powless. "We continue to use our strong cash flow to pay down the loan and have reduced the outstanding balance by $3 million during the first quarter to $7.2 million. We have excellent cash flow of approximately $6 million per quarter and expect to continue paying down the loan to reduce future interest expense.

"We continue to invest in new opportunities for CSI's future. We recently partnered with Heartland Communications to build an 8,000 mile fiber optic communications ring (Resilient Private Ring or RPR) to serve our customers. The RPR will be an integral part of CSI's delivery of increased volume of services over the network. In addition, our staff in Lincoln, NE, was consolidated into a new location, we moved into a new facility in Omaha, NE, and we upgraded our facilities in Wichita, KS. We are excited about these new facilities supporting future growth in their markets."

About Computer Services, Inc.

Computer Services, Inc. (CSI), provides service and software solutions for community banks in both a service bureau and an in-house environment. In addition to core processing, our integrated banking solutions include check imaging, cash management, Internet banking, corporate intranets, secure web hosting, e-messaging, online shopping, teller and platform services, ATM and debit card service and support, risk assessment, network management, and compliance software and services for regulatory compliance, homeland security and fraud prevention. Over 3,000 financial institutions are served with CSI's products and services. For more information, visit CSI's website at http://www.csiweb.com/.

All statements except historical statements contained herein constitute "forward-looking statements." These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside of CSI's control, which may cause actual results to differ materially from such statements. Such risks and uncertainties include, but are not limited to, economic, competitive, technological and governmental factors affecting the Company's operations, markets, services, products, prices and other factors. Computer Services, Inc. is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet services.

COMPUTER SERVICES, INC. Financial Highlights (Unaudited) (In thousands, except per share amounts) First Quarter Ended May 31, May 31, 2006 2005 ----------- ----------- Revenues $ 28,563 $ 24,225 Expenses 22,436 18,655 ----------- ----------- Income before other income (expense) 6,127 5,570 Other income (expense), net (110) 122 ----------- ----------- Income before taxes 6,017 5,692 Provision for income taxes 2,407 2,348 ----------- ----------- Net income $ 3,610 $ 3,344 =========== =========== Earnings per share, assuming dilution $ 0.44 $ 0.40 =========== =========== Weighted average common shares outstanding, assuming dilution 8,273 8,318 CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands) 5/31/2006 2/28/2006 --------- --------- ASSETS Cash and cash equivalents $ 5,309 $ 1,748 Other current assets 15,945 17,212 Property and equipment, net 27,349 26,510 Software and software licenses, net 11,698 12,584 Other assets 26,990 27,512 ----------- ----------- Total $ 87,291 $ 85,566 =========== =========== LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities $ 11,334 $ 9,142 Other liabilities 3,866 3,856 Long-term debt 7,153 10,169 ----------- ----------- Total liabilities 22,353 23,167 Shareholders' equity 64,938 62,399 ----------- --------- Total $ 87,291 $ 85,566 =========== ===========

CONTACT: David L. Simon, Treasurer & CFO of Computer Services, Inc.,
+1-270-442-7361, ext. 10126, or dsimon@csiweb.com

Web site: http://www.csiweb.com/