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Conversion Services International Announces Second Quarter Results

EAST HANOVER, N.J., August 19, 2005 – Conversion Services International, Inc. (OTC Bulletin Board: CSII; "CSI"), a premier professional services firm focused on delivering the value in business intelligence, data warehousing and data management solutions to Global 2000 organizations and other businesses, today announced results of operations for the second quarter and six months ended June 30, 2005. See attached tables.

Revenues for the second quarter increased 14% to $7.4 million from $6.5 million in the second quarter of 2004. Gross profit increased at a higher rate, by 20%, to $2.6 million from $2.1 million in the comparable period last year. The Company incurred greater selling and marketing, research and development, and depreciation and amortization expenses that were largely related to Evoke Software, which the Company sold in July 2005. CSI reported a net loss of $3.3 million, which compares to a net loss of $1.1 million during the second quarter of 2004.

Scott Newman, CSI’s President, Chief Executive Officer and Chairman, commented, “Our Global 2000 client base continued to generate growth during the quarter. In the six-month period, revenues increased 21%, and the 28 new consulting engagements that we secured during the quarter should produce continued top-line growth in the second half of the year.

“In addition to organic growth, we expect second-half revenue contribution from our recent acquisitions, which are also strategic in nature. In late July, we acquired McKnight Associates, Inc., a renowned business intelligence and data warehouse consultancy. McKnight expands our client base with such industry leading companies as Coach, Commerzbank, USAA, and France Telecom. As Senior VP of Data Warehousing for CSI, William McKnight’s vast experience in the consumer products, retail, telecommunications, and healthcare industries will help support future growth in these key segments. Integrated Strategies, Inc., which we acquired in early August, complements our March 2004 acquisition of DeLeeuw Associates by broadening our merger integration management and business process change practices. The addition of Integrated Strategies should accelerate our ongoing organic business growth in the financial services industry and expand our geographic footprint, especially into the Midwest. Importantly, both companies joined CSI with lean cost structures.”

Mr. Newman concluded, “The Evoke divestiture and our recent cost efficient acquisitions should enable us to decrease operating expenses significantly as a percentage of revenues, beginning in the third quarter. In light of our base business and our recent strategic and accretive acquisitions, we are optimistic about CSI’s outlook.”

About Conversion Services International, Inc.

A Note on Forward-Looking Statements






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About Conversion Services International, Inc.

A Note on Forward-Looking Statements



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