Conversion Services International Reports Year-End 2007 Financial Results

EAST HANOVER, N.J. (May 1, 2008) -- Conversion Services International, Inc. (AMEX: CVN), a premier professional services firm focused on delivering business intelligence and business process optimization solutions to Global 2000 organizations and other businesses, has announced its financial results for year-end 2007.

Conversion Services (“CSI”) reported revenues of $21.5 million for the year ended December 31, 2007, a decrease of $4.2 million, or 16.4%, compared to revenues of $25.7 million for the year ended December 31, 2006.  The cost of that revenue was $16.3 million, or 75.7% of total revenues for the year ended December 31, 2007, as compared to cost of revenue of $19.9 million, or 77.6% of total revenues, for the previous year.  Cost of revenue includes payroll, benefits and other direct costs for the Company’s consultants.

Gross profit of $5.2 million, or 24.3% of total revenue for the year ended December 31, 2007, decreased by $0.5 million, but increased as a percentage of revenue by 1.9% points, as compared to gross profit of $5.7 million, or 22.4% of total revenues for the year ended December 31, 2006. The improvement in the gross profit percentage reflects the Company’s efforts to capture higher margin business during 2007.

Operating expenses for the year ended December 31, 2007 of $9.0 million declined by $2.7 million, or 23.3%, from operating expenses of $11.7 million for the year ended December 31, 2006.

Loss from operations for the year ended December 31, 2007 of $3.7 million declined by $2.2 million, or 37.0%, from the loss from operations of $5.9 million for the year ended December 31, 2006. This reduced loss from operations is the result of a $2.7 million reduction in operating expenses in 2007 versus the prior year.

The Company reported a net loss for the year ended December 31, 2007 of $10.2 million, or $0.15 per share on a basic and diluted basis, as compared to a net loss of $9.6 million, or $0.19 per share on a basic and diluted basis, for the year ended December 31, 2006. Net loss attributable to common stockholders for the year ended December 31, 2007 was $11.0 million, or $0.16 per share on a basic and diluted basis, as compared to $10.2 million, or $0.20 per share on a basic and diluted basis, for the prior year.

Scott Newman, chairman and chief executive officer of CSI, stated, “Our financial results for 2007 have caused us to take steps to strengthen our balance sheet as we work toward creating a stronger company.  As 2007 ended, we made the final payment of $250,000 to repay our debt to Sands Brothers Venture Capital LLC, and we converted $2.5 million of debt to equity. In March 2008, we converted another $600,000 of long-term debt to equity and we have replaced our line of credit with the Laurus Master Fund with a revolver with Access Capital, Inc. that is more attuned to our long-term goals and short-term needs.

He concluded, “We continue to develop our presence in the market.  Most recently CSI, along with its wholly-owned subsidiary, DeLeeuw Associates, announced a strategic alliance to sponsor iSixSigma Financial Services, an Internet portal specifically for the financial services application of Six Sigma, a rigorous, data-driven method for business process improvement. The primary purpose for this co-branded portal is to facilitate improvements in financial services sector quality and efficiency by providing free and easy access to educational and reference materials, case studies, best practices and other information designed for financial services professionals.  With 500,000 visitors a month, this portal represents significant potential.”

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