Correctional Services Corporation Announces Financial Results for First Quarter 2005

Correctional Services Corporation (NASDAQ:CSCQ)
today announced financial results for the first quarter 2005. Revenues
for the first quarter were $32.1 million versus $32.0 million in the
comparative period in 2004. For the 2005 quarter, the Company reported
contribution from operations of $3.1 million and a net loss of
$509,000 or $0.05 per diluted share. For the first quarter of 2004,
the Company reported contribution from operations of $2.2 million and
a net loss of $656,000 or $0.06 per diluted share. Diluted shares were
10,167,000 and 10,159,000 in the first quarter 2005 and 2004,
respectively.
   Included in the reported amounts for the first quarter 2005 and
2004 were the following pre-tax items: (in thousands)
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                                                  2005        2004
                                                  ----        ----
    --  Startup expenses associated with the
        opening of new facilities                 $139       $1,705

    --  Loss from discontinued operations         $140         $658
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   The above pre-tax charges for the first quarter 2005 totaled
$279,000. The total for the 2004 pre-tax items was income of $2.4
million. The after tax charges for 2005 were $170,000 or $0.02 per
diluted share and the after tax charge for 2004 was $1.4 million or
$0.14 per diluted share.
   Commenting on the first quarter results, James F. Slattery,
President & CEO stated, "I am disappointed in the first quarter
results which were impacted by lower utilization by the Immigration &
Customs Enforcement (ICE) at several of our Texas adult facilities due
to budget issues. However, additional funding is now in place and we
have begun to see occupancy improvement."
   Slattery further stated, "The Company will continue to focus on
our near term goal of improved earnings by increasing occupancy at our
existing adult facilities and stabilizing the performance of our
juvenile division. We continue to proceed toward the timely opening in
late June of our new 1020 bed Department of Homeland Security ICE
facility in South Texas and the June opening of the 96 bed expansion
of our Littlefield facility which will house inmates for the Wyoming
Department of Corrections. These new beds in addition to the full
implementation of our Behavioral Health Overlay Services (BHOS) at our
Florida Juvenile Programs are expected to produce earnings improvement
in the third and fourth quarters."
   The Company will be having a conference call to discuss this
release on Thursday May 12, 2005 at 11:00 a.m. EDT. The number to call
is [phone] (U.S. only) or [phone] (International). A
replay will be available by calling [phone] and using the pin
6045297.
   Through its Youth Services International subsidiary, the Company
is the nation's leading private provider of juvenile programs for
adjudicated youths with 17 facilities and 1,300 juveniles in its care.
In addition, the Company is a leading developer and operator of adult
correctional facilities, operating 14 facilities with approximately
5,500 beds. On a combined basis, the Company provides services in 12
states, representing approximately 6,800 beds including aftercare
services.

   Safe Harbor Statement Under The Private Securities Litigation
Reform Act of 1995

   Certain statements contained in this press release are not
historical but are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended. These include
statements regarding the expectations, beliefs, intentions or
strategies regarding the future. The Company intends that all
forward-looking statements be subject to the safe-harbor provisions of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect the Company's views as of the date
they are made with respect to future events and financial performance,
but are subject to many uncertainties and risks which could cause the
actual results of the Company to differ materially from any future
results expressed or implied by such forward-looking statements.
Examples of such uncertainties and risks include, but are not limited
to: fluctuations in occupancy levels and labor costs; the ability to
secure both new contracts and the renewal of existing contracts; the
possibility of unforeseen costs relating to facility closings, the
ability to achieve profitability and public resistance to
privatization; ability to obtain construction financing; and ability
to complete new construction projects within budgeted amounts.
Additional risk factors include those discussed in reports filed by
the Company from time to time on Forms 10-K, 10-Q and 8-K. The Company
does not undertake any obligation to update any forward-looking
statements.
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          CORRECTIONAL SERVICES CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
             (dollars in thousands, except per share data)

                                         Three Months Ended March 31,
                                     ---------------------------------
                                            2005             2004
                                     ---------------- ----------------

Revenues from continuing operations  $32,066  100.00% $32,041  100.00%
                                     -------- ------- -------- -------

Facility expenses:
    Operating                         28,830   89.91%  28,109   87.73%
    Start up costs                       139    0.43%   1,705    5.32%
                                     -------- ------- -------- -------
                                      28,969   90.34%  29,814   93.05%
                                     -------- ------- -------- -------

Contribution from operations           3,097    9.66%   2,227    6.95%

General and administrative expenses    2,254    7.03%   2,153    6.72%
                                     -------- ------- -------- -------

Operating income                         843    2.63%      74    0.23%
Interest expense, net                  1,550    4.83%     557    1.74%
                                     -------- ------- -------- -------

Loss from continuing operations
 before income taxes                    (707)  -2.20%    (483)  -1.51%
Income tax  benefit                     (283)  -0.88%    (228)  -0.71%
                                     -------- ------- -------- -------

Loss from continuing operations         (424)  -1.32%    (255)  -0.80%
Loss from discontinued operations,
 net of tax benefit of $55 and $257      (85)  -0.27%    (401)  -1.25%
                                     -------- ------- -------- -------

Net loss                               $(509)  -1.59%   $(656)  -2.05%
                                     ======== ======= ======== =======

Basic and diluted loss per share
    Loss per share from
     continuing operations            $(0.04)          $(0.02)
    Loss per share from
     discontinued operations           (0.01)           (0.04)
                                     --------         --------

    Loss per share                    $(0.05)          $(0.06)
                                     ========         ========

Number of shares used to compute EPS:
    Basic                             10,167           10,159
                                     ========         ========
    Diluted                           10,167           10,159
                                     ========         ========

Other Information

Beds under management 
 (includes aftercare)                  6,771            7,693
Compensated mandays                  495,170          508,644


SELECTED BALANCE SHEET DATA
                                     March 31       December 31       
                                       2005             2004
                                     --------         --------
Working Capital                      $10,841          $11,686
Total Assets                         199,896          199,990
Bond and Note Payable                101,969          101,962
Other Long-term Obligations           18,854           18,995
Shareholders' Equity                  47,604           48,113
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