Computational Systems reports gains in fourth quarter results.

KNOXVILLE, Tenn.--(BUSINESS WIRE)--Jan. 27, 1997--

Net income up 54% for the twelve-month period

Computational Systems, Incorporated (Nasdaq/NM:CSIN) today reported record sales, net income and net income per share for the fourth quarter and twelve-month period ended Dec. 31, 1996.

For the fourth quarter, net sales rose 37% to $16,871,000 compared with $12,312,000 in the year-earlier period. Net income rose 33% to $1,898,000, or $0.37 per share, compared with net income of $1,431,000, or $0.29 per share, a year ago based upon a weighted average number of shares outstanding of 5,112,033 for the fourth quarter of 1996 and 5,012,481 for the fourth quarter of 1995.

For the twelve months ended Dec. 31, 1996, net sales rose 20% to $50,046,000 compared with net sales of $41,772,000 in the year-earlier period. Net income increased 54% to $4,534,000, or $0.90 per share, compared with net income of $2,947,000, or $0.72 per share, a year ago based upon weighted average number of shares outstanding of 5,065,510 in 1996 and 4,117,251 in 1995.

Chairman and Chief Executive Officer, Ronald G. Canada, stated, "The year 1996 was one of transition presenting management with several challenges. Achieving record earnings and sales in the first full year as a public company required balancing management's long-term growth perspective with the public's short-term earnings growth expectations. The year was a challenge to our sales, support and training teams as our customer base continued to shift from large manufacturing plants to smaller plants with fewer skilled tradesmen. Finally, our management team underwent several important transitions that strengthened our leadership and increased focus on our business units. In light of these challenges, I am very excited by prospects for future growth arising from new products in development, continued expansion of our services business, expansion of international markets, and from distribution channel enhancement through new alliances."

CSI designs, produces and markets an integrated family of advanced predictive maintenance products and services for use in continuous-run manufacturing facilities worldwide. The company's Reliability-Based Maintenance(R) products and services help customers detect potentially disruptive conditions in the operation of their machinery before damage or complete mechanical failure occurs, thereby allowing maintenance to be scheduled at the most appropriate time. -0-

              COMPUTATIONAL SYSTEMS INC. AND SUBISIDIARIES

                 CONSOLIDATED STATEMENTS OF OPERATIONS

                      Three Months Ended        Twelve Months Ended
                     Dec. 31,     Dec. 31,     Dec. 31,      Dec. 31,
                      1996         1995         1996          1995

Revenues, net:
 Product          $11,890,315  $ 9,626,645  $36,275,150  $31,990,239
 Services           4,980,933    2,685,839   13,770,973    9,782,244
                  -----------  -----------  -----------  -----------
                   16,871,248   12,312,484   50,046,123   41,772,483

Cost of revenues:
 Product            2,995,598    2,418,489    9,339,308    9,219,753
 Services           3,664,228    2,163,699   10,731,997    7,442,778
                  -----------  -----------  -----------  -----------
                    6,659,826    4,582,188   20,071,305   16,662,531
                  -----------  -----------  -----------  -----------
Gross margin       10,211,422    7,730,296   29,974,818   25,109,952

 Selling, general
  and
  administrative    5,835,416    4,590,871   18,245,737   15,909,203
 Research and
  development       1,481,767    1,155,392    5,075,674    4,562,481
                  -----------  -----------  -----------  -----------
Income from
 operations         2,894,239    1,984,033    6,653,407    4,638,268
Other income
 (expense):
 Interest expense      (2,040)        (748)      (3,985)    (373,451)
 Interest income       72,306      164,152      457,560      261,184
 Other income
  (expense) net           373       86,422      (22,525)      76,795
                  -----------  -----------  -----------  -----------
Income before
 provision for
 income taxes       2,964,878    2,233,859    7,084,457    4,602,796
Provision for
 income taxes       1,067,356      802,573    2,550,406    1,655,495
                  -----------  -----------  -----------  -----------
Net income        $ 1,897,522  $ 1,431,286  $ 4,534,051  $ 2,947,301
                  ===========  ===========  ===========  ===========
Earnings per
 share            $      0.37  $      0.29  $      0.90  $      0.72
                  ===========  ===========  ===========  ===========
Weighted average
 shares outstanding 5,112,033    5,012,481    5,065,510    4,117,251


                  CONDENSED CONSOLIDATED BALANCE SHEETS

                                  December 31, December 31,
                                    1996         1995
                                  ----------   ----------
ASSETS
Current assets                   $24,331,014  $23,529,831
Total property, plant and
 equipment, net                   13,483,920    7,938,241
Other non-current assets           7,457,913      682,701
                                  ----------   ----------
Total assets                     $45,272,847  $32,150,773
                                  ==========   ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities              $12,917,524  $ 7,097,991
Long-term debt                             0       13,172
Deferred revenue                     668,863      512,159
Total shareholders' equity        31,686,460   24,527,451
                                  ----------   ----------
Total liabilities and
 shareholders' equity            $45,272,847  $32,150,773
                                  ==========   ==========

CONTACT: Computational Systems, Incorporated, Knoxville

Bryan J. Collier, 423/675-2110