Computer Horizons Reports First Quarter 2000 Results - Company Financial Information

Edge: Work-Group Computing Report, May 1, 2000

Computer Horizons Corp. (Nasdaq: CHRZ), a strategic e-Business solutions and professional services company, Thursday announced revenues and financial results for its first quarter ended March 31, 2000.

Revenues for the first quarter of 2000 were $114.3 million, a 17 percent decrease from the $138.1 million in the 1999 first quarter. The Company reported a net loss for the first quarter of $2.2 million, or $(0.07) per diluted share, compared with net income for the first quarter of 1999 of $9.5 million, or $0.30 per diluted share. Diluted Cash EPS (before amortization of goodwill and other intangibles) was a loss of $(0.04) per share for the first quarter of 2000, as compared to $0.32 in the prior year.

Bill Murphy, Executive Vice President and CFO commented, "Company metrics and comparisons are not particularly insightful for CHC, as the Company continues its post-Y2K reconfiguration. What is fueling our growth today is our E-Solutions Group. E-Solutions revenue in the first quarter increased by $13.1 million or 65 percent to $33.4 million, and now represents 29 percent of our total sales. At the same time IT Services revenue decreased $37.0 million in the first quarter compared with last year's first quarter, due to the expected Y2K revenue decline and its related impact on the buying habits of our customers. This decline, coupled with continued, planned investment in our E-Solutions Group, resulted in a reported loss for the quarter."

John Cassese, Chairman and CEO commented, "With the e-Business professional services market in Web-enabling services and systems integration estimated to grow from $5 billion in 1999 to approximately $35 billion by 2003, according to Gartner Group, our E-Solutions Group is experiencing significant sequential growth and has an abundant pipeline of new opportunities. CHC enables new and old economy companies to move their business to the Web quickly and correctly. CHC understands how to integrate both the needs of Internet start-ups and the IT dynamics of legacy systems. We have attracted more than 50 new clients during the past two quarters alone."

Cassese added that the Board has approved the company's plan to offer public ownership in its HR e-Procurement Company, CHIMES. "With the market for packaged supply-chain software also expected to grow from approximately $600 million last year to $12 billion by 2003, according to International Data Corp., the creation of a separate public entity for CHIMES is expected to enhance its focus in its respective markets. It will also enable the financial community to value this business independently, potentially providing increased value and returns to our shareholders. In addition, it will provide the availability of a separate acquisition currency and the opportunity to raise additional capital. The planned 20 percent equity carve-out is targeted for the third quarter of this year, market conditions permitting," commented Cassese.

"We have made great strides toward establishing Computer Horizons as an emerging force in the E-Business marketplace. CHC has successfully repositioned our business emphasis to focus on the high margin, faster growing E-Services sector. At the same time we have continued to pursue an aggressive investment strategy in the business units we have incubated and plan to carve-out: our network infrastructure business (eB Networks, Inc.), our products division (Princeton Softech), and our unique HR e-procurement initiative (CHIMES, Inc.)," concluded Cassese.

Computer Horizons Corp. (Nasdaq:CHRZ) is a strategic e-Business solutions and professional services company that is powering a new breed of rapid growth Internet developers. With thirty years of experience, CHC is a global leader in systems integration, migration and innovation, enabling companies to stay ahead of the technological curve. By leveraging its core business in IT services, CHC is powering its new breed of Internet companies, including e-Solutions, CHIMES, eB Networks and Princeton Softech, to enable its Global 1000 customer base to compete in this new digital business environment. For more information on Computer Horizons, visit our Web site at www.computerhorizons.com.

               Computer Horizons Corp. and Subsidiaries
          Consolidated Condensed Statements of Income (Loss)
           (Unaudited - In thousands, except per share data)

                                            Three Months Ended

                                        March 31,         March 31,
                                           2000              1999
Revenues:
     IT Services                          $80,892          $117,899
     e-Solutions Group                     33,390            20,242
Total                                     114,282           138,141
Direct Costs                               83,015            90,720
Gross Profit                               31,267            47,421
Selling, General & Admin.                  33,160            29,941
Amortization of Intangibles                 1,776             1,192
Income (Loss) from Operations              (3,669)           16,288
Net Interest Income (Expense)                (266)              266
Income (Loss) Before Income Taxes         $(3,935)          $16,554
Income Taxes (Benefit)                     (1,692)            7,035
Net Income (Loss)                         $(2,243)          $ 9,519
Earnings (Loss) Per Share:
   Basic                                 $ (0.07)           $ 0.30
   Diluted                               $ (0.07)           $ 0.30
Weighted Average Number of Shares
Outstanding:
   Basic                               31,482,000        31,221,000
   Diluted                             31,482,000        31,833,000

           CONSOLIDATED CONDENSED BALANCE SHEET INFORMATION
                      (Unaudited - In Thousands)

                                      March 31,       December 31,
                                           2000             1999
ASSETS:

Current Assets:
  Cash and cash equivalents              $19,099           $17,072
  Accounts receivable, less
  allowance for doubtful accounts        170,047           172,806
    Other current assets                  17,047            18,903
                                         ------             ------
            Total current assets         206,193           208,781

  Property and equipment, net             19,647            20,221
  Goodwill                                93,646            94,349
  Other assets                            24,440            24,643
                                          ------            ------
           Total Assets                $343,926           $347,994
                                      ========            ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts payable & accrued expenses   $27,381             $35,505
  Current portion - long-term debt       29,184              19,502
  Other current liabilities              20,826              23,917
                                         ------              ------
       Total current liabilities         77,391              78,924

Long-term debt                            4,024               4,100
Other long-term liabilities               2,055               2,318
Shareholders' equity                    260,456             262,652
                                        -------             -------
Total Liabilities &
 Shareholders' Equity                  $343,926            $347,994
                                       ========            ========