Computer Horizons Reports First Quarter 2002 Results.Business Editors & High-Tech Writers MOUNTAIN LAKES, N.J.--(BUSINESS WIRE)--May 1, 2002 Computer Horizons (Nasdaq: CHRZ): Continued Strength in Balance Sheet: Company Debt-Free; Solutions Pipeline Continues Strong, Particularly in CHC's HIPAA (Health Insurance Portability & Accountability Act of 1996, Public Law 104-191) Also known as the "Kennedy-Kassebaum Act," this U.S. law protects employees' health insurance coverage when they change or lose their jobs (Title I) and provides standards for patient health, Practice; Chimes Adds to Client Roster Computer Horizons Corp. (Nasdaq: CHRZ), a strategic human capital services and e-business solutions company, today announced financial results for its first quarter ended March 31, 2002, essentially in line with company guidance regarding revenues and operating performance. Excluding the operations of assets held for sale, the Company recorded revenues for the first quarter of $76.3 million, an 18 percent decline over the first quarter of 2001, due to continued softness in the IT Services area in terms of both headcount and revenue stream. Excluding the operations of assets held for sale and net gain on sale of assets, CHC CHC Chicago Cubs CHC Community Health Center CHC Chestnut Hill College (Philadelphia, Pennsylvania) CHC Congressional Hispanic Caucus CHC Community Health Council (UK National Health Service) recorded a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss of $2.3 million, or $(0.07) per share, for the period compared with a pro forma net income of $234,000, or $0.01 per share, in the first quarter of 2001. Effective January 1, 2002, the Company no longer amortizes goodwill and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , in compliance with Statement of Financial Accounting Standard (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) No. 142. Amortization of intangible assets for the first quarter of 2001 was $707,000. Total Company revenues for the first quarter of 2002 were $79.2 million, a decrease of $27.3 million, or 26 percent, over the prior year. Net loss in the first quarter of 2002 was $1.2 million, or $(0.04) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with a net loss of $1.0 million, or $(0.03), in the prior year. The 2002 net loss includes a net gain of $1.1 million, or $0.03 per share, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the sale of Princeton Softech and its operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in the quarter. The 2001 net loss of $1.0 million included a loss of $748,000, or $(0.02) per share, relating to operating results of the assets held for sale, net of gain on sale of assets. The Company continues to avail itself of its stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program. And, during the first quarter of 2002, CHC purchased 161,000 of its common shares in the open market at an aggregate cost of approximately $582,000. Commenting on financial position and performance at CHC, William J. Murphy, chief financial officer of Computer Horizons, said, "Our continuing efforts to strengthen our balance sheet and contain costs have paid off handsomely and positioned us well, considering the prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. ambiguities of the economy and, consequently, our markets. During the first quarter of 2002, we paid off the remainder of our debt ($10 million), and completed the final piece of our divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). program with the sale of the last remaining assets of Princeton Softech. At the end of the quarter, we had $117 million in working capital, an unused line of credit of $40 million, and $46 million in cash. Subsequent to the closing of the first quarter, the Company received an income tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. of $11.3 million, which further enhanced our strong cash position. Additionally, as a result of the Economic Stimulus Act signed into law on March 9, 2002, whereby the loss carryback Loss Carryback An accounting technique with which a company retroactively applies net operating losses to a preceding year's income in order to reduce tax liabilities present in that previous year. provisions were extended from two years to five years, CHC is expecting an additional refund of approximately $20 million. We are currently evaluating alternatives regarding cash allocations, including additional stock repurchases, and strategic investments." "Our IT Services business continues to suffer from a weak economy. While revenues in our continuing Solutions business increased 7 percent year-over-year, to $21.7 million, there was a sequential decline reflecting lower utilization rates in our development and integration practices as some projects scheduled to start were delayed. The fourth quarter of 2001 had very heavy volume associated with our work with the City of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of ," said John J. Cassese, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Computer Horizons. "At the same time, growth prospects in the government and healthcare sectors remain strong. Payers and providers are required to update their systems to meet compliance deadlines under the Health Insurance Portability and Accountability Act The Health Insurance Portability and Accountability Act (HIPAA) was enacted by the U.S. Congress in 1996. According to the Centers for Medicare and Medicaid Services (CMS) website, Title I of HIPAA protects health insurance coverage for workers and their families when (HIPAA). Computer Horizons' HIPAA practice has already conducted in excess of 65 assessments for payers and providers, such as the New York City Health and Hospitals Corporation The New York City Health and Hospitals Corporation (HHC) operates the public hospitals and clinics in New York City. It was created in 1969 by the New York State Legislature as a public benefit corporation (Chapter 1016 of the Laws 1969). , over the last 18 months. So this opportunity is not new to us. We have been placing a heavy emphasis on this practice, and in fact, have recently doubled the size of our consulting staff con·sult·ing staff n. The body of specialists affiliated with a hospital who serve in an advisory capacity to the attending staff. to support a healthy pipeline. "Demand for outsourcing and development solutions has increased, both on and offshore, while customers are looking to reduce costs wherever possible. Companies are beginning to see the value in moving their mission critical systems offshore, in addition to their non-critical systems. Our goal is to leverage the cost efficiencies provided by our offshore model and market this to our existing and potential customer base. "The Chimes model continues to spark significant interest among the Global 2000 with new deals in the first quarter with American Airlines American Airlines Major U.S. airline. American was created through a merger of several smaller U.S. airlines and incorporated in 1934. It continued to buy the routes of other airlines, becoming an international carrier in the 1970s; its routes include South America, the , Discover Card and Perot Systems Perot Systems Corporation NYSE: PER is an information technology services provider based in Plano, Texas. Peter Altabef has served as president, chairman, and chief executive officer since 2004. . In addition, the US subsidiary of Vedior NV, Sapphire sapphire, precious stone. A transparent blue corundum, it is classified among the most valuable of gems. Sapphires are found chiefly in Thailand, India, Sri Lanka, and Myanmar and also in Australia and in the United States (in Montana). Technologies North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , agreed to use the Chimes software platform internally. "With 80,000 users and $1.2 billion flowing through the exchange, we believe Chimes is the largest Managed Service Provider (MSP (1) (Management Service Provider or Managed Service Provider) An organization that manages a customer's computer systems and networks which are either located on the customer's premises or at a third-party datacenter. ) in the human capital management arena to date. We have a total of 30 customers and we anticipate profitability at Chimes by the end of the year. "CHC is in a very favorable position Noun 1. favorable position - the quality of being at a competitive advantage favourable position, superiority advantage, vantage - the quality of having a superior or more favorable position; "the experience gave him the advantage over me" , financially, and we will continue to do everything possible to leverage the areas of growth we have identified and take advantage of a market recovery, as, and where that occurs," concluded Cassese. Looking Forward CHC expects revenue for the second quarter of 2002 to be in the range of $77 to $80 million and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. in the range of a ($0.02) to ($0.04) loss. For the full year 2002, and excluding the operations of Princeton Softech, we expect revenue to be approximately $310 to $315 million and EPS in the range of $0.01 to $0.04. The revenue estimates are largely influenced by assumptions made as to future IT spending levels of our customers and the uncertain economic environment. The Company also indicated that, in accordance with its adoption of Statement of Financial Accounting Standard (SFAS) No. 142, "Goodwill and Other Intangible Assets," it is conducting an independent valuation of its intangible assets and expects that a preliminary evaluation will be completed in the second quarter of 2002. Computer Horizons Corp. will conduct a conference call webcast at 10:00 A.M. (EST EST electroshock therapy. EST abbr. electroshock therapy ) today to discuss first quarter results. The call will be broadcast live via the Internet and can be accessed for the next 14 days at http://www.computerhorizons.com. Pro Forma Income Reconciliation A reconciliation of reported operating results, net of tax, to pro forma income amounts is as follows:
Three Months Ended
March 31,
(in thousands)
2002 2001
$ EPS $ EPS
Net income (loss)
as reported $(1,233) $(0.04) $(1,018) $(0.03)
Loss on investments 40 -- -- --
Operating results
of the assets
held for sale, including gain
on sale
of assets (1,071) (0.03) 748 0.02
Amortization of
Intangibles -- -- 504 0.02
Pro forma net income
(loss)(a) $(2,264) $(0.07) $ 234 0.01
(a) Not a measurement in accordance with Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . About Computer Horizons Corp. Computer Horizons Corp. (Nasdaq: CHRZ) is a strategic human capital services and e-Business solutions company with more than thirty years of experience, specifically in information technology. As a global leader in systems integration and managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality , CHC enables companies to maximize technology investments. By leveraging its core business in IT services and its proprietary technology through Chimes, its wholly-owned subsidiary, CHC is enabling its Global 2000 customer base to align and integrate business planning with human resource management across an enterprise's business functions. For more information on Computer Horizons, please visit our Web site at www.computerhorizons.com. Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " (within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995) that involve a number of risks and uncertainties. It is possible that the assumptions made by management--including, but not limited to, those relating to contract awards, service offerings, market opportunities, results, performance expectations, expectations of cost savings, or proceeds from sale of certain operations--may not materialize. Actual results may differ materially from those projected or implied in any forward-looking statements. In addition to the above factors, other important factors include the risks associated with unforeseen technical difficulties, the ability to meet customer requirements, market acceptance of service offerings, changes in technology and standards, the ability to complete cost-reduction initiatives, the ability to execute the sale of certain operations or other initiatives, dependencies on key employees, customer satisfaction, availability of technical talent, dependencies on certain technologies, delays, market acceptance and competition, as well as other risks described from time to time in the Company's filings with the Securities Exchange Commission, press releases, and other communications.
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,
2002 2001
Revenues:
IT Services $ 54,650 $ 73,017
Solutions Group 24,569 33,464
Total 79,219 106,481
Direct Costs 58,192 72,916
Gross Profit 21,027 33,565
Selling, General & Admin. 25,797 34,221
Bad Debt Expense 662 443
Amortization of Intangible
Assets -- 707
Income (Loss) From Operations (5,432) (1,806)
Gain on Sale of Assets 3,570 438
Loss on Investments (61) --
Net Interest Income (Expense) 55 (175)
Income (Loss) Before Income Taxes $ (1,868) $ (1,543)
Income Taxes (Benefit) (635) (525)
Net Income (Loss) $ (1,233) $ (1,018)
Earnings (Loss) per Share:
Basic $ (0.04) $ (0.03)
Diluted $ (0.04) $ (0.03)
Weighted Average Number
of Shares Outstanding:
Basic 31,501,000 32,062,000
Diluted 31,501,000 32,062,000
CONSOLIDATED CONDENSED BALANCE SHEET INFORMATION
(Unaudited - In Thousands)
March 31, December 31,
2002 2001
ASSETS:
Current Assets:
Cash and cash equivalents $ 46,209 $ 41,033
Accounts receivable, less
allowance for doubtful
accounts 72,667 83,564
Net assets held for sale -- 10,381
Other current assets 46,386 26,260
Total current assets 165,262 161,238
Property and equipment, net 11,823 12,473
Goodwill 48,725 48,725
Other assets 13,376 15,285
Total Assets $239,186 $ 237,721
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable & accrued
expenses $ 21,257 $ 27,978
Current portion - long-term debt -- 10,000
Other current liabilities 27,324 7,513
Total current liabilities 48,581 45,491
Other long-term liabilities 2,783 2,375
Shareholders' equity 187,822 189,855
Total Liabilities &
Shareholders' Equity $239,186 $237,721
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