Computer Outsourcing Services, Inc. Reports Record Second Quarter/Six Months Results Income From Continuing Operations for Quarter Up 52%.LEONIA, N.J.--(BUSINESS WIRE)--June 8, 1999-- Computer Outsourcing Services, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on NMS See NetWare Management System. : COSI COSI Center Of Science and Industry (Columbus, OH, USA) COSI Creative Outsourcing Solutions International (UK) COSI Cost of Savings Index COSI Closeout System Installation (NASA) ), a provider of information technology services, today announced significant revenue and earnings increases for its fiscal second quarter and six months ended April 30, 1999. Second quarter revenues from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the rose 13%, to $9,022,000 from $7,957,000 for the same period last year. Income from continuing operations for the second quarter reached $775,000, up 52% from $511,000 for the comparable quarter of fiscal 1998. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of from continuing operations rose to 16 cents on 4,998,159 weighted average diluted common shares outstanding for the quarter from 12 cents on 4,222,087 diluted shares outstanding in last year's second quarter. Revenues from continuing operations for the first half of fiscal 1999 increased 14% to $17,303,000 from $15,173,000 for the first six months of the prior year. Income from continuing operations rose 33% to $1,333,000 for the six months from $1,001,000 for the same period last year. Diluted earnings per share rose to 27 cents on 4,892,069 weighted average diluted common shares outstanding from 23 cents on 4,379,701 shares outstanding last fiscal year. "We are pleased with our sustained increases in income from operations for both the quarter and six month periods," remarked Zach Lonstein, 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. . "These results are the rewards of positioning ourselves to enhance revenue by expanding our services." "Our operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: increased considerably in both the three and six month periods," continued Mr. Lonstein. "A 13% increase in revenue resulted in a 52% increase in net income for the quarter compared with the same quarter in the prior year. Strong operating results have allowed us to explore new opportunities to create shareholder value. Our recent Internet-related initiative, announced on June 3, is a logical extension of our data center outsourcing business. We will offer premium colocation and web hosting services A web hosting service is a type of Internet hosting service that allows individuals and organizations to provide their own websites accessible via the World Wide Web. Web hosts are companies that provide space on a server they own for use by their clients as well as providing for Internet Service Providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. and other communications providers that enable them to colocate equipment or host media and E-commerce applications. We are retooling 20,000 square feet of our secure data center for these services. "This new offering allows COSI to leverage our strengths in operating and managing mission critical data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a facilities and our infrastructure and communications consulting capabilities. "Initial interest in these services has been strong, reflecting the expense, complexity and distraction of building and managing a center for a single user, the continuing scarcity of premium colocation and hosting space, the growing need for additional storage capacity, and confidence in our technological expertise. These Internet-related services draw on our proven expertise and we believe they are an important potential contributor to ensuring our future profitability. They are consistent with our commitment to improving our penetration of the rapidly growing middle market and augmenting our recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue base derived from long-term relationships," Mr. Lonstein concluded. Computer Outsourcing Services, Inc. provides information processing information processing: see data processing. information processing Acquisition, recording, organization, retrieval, display, and dissemination of information. Today the term usually refers to computer-based operations. and other information technology services to companies, institutions, and government agencies throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The Company is headquartered in Leonia, New Jersey Leonia is a borough in Bergen County, New Jersey, United States. As of the United States 2000 Census, the borough population was 8,914. It is located near the western approach to the George Washington Bridge. . 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. in this release that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions 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. Investors are cautioned that actual results may differ substantially from such forward-looking statements. Forward-looking statements may be subject to certain risks and uncertainties, including, but not limited to, incomplete or preliminary information; changes in government regulations and policies; continued acceptance of the Company's products and services in the marketplace; competitive factors; technological changes; the Company's dependence upon third-party suppliers; intellectual property rights; and other risks detailed from time to time in the Company's periodic report filings with the Securities and Exchange Commission. Accordingly, the actual results of the Company could differ materially from such forward-looking statements. -0-
COMPUTER OUTSOURCING SERVICES, INC.
CONSOLIDATED INCOME STATEMENTS
(In Thousands except Per Share Data)
(Unaudited)
Six Months ended Second Quarter
April 30, ended April 30,
----------------------- -----------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Revenues $17,303,000 $15,174,000 $ 9,022,000 $ 7,957,000
----------- ----------- ----------- -----------
Income from continuing
operations before
provision for income
taxes $ 2,260,000 1,802,000 1,314,000 927,000
Provision for income
taxes 927,000 801,000 539,000 416,000
----------- ----------- ----------- -----------
Income from continuing
operations 1,333,000 1,001,000 775,000 511,000
Loss from discontinued
operation, net of
income tax benefit - (60,000) - -
Gain on sale of the
Payroll Division, net
of income tax
provision - 1,601,000 - -
----------- ----------- ----------- ------------
Net income $ 1,333,000 $ 2,542,000 $ 775,000 $ 511,000
=========== =========== =========== ============
Basic Earnings Per Share:
Income from continuing
operations $ 0.29 $ 0.26 $ 0.17 $ 0.13
Income/(loss) from
discontinued
operation - (0.02) - -
Gain on sale of
discontinued operation - 0.41 - -
----------- ----------- ----------- ------------
Net income $ 0.29 $ 0.65 $ 0.17 0.13
=========== =========== =========== ============
Weighted average
shares outstanding 4,544,525 3,888,159 4,661,680 3,956,190
=========== =========== =========== ============
Diluted Earnings Per Share:
Income from continuing
operations $ 0.27 $ 0.23 $ 0.16 $ 0.12
Loss from discontinued
operation - (0.01) - -
Gain on sale of
discontinued operation - 0.36 - -
----------- ----------- ----------- ------------
Net income $ 0.27 $ 0.58 $ 0.16 0.12
=========== =========== =========== ============
Weighted average shares
and share equivalents
outstanding 4,892,069 4,379,701 4,998,159 4,222,087
=========== =========== =========== ============
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