Computer Outsourcing Services, Inc. reports third quarter and nine month results.

NEW YORK--(BUSINESS WIRE)--Sept. 16, 1996--Computer Outsourcing Services, Inc. ("COSI") (Nasdaq National Market: COSI) today announced unaudited financial results for the third quarter and nine month periods ended July 31, 1996.

Revenues for the nine month period ended July 31, 1996 increased 40.7% to $21,576,396 from $15,334,972 in the same period of fiscal 1995. Net income for the nine months for fiscal '96 was $246,785, or $.06 per share, compared to $120,273, or $.02 per share in the comparable period last year.

Revenues for the third quarter of fiscal 1996 increased 9.8% to $7,259,305 from $6,614,216 in the 1995 third quarter. Net income in the third quarter ended July 31, 1996 increased to $90,374, or $.02 per share from $1,436 in the same period last year.

Commenting on these financial results, Zach Lonstein, Chairman and CEO, said, "The growth of 46.2% in nine-month outsourcing revenues derives from the inclusion of MCC Corporation revenues for the full period in 1996 versus only two months in 1995. Internal sales growth, coupled with the inclusion of Key- ACA for the full nine-month period, as compared with only three months last year, resulted in a 30.1% growth for payroll services.

"In addition to revenue growth, our profitability improved considerably from last year, " Mr. Lonstein stated. "Earnings from the outsourcing operations have improved as compared to last year, while the process of standardizing our payroll business is continuing."

Mr. Lonstein concluded, "We remain optimistic that these positive trends will continue for the balance of fiscal 1996."

All forward looking information are estimates by the Company's management and are subject to various risks and uncertainties that may influence the Company's development efforts, products and technologies and other risks as detailed from time to time in the Company's SEC reports and filings.

COSI provides payroll and tax filing services to approximately 3,600 customers nationwide and offers other data processing services to companies in niche markets including publishing, direct marketing, apparel importing and manufacturing and health care. -0-

             COMPUTER OUTSOURCING SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED INCOME STATEMENTS
                             (Unaudited)

                  Nine Months Ended       Three Months Ended
                        July 31,                July 31,
                     1996     1995          1996        1995

Revenues         $21,576,396  $15,334,972  $7,259,305  $6,614,216
Income before
 provision for
 income taxes        481,785      299,544     171,389      51,545
Provision for
 income taxes        235,000      179,271      81,015      50,109(a)
Net income          $246,785     $120,273     $90,374      $1,436
Income per common share $.06         $.02        $.02        $.00
Weighted average
 number of
 shares outstanding 3,799,739   3,609,703   3,869,360   3,677,673

(a) The variance from the statutory rate relates to the
non-deductibility of Goodwill for certain acquired entities.

CONTACT: Computer Outsourcing Services, Inc.

Roger Kaufman, CFO [phone]

or

The Equity Group

Robert Goldstein [phone]

Caroline Royall [phone]