Computer Outsourcing Services reports second quarter results; Revenues Up 66.8%.

NEW YORK--(BUSINESS WIRE)--June 12, 1996--Computer Outsourcing Services, Inc. ("COSI") (Nasdaq National Market: COSI) today announced unaudited financial results for the second quarter and six month periods ended April 30, 1996.

Revenues for the second quarter of fiscal 1996 rose 66.8% to a record $7,209,976 up from $4,322,220 for the second quarter of fiscal 1995. Net income was $110,389 or $.03 per share compared to $65,298 or $.01 per share in the respective 1995 period. Revenues for the six month period of fiscal 1996 reached a record $14,317,091, up 64.2% compared to $8,720,756 for the same period of the 1995 fiscal year. Net income for the first six months of fiscal 1996 was $156,411 or $.04 per share compared to $118,837 or $.02 per share in the corresponding period for fiscal 1995.

Commenting on these financial results, Zach Lonstein, Chairman and CEO, said, "The significant increase in revenues for the current second quarter and six month periods of 1996 is primarily attributable to the acquisitions of Key-ACA and MCC Corporation in May 1995 and June 1995, respectively." Mr. Lonstein continued, "Our ongoing efforts to standardize our payroll processing business and consolidate our outsourcing operations continue and already have yielded improved results as compared to the second quarter of last year, as well as the immediately preceding first quarter. We are 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.
                           CONSOLIDATED INCOME STATEMENTS
                                    (Unaudited)

                         Three Months Ended       Six Months Ended
                              April 30,               April 30,
                           1996      1995         1996        1995

Revenues                $7,209,976 $4,322,220  $14,317,091 $8,720,756

Income before provision
 for income taxes          204,982    132,789      310,396    247,999

Provision for income
 taxes                      94,593     67,491      153,985    129,162

Net income                $110,389    $65,298     $156,411   $118,837

Net income per common
 share                        $.03       $.01         $.04       $.02

Weighted average number
 of shares outstanding   3,791,192  3,563,201    3,775,917  3,560,213

CONTACT: Computer Outsourcing Services, Inc., New York

Roger Kaufman, CFO [phone]

or

INVESTOR RELATIONS COUNSEL:

The Equity Group, New York

Robert Goldstein [phone]

Caroline Royall [phone]