8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 13, 2006

Computer Horizons Corp.
(Exact name of registrant as specified in its charter)
New York	0-7282	13-2638902
(State or other jurisdiction  of incorporation or organization)	(Commission  File Number)	(IRS Employer Identification No.)
49 Old Bloomfield Avenue Mountain Lakes, New Jersey 07046-1495
(Address of principal executive offices)
Registrant’s telephone number, including area code: (973) 299-4000
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02     Results of Operations and Financial Condition.

          The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor be deemed incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the “Exchange Act,” except as shall be expressly set forth by specific reference in such filing.

          On March 13, 2006, Computer Horizons Corp. (the “Company”) issued a press release regarding the Company’s financial results for its full year and fiscal quarter ended December 31, 2005. The full text of the Company’s press release is attached hereto as Exhibit 99.1.

Item 9.01     Financial Statements and Exhibits.

           (d)     Exhibits.

Exhibit Number	Description
99.1	Press Release of Computer Horizons Corp. dated March 13, 2006.

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SIGNATURE

          Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:  March 13, 2006

COMPUTER HORIZONS CORP.
By:	/s/ Michael J. Shea
	Michael J., Shea
	Chief Financial Officer

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EX-99.1

Exhibit 99.1

 

COMPUTER HORIZONS REPORTS FOURTH QUARTER AND FULL YEAR 2005 RESULTS
Company Positioned for Growth and Profitability in 2006

MOUNTAIN LAKES, N.J., March 13 /PRNewswire-FirstCall/ -- Computer Horizons Corp. (Nasdaq: CHRZ), a strategic solutions and professional services company, today announced its financial results for the fourth quarter and full year ended December 31, 2005.

Financial Highlights and Update on Strategic Alternatives Review

In October of 2005, CHC shareholders elected a new Board, which appointed two new senior executives to lead the management team: Dennis J. Conroy, president and chief executive officer, and Brian A. Delle Donne, executive vice president and chief operating officer.  The new team concentrated during the fourth quarter on completing and addressing fiscal 2005 activities, and on repositioning CHC for improved performance in 2006.

Mr. Conroy commented, “Results for 2005, a year of turmoil for CHC with many external distractions, were not what any of us would have liked.  However, with a sound balance sheet and the recognition of restructuring costs and special charges behind us and, in front of us, the growing impact of our realignment initiatives and a brighter outlook for IT spending, we are increasingly optimistic. We expect a return to modest growth and profitability during 2006 and beyond. On a parallel track, we continue our work with Jefferies Broadview to explore all appropriate strategic alternatives to maximize value for the Company and all its constituencies.  We have made significant headway.  We are reviewing expressions of interest from various parties, and will continue to keep you apprised as this process unfolds.”

CHC recorded consolidated revenues for the fourth quarter of 2005 of $65.8 million, a three percent decrease from the fourth quarter of 2004.  The Company reported a net loss of $39.5 million, or $(1.24) per share, for the fourth quarter of 2005, compared with a net loss of $24.3 million, or $(0.78) per share, in the comparable period of 2004.  The fourth quarter 2005 net loss includes special charges of $36.6 million, or $(1.15) per share, related to expenses from the 2005 proxy contest/change of control payments, restructuring expenses, a loss on the sale of investments and an increase in the valuation allowance established for deferred tax assets.  The fourth quarter 2004 net loss includes special charges of $24.1 million, or $(0.71) per share, primarily relating to the impairment of goodwill.  Gross margin for the fourth quarter of 2005 improved to 31.3 percent, up from 29.9 percent in the comparable period in 2004. 

CHC recorded consolidated revenues for the full year 2005 of $268.8 million, a two percent increase over the comparable period in 2004.  The Company reported a net loss of $46.4 million, or $(1.48) per share, for the full year 2005, compared with a net loss of $25.2 million, or $(0.82) per share, in the comparable period of 2004.  Net loss for the full year of 2005 includes special charges of $41.8 million, or $(1.33) per share, related to expenses from the 2005 proxy contest/ change of control payments, restructuring expenses, a loss on the sale of investments, special expenses relating to the termination of the proposed merger with Analysts International and an increase in the valuation allowance established for deferred tax assets.  The net loss for the full year of 2004 included special charges of $23.1 million, or $(0.68) per share, primarily relating to the impairment of goodwill and restructuring charges. 

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Commenting on CHC’s financial position, Michael J. Shea, chief financial officer of Computer Horizons, said, “Our balance sheet remains healthy, with no debt and $51.4 million in working capital. SG&A expenses increased in the fourth quarter as a result of several non-recurring costs and I anticipate a reduction in SG&A in the first quarter of 2006. With the realignment initiatives implemented during the fourth quarter, I believe we’ve entered 2006 on solid footing and we should continue to see an improvement in our financials as the year progresses.”

Repositioning the Business

During the fourth quarter, the new CHC executive team conducted a review of the Company’s strategic and operational strengths and weaknesses, and formulated a plan for improved performance. Mr. Conroy commented, “We discovered at CHC a foundation of talent, brand recognition and service offerings that enjoy rising market demand. We also discerned a need for: clearer, measured accountabilities; strengthened standards of performance; more sharply focused and clearly articulated service offerings; closer collaboration between sales and delivery; and, realigned goals and incentives.” 

As announced on December 1, 2005, CHC repositioned its Commercial Services unit to implement a set of strategic and tactical initiatives that address the above requirements, while at the same time, streamlining operations to reduce redundancies and inefficiencies. Similarly, the Federal business unit completed a restructuring and rationalization of its services, while working to strengthen business development.  With these steps and its conversion to an unrestricted services provider, the Federal business is poised for growth in 2006. Chimes moves into 2006 with an expanded suite of services, stronger focus on sales and continued emphasis on customer service.  Mr. Conroy comments: “In all three businesses, we have put in place some new leaders at sales and operating levels, altered compensation programs to facilitate profitable growth, and selectively invested to support operations.” 

The Company also took steps to lower operating overhead and recognized a related $1.5 million restructuring charge during the fourth quarter.  CHC expects an approximate $4.2 million reduction in annual costs, which is designed to deliver growth and profitability for 2006 and beyond.

Looking Forward

In light of the restructuring completed in the fourth quarter of 2005, the Company expects to report modest profitability in the first quarter of 2006.  For the full year 2006, the Company expects revenues to be in the range of $280 to $290 million.  Diluted earnings per share are expected to be in the range of $0.20 to $0.25 per share.

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OPERATIONAL REVIEW BY BUSINESS SEGMENT

Condensed financial information is presented below for each of the Company’s business segments.  Total income /(loss) before income taxes excludes interest income/expense, amortization, and special charges / credit.  [See Reconciliation of Segments Income / (Loss) Before Income Taxes to Consolidated Income /(Loss) Before Income Taxes.]

(in thousands)

	THREE MONTHS ENDED						TWELVE MONTHS ENDED
	Dec. 31, 2005			Dec. 31, 2004			Dec. 31, 2005			Dec. 31, 2004
Revenues :
Commercial	$	46,931		$	50,179		$	195,435		$	191,096
Federal		11,175			11,647			44,980			48,339
Chimes		7,674			5,808			28,421			23,092
Total Revenues		65,780			67,634			268,836			262,527
Gross Profit :
Commercial		8,470			9,337			36,786			38,005
Federal		4,685			5,465			20,408			22,221
Chimes		7,456			5,419			27,483			21,696
Total Gross Profit		20,611			20,221			84,677			81,922
%		31.3	%		29.9	%		31.5	%		31.2	%
Operating Income :
Commercial		818			1,387			8,155			8,350
Federal		1,097			1,223			4,449			6,468
Chimes		1,585			203			5,801			1,420
Total Operating Income		3,500			2,813			18,405			16,238
%		5.3	%		4.2	%		6.8	%		6.2	%
Corporate Allocation :
Commercial		4,687			3,841			17,375			15,601
Federal		515			408			1,846			1,793
Chimes		860			493			2,848			2,065
Total Corporate Allocation		6,062			4,742			22,069			19,459
%		9.2	%		7.0	%		8.2	%		7.4	%
Total Income / (Loss) before Income Taxes :
Commercial		(3,869	)		(2,454	)		(9,220	)		(7,251	)
Federal		582			815			2,603			4,675
Chimes		725			(290	)		2,953			(645	)
Total Income / (Loss) before Income Taxes	$	(2,562	)	$	(1,929	)	$	(3,664	)	$	(3,221	)
%		-3.9	%		-2.9	%		-1.4	%		-1.2	%

Reconciliation of Segments Income/(Loss) Before Income Taxes to Consolidated Income / (Loss) Before Income Taxes
(in thousands)

	THREE MONTHS ENDED						TWELVE MONTHS ENDED
	Dec. 31, 2005			Dec. 31, 2004			Dec. 31, 2005			Dec. 31, 2004
Total Segment Income / (Loss) Before Income Taxes :	$	(2,562	)	$	(1,928	)	$	(3,664	)	$	(3,220	)
Adjustments :
Change of Control Charges		(13,247	)		—			(13,247	)		—
Special (charges) / credits		(1,236	)					(5,728	)		939
Write-off of assets		—			(910	)		—			(910	)
Restructuring Charges		(1,459	)		(2,859	)		(2,175	)		(2,859	)
Goodwill Impairment		—			(20,306	)		—			(20,306	)
Amortization of intangibles		(233	)		(483	)		(1,080	)		(1,695	)
Net Loss on Investments		(1,180	)		—			(1,180	)		—
Net interest income		269			29			822			234
Total adjustments		(17,086	)		(24,529	)		(22,588	)		(24,597	)
Consolidated Income / (Loss) Before Income Taxes	$	(19,648	)	$	(26,457	)	$	(26,252	)	$	(27,817	)

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Highlights from the Commercial Sector

• Revenues for the fourth quarter were $46.9 million, a six percent  decrease from the fourth quarter of 2004 and a decrease of five percent sequentially as the Company deemphasized certain underperforming parts of the business, and heightened its focus on more profitable services and relationships.

• The Company was added to three new preferred vendor lists and renewed at several others during the fourth quarter of 2005.

• Total billable headcount at the end of the fourth quarter of 2005 was approximately 1,730 an eight percent decrease from the fourth quarter of  2004 and down seven percent from the third quarter of 2005.

• CHC’s Commercial business entered 2006 well-positioned for a return to  profitability.

Highlights from the Federal Government Sector

• Revenues for the fourth quarter were $11.2 million, a four percent decrease over the comparable period in 2004 and an increase of three percent over the third quarter of 2005.  The year-over-year revenue decrease is attributable to the transition of restricted contracts.  As previously announced, RGII anticipates the return to strong organic growth in 2006.

• During the fourth quarter, RGII was awarded several multiple year contracts totalling over $16.4 million by the Dept. of the Navy - Naval Medical Information Management Center (NMIMC), and the Technology Management, Integration and Standards (TMI&S) Directorate.  RGII also supported a Hurricane Katrina relief project from its call center in Oklahoma City, OK which contributed over $1 million in revenue.

• Funded backlog as of December 31, 2005 for RGII was approximately $15.7  million and contracted (unfunded) backlog approximated $118.7 million.

Chimes, Inc. Highlights

• Chimes reported $7.7 million in revenue for the fourth quarter of 2005,  a 32 percent increase from the comparable period in 2004, and a four percent increase from the third quarter of 2005.

• Two new customer implementations took place during the fourth quarter,  through Chimes’ Strategic Alliance partners.

• Chimes expanded business at several existing customers.

• Chimes pre-tax bottom-line results significantly improved, from a loss  of $(300,000) in the fourth quarter of 2004 to income of over $700,000  in the fourth quarter of 2005.

About Computer Horizons Corp.

Computer Horizons Corp. (Nasdaq: CHRZ) provides professional information technology (IT) services to a broad array of vertical markets, including financial services, healthcare, pharmaceutical, telecom, consumer packaged goods, as well as the Federal government, through its wholly-owned subsidiary, RGII Technologies, Inc. CHC’s wholly-owned subsidiary, Chimes, uses its proprietary technology to enable 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, visit http://www.computerhorizons.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  In some cases, forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “plan,” “potential,” “continue” or similar expressions.  Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements.  Such forward-looking statements are based upon current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements including, but not limited to, 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, 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 and Exchange Commission, press releases and other communications.  All forward-looking statements included in this press release are based on information available to the Company on the date hereof.  The Company undertakes no obligation (and expressly disclaims any such obligation) to update forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to update reasons why actual results would differ from those anticipated in such forward-looking statements.

Corporate Contacts:
	David Reingold/Lauren Felice
	Investor Relations, Marketing
	Computer Horizons Corp.
	(973) 299-4105/4061
	dreingold@computerhorizons.com
	lfelice@computerhorizons.com

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COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited - In thousands, except per share data)

	THREE MONTHS ENDED						TWELVE MONTHS ENDED
	Dec. 31, 2005			Dec. 31, 2004			Dec. 31, 2005			Dec. 31, 2004
Revenues
Commercial	$	46,931		$	50,179		$	195,435		$	191,096
Federal		11,175			11,647			44,980			48,339
Chimes		7,674			5,808			28,421			23,092
Total		65,780			67,634			268,836			262,527
Direct Costs		45,169			47,413			184,159			180,606
Gross Profit		20,611			20,221			84,677			81,921
Selling, General & Admin.		23,173			22,149			88,341			85,141
Change of Control Charges		13,247			—			13,247			—
Special Charges /(Credits)		1,236
Restructuring Charges		1,459			2,859			2,175			2,859
Write-off of assets		—			910			—			910
Goodwill impairment		—			20,306			—			20,306
Amortization of Intangibles		233			483			1,080			1,695
Income / (Loss) from Operations		(18,737	)		(26,486	)		(25,894	)		(28,051	)
Loss on Investments		(1,180	)		—			(1,180	)		—
Net Interest Income		269			29			822			234
Income / (Loss) Before Income Taxes		(19,648	)		(26,457	)		(26,252	)		(27,817	)
Income (Taxes) / Benefit		(19,808	)		2,210			(20,168	)		2,690
Minority Interest		—			(23	)		—			(45	)
Net Income / (Loss)	$	(39,456	)	$	(24,270	)	$	(46,420	)	$	(25,172	)
Earnings / (Loss) per share - Basic and Diluted	$	(1.24	)	$	(0.78	)	$	(1.48	)	$	(0.82	)
Weighted Average Number of Shares Outstanding - Basic and Diluted		31,757,000			31,061,000			31,399,000			30,870,000

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COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited - In thousands)

	December 31, 2005			December 31, 2004
ASSETS
Current Assets :
Cash and cash equivalents*	$	46,365		$	33,649
Accounts receivable, less allowance for doubtful accounts		48,124			51,322
Deferred income taxes		—			1,868
Refundable income taxes		6,430			4,088
Other receivables		—			1,443
Prepaid expenses and other		4,108			4,107
Total Current Assets		105,027			96,477
Property and equipment, net		5,065			5,995
Other assets - net :
Goodwill		27,625			27,625
Intangibles		1,938			3,253
Deferred income taxes		—			17,698
Other assets		3,687			8,036
Total Assets	$	143,342		$	159,084
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities :
Accounts payable*	$	36,252		$	7,615
Accrued payroll, payroll taxes and benefits		10,548			8,489
Income taxes payable		1,150			1,377
Restructuring reserve		1,668			3,351
RGII contingency payment		—			1,851
Other accrued expenses		4,005			4,912
Total Current Liabilities		53,623			27,595
Deferred compensation		2,468			2,633
Change of Control Payable		2,938			—
Supplemental executive retirement plan		—			2,162
Other liabilities		286			913
Total Liabilities		59,315			33,303
Shareholders’ Equity :
Common stock		3,315			3,315
Additional paid in capital		148,083			151,281
Accumulated comprehensive loss		(642	)		(2,200	)
Retained earnings / (deficit)		(60,491	)		(14,072	)
		90,265			138,324
Less treasury shares		(6,238	)		(12,543	)
Total Shareholders’ Equity		84,027			125,781
Total Liabilities and Shareholders’ Equity	$	143,342		$	159,084

* Cash and cash equivalents at December 31, 2005 and December 31, 2004 include approximately $29.4 million and $2.1 million, respectively, of cash to be disbursed to Chimes vendors (i.e., Accounts Payable) in accordance with the client payment terms.

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COMPUTER HORIZONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited - In thousands)

	Dec. 31, 2005			Dec. 31, 2004
Cash flows from operating activities
Net income / (loss)	$	(46,420	)	$	(25,172	)
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities:
Deferred taxes		19,567			(1,254	)
Depreciation		4,181			4,821
Amortization of intangibles		1,080			1,695
Provision for bad debts		1,632			969
Loss on Investments		1,264			—
Gain on sale of assets		(327	)		—
Goodwill impairment charge		—			20,306
Write-off of assets		—			910
Changes in assets and liabilities, net of acquisitions:
Accounts receivable		1,566			(696	)
Other receivables		1,443			(1,040	)
Prepaid expenses and other current assets		(1	)		254
Other assets		4,349			(245	)
Refundable income taxes		(2,342	)		(4,088	)
Accrued payroll, payroll taxes and benefits		2,060			(49	)
Accounts payable		28,637			(1,072	)
Income taxes payable		(227	)		134
RGII contingency payments		(1,851	)		1,221
Other accrued expenses and restructuring reserve		(2,590	)		582
Change of control payable		2,938			—
Deferred compensation		(165	)		530
Supplemental executive retirement plan		(2,162	)		480
Other liabilities		(627	)		317
Net cash provided by / (used in) operating activities		12,005			(1,397	)
Cash flows from investing activities
Proceeds from sale of assets		562			—
Purchases of furniture and equipment		(3,252	)		(2,050	)
Acquisitions, net of cash acquired		—			(14,714	)
Acquisition of goodwill		—			(2,461	)
Net cash provided by / (used in) investing activities		(2,690	)		(19,225	)
Cash flows from financing activities
Stock options exercised		2,440			774
Stock issued on employee stock purchase plan		667			623
Net cash provided by / (used in) financing activities		3,107			1,397
Foreign currency gains/ (losses)		294			264
Net increase/ (decrease) in cash and cash equivalents		12,716			(18,961	)
Cash and cash equivalents at beginning of year		33,649			52,610
Cash and cash equivalents at end of period	$	46,365		$	33,649

SOURCE  Computer Horizons Corp.
          -0-                                        03/13/2006
          /CONTACT:  David Reingold, +1-973-299-4105, dreingold@computerhorizons.com, or Lauren Felice, +1-973-299-4061, lfelice@computerhorizons.com, both of Computer Horizons Corp./
          /First Call Analyst: /
          /FCMN Contact: lfelice@computerhorizons.com /
          /Web site:  http://www.computerhorizons.com /
          (CHRZ)

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