QRS Corporation Reports Second Quarter 2002 Results

Narrows loss, maintains margins in tough economic climate

Richmond, Calif. – August 01, 2002 — QRS Corporation (Nasdaq: QRSI), a leading provider of adaptive commerce solutions for the extended supply chain, announced today the results of its second quarter ended June 30, 2002. For the quarter ended June 30, 2002, the Company reported revenues of $35.1 million, compared with $36.9 million for the quarter ended June 30, 2001 and $35.5 million for the quarter ended March 31, 2002.

Net loss for the quarter ended June 30, 2002 was $2.4 million, or $0.15 per share, diluted, compared with net loss of $8.2 million, or $0.53 per share, diluted, for the quarter ended June 30, 2001, and compared with net loss of $3.2 million, or $0.20 per share, diluted, for the quarter ended March 31, 2002. Net loss for the quarter ended June 30, 2001 included restructuring expenses of $0.8 million, while the net loss for the quarter ended June 30, 2002 included severance expenses of $0.8 million.

The Company also reported that it maintained gross margins of 45 percent for the quarter ended June 30, 2002. This figure is consistent with the gross margin of 45 percent for the quarters ended March 31, 2002 and June 30, 2001. Operating expenses for the quarter ended June 30, 2002 were $18.2 million, compared with $25.2 million for the quarter ended June 30, 2001, and $20.3 million for the quarter ended March 31, 2002. Cash and marketable securities rose by $1.1 million during the six-month period ended June 30, 2002 to $39.7 million, from $38.6 million at December 31, 2001.

"While the difficult economic environment continues to impact the sales cycles for enterprise software applications, QRS continues to maintain its recurring revenue stream, thanks to the strength of our core product offerings," said Liz Fetter, president and CEO of QRS. "We are executing on our plan to return to profitability, and have a number of initiatives in place to continue reducing costs."

Revenues from QRS Catalogue™, a hosted application, were up 18 percent to $8.7 million for the quarter ended June 30, 2002, compared with $7.3 million during the quarter ended June 30, 2001, and up 3 percent compared to $8.4 million for the quarter ended March 31, 2002. However, due to the decrease in enterprise software application sales, overall revenues from Software Applications, which include both enterprise and hosted applications, were $9.3 million for the quarter ended June 30, 2002, compared with $11.4 million for the quarter ended June 30, 2001, and $9.5 million for the quarter ended March 31, 2002.

Although the market for Trading Community Management solutions remains highly competitive, resulting in lower revenue for the quarter, actual message volume measured in total kilo characters in the second quarter 2002 increased modestly over the same period last year, as well as over the first quarter of 2002. Trading Community Management revenues were $18.3 million for the quarter ended June 30, 2002, compared with $19.8 million for the quarter ended June 30, 2001 and $19.1 million for the quarter ended March 31, 2002.

Global Services revenues were $7.5 million for the quarter ended June 30, 2002, compared with $5.7 million for the quarter ended June 30, 2001 and $6.9 million for the quarter ended March 31, 2002. Revenues for the quarter ended June 30, 2002 include $0.6 million in previously deferred revenue realized through the sale to a third party of the Company`s $1.9 million Kmart pre-petition receivables.

Second quarter highlights for QRS include:
· Strengthened strategic relationship with IBM. On July 30, 2002, QRS announced the signing of a new multi-year Business Partner Agreement with IBM, which enhances and extends QRS` longstanding relationship with IBM. The new agreement, which is already in effect, replaces the previous agreement that was due to expire on December 31, 2002. The new agreement enables QRS to improve its overall cost structure, and permits QRS to offer customers expanded options for transmitting critical data and forms-based documents with their global business partners. The agreement also strengthens QRS` ability to provide retail industry customers solutions that bridge between legacy and Web-based environments.
· Customer wins and renewals. During the second quarter of 2002, QRS secured wins and agreement extensions with more than 50 retailers and vendors, including J.C. Penney Corp., Modell`s Sporting Goods, Saks Inc., Marchon Eyewear Inc., Kroger Co., Pathmark Stores Inc., and The Sports Authority.
· Completion of senior management team. Rounding out the executive leadership team, the Company named James Rowley as senior vice president, Engineering and CTO. Mr. Rowley has served in several leadership positions throughout his career including CrossWorlds Software, Siebel and Oracle, where he established a proven track record of advancing early-stage technology companies to marketplace success.

Conference Call Information
In conjunction with the earnings release, the Company will hold a conference call at 2:00 p.m. PDT (5:00 p.m. EDT) on Thursday, August 1, 2002. QRS president and CEO Liz Fetter will host the call. For those who wish to participate, the conference call can be accessed via telephone at 1-877-580-9103 with pass code QRS.

The call also will be Web-cast and can be accessed at www.qrs.com. Telephone replay will be available from Thursday, August 1, 7:00 p.m. EDT until Friday, August 9, 5:00 p.m. EDT at 1-800-801-6159.

About QRS
QRS Corporation (Nasdaq: QRSI) has been building, automating and managing retail trading relationships through innovative software applications and services since 1988. Today, QRS is an established leader in providing adaptive commerce solutions for the extended supply chain. QRS offers scalable trading community connectivity; reliable product content management; real-time, synchronized transaction delivery; and Web-enabled sourcing and procurement. QRS solutions are used by more than 8,000 retail industry customers* representing the world`s top retailers, vendors and manufacturers, including Federated Department Stores Inc., Selfridges plc, Sears, Roebuck and Co., LVMH LLC, Group Clarins USA and Jones Apparel Group Inc. With QRS adaptive commerce solutions, retail industry customers can transform their extended supply chain in response to marketplace dynamics, drive process efficiency and achieve superior profit. Learn more about QRS Corporation at www.qrs.com.

*Based on total, unique QRS corporate customers that purchased or licensed QRS products and services between April 2001 and May 2002.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This release contains forward-looking statements regarding future events and the future financial performance of QRS Corporation that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are referred to the documents filed by QRS Corporation with the SEC, specifically the most recent reports on Form 10-K, 8-K, and 10-Q, each as it may be amended from time to time, which identify important factors that could cause actual results to differ from those contained in the forward-looking statements, including risks associated with general economic conditions; specific conditions in the retail industry; competition; changes in our senior management; rapid technological change in our industry; dependence upon key customers and their trading partners; ability to introduce and market acceptance of new products and services; the ability to successfully integrate and manage acquired businesses and technologies; and dependence upon IBM for e-commerce services, among others. QRS assumes no obligation to update the forward-looking information contained in this news release. QRS is a registered trademark of QRS Corporation. All other trademarks belong to their respective owners.

©2002 QRS Corporation. All Rights Reserved.

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