QRS (QRSI) 8-K QRS Significantly Improves Profitability in Second Quarter

EXHIBIT 99.1

PRESS RELEASE

QRS Significantly Improves Profitability in Second Quarter

RICHMOND, Calif. – July 29, 2003 – QRS Corporation (Nasdaq: QRSI) announced today its results for the second quarter ended June 30, 2003.

The Company reported its fourth consecutive quarter of profitability with second quarter net income of $1.8 million, or $0.12 per share, diluted, compared to net income of $0.8 million, or $0.05 per share, diluted, for the first quarter 2003 and to a net loss of $2.4 million, or $0.15 per share, for the second quarter 2002.

“We are pleased to have significantly improved our bottom line results this quarter, particularly given the ongoing challenges in the external environment. In fact, we believe we have stabilized revenues, and we expect to see revenues increase slightly in the third quarter,” said Liz Fetter, President and CEO of QRS. “We are investing for growth while exercising strong operational discipline and managing our costs in line with our revenue stream. These efforts will better position the Company for a strong future.”

The Company reported revenues for the second quarter of $30.6 million, compared to $30.8 million for the first quarter 2003 and $35.1 million for the second quarter 2002. Gross margins for the second quarter were 50%, compared to 49% for the first quarter 2003 and 45% for the second quarter 2002. The Company expects overall gross margins, as a percentage of revenues, to remain in the upper-forties to 50% range this year.

The Company reduced operating expenses for the quarter to $13.4 million, down 7% from the $14.4 million for the first quarter 2003 and down 27% from the $18.2 million for the second quarter 2002. Operating expenses were net of $0.5 million in operating expense benefits, primarily related to the favorable resolution of various tax-related matters and other items. Earnings excluding these benefits would have been $0.08 per share, diluted.

In order to further improve operating performance and continue aligning resources with its growth strategy, the Company is currently conducting a comprehensive review of its cost structure. The Company anticipates that on completion of this review, it will likely recognize a restructuring charge in the third quarter of up to $2 million. The Company expects that the cost savings

resulting from these actions will help the Company achieve its goal of double digit operating margins in 2004.

The cash and marketable securities balance at the end of the quarter was $36.4 million, compared to $35.6 million at the end of the first quarter 2003. Cash flows from operations totaled $3.3 million for the quarter. The Company will fund capital expenditures and its planned technology investment for the remainder of the year largely from cash flows from operations. Days sales outstanding were 46 days at the end of the second quarter, compared to 43 days at the end of the first quarter 2003 and 50 days at the end of the second quarter 2002.

QRS accomplishments in 2003 to date include:

• Deepening Our Relationships Within General Merchandise and Apparel (GMA). QRS reported continued strength in the Company’s traditional base of GMA retailers, brand marketers/manufacturers and suppliers, signing contracts in the second quarter of 2003 with companies including Boscov’s Department Stores, Jockey International Inc., Levi Strauss & Co., Marshall Field’s, The Leslie Fay Company, Von Maur and Wacoal Corporation.

• Expanding to New Retail Segments. In the second quarter of 2003, Woolworth Germany signed an agreement with QRS to license QRS Sourcing^™, as announced earlier this year, strengthening the Company’s growing presence in the European retail market. The Company also won business with companies in retail segments adjacent to GMA, including the consumer packaged goods, sporting goods, grocery, consumer electronics, and health and beauty segments.

• Enhancing the Product Portfolio. The Company delivered new releases of QRS Sourcing^™ and QRS Catalogue^™ that offer increased functionality and value to QRS’ general merchandise and apparel customers as well as the Company’s target retail adjacencies. At the same time, the Company is investing internally in the development of collaborative applications. Among the first of these applications will be an intelligent transaction manager, which will offer actionable intelligence into trading community transactions.

Conference Call Information

In conjunction with the earnings release, the Company will hold a conference call at 2:00 p.m. PT (5:00 p.m. ET) on July 29, 2003. The conference call can be accessed via telephone at 877.580.9103 (toll-free) and 610.794.9303 (international) with passcode QRS. The call will be webcast and can be accessed at www.qrs.com. Telephone replay will be available beginning July 29, 2003, after 4:00 p.m. PT (7:00 p.m. ET) at 800.731.6045 (toll-free) and 402.220.0349 (international). The replay of the webcast will also be available at www.qrs.com.

About QRS

QRS (Nasdaq: QRSI) is a leading provider of collaborative commerce solutions for the global retail trading community. We enable companies to communicate electronically with their global trading partners; conduct cross-company transactions; synchronize and manage product data; collaboratively source, merchandise and import goods; and automatically detect and resolve supply chain issues. More than 8,000* retailers, brand marketers, manufacturers, suppliers, wholesalers and distributors from a variety of retail segments – including Federated Department Stores Inc., Groupe Clarins USA, Jones Apparel Group Inc., The Kroger Company, Sears, Roebuck and Co., and Selfridges plc – use QRS solutions to significantly improve their overall business performance. Learn more about QRS at www.qrs.com.

*Based on total, unique QRS corporate customers that purchased or licensed QRS products and services between January and December 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 and political conditions; specific conditions in the retail industry; competition; changes in senior management; rapid technological change in our industry; dependence upon key customers and their trading partners; the ability to introduce and market acceptance of new products and services; the ability to meet requirements of retail segments other than general merchandise and apparel; the ability to successfully integrate and manage acquired businesses and technologies; customers’ willingness to purchase products or services offered through or in conjunction with third parties; and dependence upon IBM for e-commerce services, among others. QRS disclaims any obligation to update the forward-looking information contained in this news release.

^© 2003 QRS Corporation. All Rights Reserved. QRS, the QRS logo, QRS Catalogue, and QRS Sourcing are registered trademarks or trademarks of QRS Corporation. Any other trademarks belong to their respective owners.

CONTACT:

Guy Yalif	Katherine Post
Investor Relations	Media Relations
QRS Corporation	QRS Corporation
510.965.4470	510.965.4521
gyalif@qrs.com	kpost@qrs.com

QRS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Six Months Ended June 30, 2003 and 2002

(Dollars in thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002
Revenues:
Software applications	$	8,329		$	9,296		$	16,470		$	18,750
Trading community management		16,336			18,291			33,002			37,380
Global services		5,905			7,496			11,901			14,403
Total revenues		30,570			35,083			61,373			70,533
Cost of revenues:
Software applications		2,157			3,332			4,444			6,449
Trading community management		8,050			9,676			16,107			19,671
Global services		5,178			6,384			10,489			12,851
Total cost of revenues		15,385			19,392			31,040			38,971
Gross profit		15,185			15,691			30,333			31,562
Operating expenses:
Sales and marketing		5,013			7,673			10,800			16,654
Service and product development		3,161			4,031			6,158			7,911
General and administrative		4,370			5,664			9,142			12,182
Amortization of other intangible assets		839			872			1,688			1,744
Total operating expenses		13,383			18,240			27,788			38,491
Operating income (loss)		1,802			(2,549	)		2,545			(6,929	)
Interest income		109			193			226			394
Interest expense		(36	)		(54	)		(76	)		(54	)
Income (loss) from operations before income taxes		1,875			(2,410	)		2,695			(6,589	)
Income tax expense (benefit)		48			—			48			(998	)
Net income (loss)	$	1,827		$	(2,410	)	$	2,647		$	(5,591	)
Basic net income (loss) per share	$	0.12		$	(0.15	)	$	0.17		$	(0.36	)
Shares used to compute basic net income (loss) per share		15,829,123			15,704,150			15,815,265			15,666,503
Diluted net income (loss) per share (1)	$	0.12		$	(0.15	)	$	0.17		$	(0.36	)
Shares used to compute diluted net income (loss) per share (1)		15,885,209			15,704,150			15,857,941			15,666,503

(1) Diluted net loss per share for the three and six months ended June 30, 2002 was the same as basic net loss per share for the three and six months ended June 30, 2002 because the potential common shares outstanding during the periods would have been antidilutive.

QRS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of June 30, 2003 and December 31, 2002

(Dollars in thousands, except share and per share amounts)

(Unaudited)

	June 30, 2003			December 31, 2002
ASSETS
Current assets:
Cash and cash equivalents	$	27,178		$	35,358
Current portion of marketable securities available-for-sale		7,005			1,998
Accounts receivable—net of allowance for doubtful accounts of $1,320 at June 30, 2003 and $1,613 at December 31, 2002		15,541			14,907
Prepaid expenses and other		2,925			3,061
Total current assets		52,649			55,324
Property and equipment:
Furniture and fixtures		1,954			1,780
Equipment		15,554			13,547
Leasehold improvements		1,940			1,921
		19,448			17,248
Less accumulated depreciation and amortization		(11,007	)		(8,703	)
Total property and equipment		8,441			8,545
Marketable securities available-for-sale		2,202			2,230
Capitalized service and product development costs—net of accumulated amortization of $7,521 at June 30, 2003 and $6,934 at December 31, 2002		4,514			2,282
Goodwill		1,113			1,113
Other intangible assets—net of accumulated amortization of $16,956 at June 30, 2003 and $15,268 at December 31, 2002		8,169			9,857
Other assets		1,741			2,598
Total assets	$	78,829		$	81,949
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,661		$	8,870
Accrued compensation		4,450			6,289
Accrued vacation		2,278			2,044
Deferred acquisition payments		2,500			2,500
Deferred revenue		2,338			1,605
Current portion of sublease loss accruals related to business restructuring		3,831			2,788
Other accrued liabilities		2,942			3,762
Current portion of note payable		832			1,070
Total current liabilities		25,832			28,928
Sublease loss accruals related to business restructuring		3,857			6,315
Note payable		—			290
Deferred rent and other		2,129			2,285
Total liabilities		31,818			37,818
Stockholders’ equity:
Preferred stock: $.001 par value; 10,000,000 shares authorized; none issued and outstanding		—			—
Common stock: $.001 par value; 60,000,000 shares authorized; 16,077,613 shares issued and 15,844,267 shares outstanding at June 30, 2003 and 16,032,353 shares issued and 15,801,253 shares outstanding at December 31, 2002		252,275			251,914
Deferred compensation		(257	)		(157	)
Treasury stock: 233,346 shares at June 30, 2003 and 231,100 shares at December 31, 2002		(5,556	)		(5,548	)
Accumulated other comprehensive earnings (loss):
Unrealized gain on marketable securities available-for-sale		21			26
Cumulative translation adjustments		(244	)		(229	)
Accumulated deficit		(199,228	)		(201,875	)
Total stockholders’ equity		47,011			44,131
Total liabilities and stockholders’ equity	$	78,829		$	81,949

QRS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2003 and 2002

(Dollars in thousands)

(Unaudited)

	Six Months Ended June 30,
	2003			2002
Cash flows from operating activities:
Net income (loss)	$	2,647		$	(5,591	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of property and equipment		2,304			2,772
Amortization of capitalized service and product development costs		587			1,176
Amortization of software licenses and other		714			452
Amortization of other intangible assets		1,688			1,744
Stock-based compensation		83			376
Provision for allowance for doubtful accounts		151			655
Loss from disposal of property and equipment		—			283
Changes in assets and liabilities:
Accounts receivable		(785	)		1,983
Prepaid expenses and other		(252	)		251
Income taxes receivable		—			125
Accounts payable		(2,209	)		(1,246	)
Accrued compensation		(1,839	)		1,524
Accrued vacation		234			390
Deferred revenue		733			(987	)
Sublease loss accruals related to business restructuring		(1,415	)		(2,031	)
Other accrued liabilities		(1,399	)		93
Deferred rent and other		103			818
Net cash provided by operating activities		1,345			2,787
Cash flows from investing activities:
Sales and maturities of marketable securities available-for-sale		3,162			3,738
Purchases of marketable securities available-for-sale		(8,146	)		(3,116	)
Purchases of property and equipment		(1,781	)		(1,202	)
Capitalization of service and product development costs		(2,819	)		(691	)
Other assets		532			(198	)
Net cash used in investing activities		(9,052	)		(1,469	)
Cash flows from financing activities:
Proceeds from employee stock purchase plan issuance		176			296
Exercise of stock options		2			598
Repurchase of common stock		(8	)		(18	)
Payments on note payable		(528	)		(250	)
Payments on capital lease obligations		(99	)		(200	)
Net cash provided by (used in) financing activities		(457	)		426
Effect of exchange rate on cash and cash equivalents		(16	)		6
Net increase (decrease) in cash and cash equivalents		(8,180	)		1,750
Cash and cash equivalents at beginning of period		35,358			28,911
Cash and cash equivalents at end of period	$	27,178		$	30,661
Cash paid for:
Taxes	$	76		$	78
Interest	$	64		$	41
Noncash investing and financing activities:
Property and equipment acquired through capital lease	$	419		$	550
Disposal of fully depreciated assets	$	—		$	1,387
Note payable exchanged for software licenses	$	—		$	2,100
Fair value of restricted stock awarded	$	210		$	—