VIENNA, Va., April 20 /PRNewswire/ -- GRC International (NYSE: GRH) today
reported revenue growth approaching 20 percent for the third quarter of fiscal
1999 and a greater than 50 percent improvement of operating income. This
marks the fifth consecutive quarter of year-to-year double-digit revenue
growth and the third consecutive quarter of year-to-year growth of operating
income of 50 percent or better. The continuing strong financial performance
is the result of the initial success the company has achieved positioning
itself as a prime systems integrator serving the federal information
technology market and gains achieved through improving operating efficiencies.
Third Quarter Results
For the third quarter ended March 31, 1999, GRCI reported revenues of
$42.1 million, a 19 percent increase over revenues of $35.3 million reported
for the corresponding quarter last year. Operating income grew to $2.2
million, up 52 percent from $1.5 million reported last year.
Third quarter net income was $1.3 million, or $0.12 per share assuming
full dilution. Net results include a $681,000 tax provision. This compares to
net income reported for the third quarter of fiscal 1998 of $3.5 million, or
$0.35 per share assuming full dilution. Last year's net income included a
$2.5 million benefit for income taxes. The company's strong profit
performance this year accelerated the recognition of the tax benefits related
to prior year tax net operating losses to the point that it is now reporting a
normal tax provision against its pretax income.
Nine Months Results
For the first nine months of the current fiscal year, revenues were $117.9
million, a 28 percent improvement over the $92.2 million in revenues reported
for the first nine months of last year. Operating income improved 61 percent
to $6.6 million from $4.1 million in the corresponding nine-month period last
year.
For the first three quarters of the current fiscal year, net income was
$7.6 million, or $0.73 per share assuming full dilution. Net results included
a $1.8 million benefit for income taxes and a gain from discontinued
operations, net of taxes, of $220,000.
Net income for the first three quarters of last year was $7.5 million, or
$0.75 per share assuming full dilution. Last year's net income for the first
nine months included $4.1 million in tax benefits and a gain from discontinued
operations, net of taxes, of $758,000.
Management Discussion
"I am very pleased with GRCI's continuing strong financial performance,"
said GRCI President and CEO Gary Denman. "Year-to-date, our revenues are
growing at a very robust 28 percent and are 19 percent higher this quarter
over a strong third quarter last year. This improvement is driven largely by
new revenues generated from work we are performing as a prime systems
integrator for the U.S. Army. Our goal continues to be delivery of $260
million in annual revenues by fiscal 2001 through a combination of 15-to-20
percent annual internal growth and acquisitions of small- to medium-sized
companies.
"Our focus on profitability has resulted in an even stronger improvement
in operating profits, which have grown 61 percent through the first three
quarters of the year," said Denman. "I also am pleased with the progress we
are making towards improving the company's operating margins, which reached
5.3 percent this quarter, up from 4.2 percent one year ago. This demonstrates
the progress we have made towards our goal of achieving margins of 6 percent
or better next year."
Discussion of Tax Treatment
Beginning with the third quarter of fiscal 1997, the company reported a
tax benefit on its income statements in recognition of tax loss carryforwards
resulting from prior period tax net operating losses. With the company's
accelerating growth and profitability, this asset has now been fully
recognized and the company began reporting a tax provision this quarter and
will continue to do so going forward.
For the first six months of the current year, the company recognized a
$2.5 million net tax benefit on its income statements. An additional tax
benefit of $79,000 was taken in the third quarter, which resulted in a net
income tax provision of $681,000 for the quarter. The remaining tax benefit
of $3.4 million was credited directly to paid-in capital in stockholders'
equity in the third quarter and relates to the portion of the tax net
operating loss carryforwards derived from stock options exercised in prior
years.
Having completed the recognition of its net operating losses, the company
now has a $23.1 million asset on its balance sheet. This will result in the
company not paying income taxes on earnings for the next several years and
will substantially increase free cash flow.
GRC International Inc., with headquarters in Vienna, Va., provides
knowledge-based professional services and high-quality technology-based
product solutions to government and commercial customers. GRCI is a publicly
traded company listed on the New York Stock Exchange under the symbol GRH.
Additional details about the company can be obtained on the Internet at
http://www.grci.com/.
Inquiries: Wayne Jackson, Director, Corporate Communications,
703-506-5038. GRCI press releases are available on the Internet through
Company News On-Call at http://www.prnewswire.com/.
GRC International, Inc.
Consolidated Condensed Statements of Income
(in thousands, except for per share data)
(unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
Revenues $42,117 $35,307 $117,925 $92,177
Cost of services 35,539 29,547 99,399 76,186
Indirect costs and
other costs 4,331 4,280 11,932 11,906
Operating income 2,247 1,480 6,594 4,085
Interest (expense), net (276) (425) (968) (1,452)
Income from continuing
operations before
benefit for income taxes1,971 1,055 5,626 2,633
Benefit (provision) for
income taxes (681) 2,493 1,794 4,078
Income from continuing
operations 1,290 3,548 7,420 6,711
Gain from discontinued
operations
(Net of tax) 26 -- 220 758
Net Income $ 1,316 $ 3,548 $ 7,640 $ 7,469
====== ====== ====== ======
Basic income per
common share:
Continuing operations $0.13 $0.36 $0.73 $0.69
Discontinued operations -- -- 0.02 0.08
Net income $0.13 $0.36 $0.75 $0.77
====== ====== ====== ======
Number of shares used
in EPS calculation 10,238 9,803 10,225 9,737
Diluted income per
common share:
Continuing operations $0.12 $0.35 $0.71 $0.68
Discontinued operations -- -- 0.02 0.07
Net income $0.12 $0.35 $0.73 $0.75
====== ====== ====== ======
Number of shares used
in EPS calculation 10,531 10,266 10,468 10,260
Consolidated Balance Sheets
(Condensed and unaudited)
(in thousands)
Mar. 31, June 30,
1999 1998
Assets
Current assets* $47,016 $39,157
Property and equipment, net 8,636 9,569
Goodwill and other
intangible assets, net 2,038 2,176
Deferred software costs, net -- 349
Deferred taxes* 21,885 16,678
Other assets 1,544 3,334
------ ------
Total assets $81,119 $71,263
====== ======
Liabilities and
stockholders' equity
Net liabilities of
discontinued operations $224 $297
Other current liabilities 21,166 20,084
Long-term debt 21,264 23,264
Other non-current
liabilities 145 258
Stockholders' equity 38,320 27,360
------ ------
Total liabilities and
stockholders' equity $81,119 $71,263
====== ======
*Total deferred tax assets, current and long-term, amounted to $23.1
million at March 31, 1999 and $17.9 million at June 30, 1998.
SOURCE GRC International
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Related links:
http://www.grci.com
Company News On-Call:
http://www.prnewswire.com/comp/320275.html or fax,
800-758-5804, ext. 320275
CONTACT:
Wayne Jackson, Director, Corporate
Communications of GRC International, 703-506-5038
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