VIENNA, Va., Jan. 20 /PRNewswire/ -- GRC International (NYSE: GRH) today
reported net income of $2.5 million, or $0.25 per share assuming full
dilution, for the second quarter ended Dec. 31, 1997. Net results included a
$1.3 million benefit for income taxes and a gain from discontinued operations,
net of taxes, of $468,000. This compares with a net loss of $19.1 million, or
$2.03 per share assuming full dilution, for the second quarter of the prior
year. Last year's second quarter results included a write-down of
$14.3 million in deferred software and other costs related to discontinued
operations.
Revenues from continuing operations for the second quarter of the current
year were $29.7 million, an increase of 4% over last year's second quarter
revenues from continuing operations of $28.6 million.
Improvements in efficiencies and contract profitability during the
quarter resulted in operating income before interest for the second quarter of
fiscal 1998 of $1.2 million, an 8.6% increase over the corresponding quarter
last year.
Net interest expense for the quarter was $499,000, a $159,000 increase
from the prior year. This resulted in $696,000 in income from continuing
operations for the second quarter of fiscal 1998 compared to $760,000 in the
second quarter of last year.
"This was a very good quarter for GRC International's operations," said
GRCI President and CEO Jim Roth. "We won several important new multi-year
contracts with the Department of Defense; expanded our efforts on an important
prime contract with the Army; and further extended our professional services
skills into commercial markets. We also have sold the assets and intellectual
property of the two remaining operations we discontinued last spring
and have managed to grow our professional services staff in a very competitive
hiring environment.
"The new contracts we received during the quarter helped push our maximum
contract backlog to more than $400 million during the quarter. This is
up from June 30, when we reported $372 million. Most significantly, we
continued to expand our efforts we began last March as prime contractor on the
Army's effort to modernize its logistics systems into a single, seamless,
integrated system. This is a highly visible program within the Army and
we are well positioned to participate in future phases of this substantial
endeavor.
"I am also encouraged by our efforts to extend our professional services
skills into commercial markets," said Roth. "We currently are working in
Maryland on a new contract with the regulation division of a national
financial association, which I believe can be expanded into a larger
engagement as we demonstrate our value to the customer. In South Carolina, we
have a new contract to provide information security services to a major
provider of health care services and in California, we are working with a
subsidiary of one of the country's largest banks that is developing Internet-
based products for the financial community. These new customers prove the
validity of our strategic plan to add value to GRCI by expanding our services
into allied markets.
"I am pleased to report," said Roth, "that during the second quarter we
saw a net increase in revenue-generating staff and, as we enter the third
quarter, our staff growth rate is accelerating. During the first two weeks of
January alone, we had a net increase of 20 employees, bringing the year-to-
date net increase to more than 50. We still have a large number of funded
openings and, therefore, growing our technical staff to meet backlog demands
is the most important challenge we currently face. As we continue to overcome
this challenge, I am confident it will have a strong, positive impact on our
results.
"Finally," said Roth, "we have sold the final two technologies from our
discontinued operations that were no longer key to our core business. These
transactions, like others that we concluded over the past year, have the
potential to generate royalties that will essentially drop to the bottom line
for up to ten years."
The technologies recently sold include the NetworkVUE(TM)
telecommunications business, which was purchased by Advanced Concepts Inc. of
Columbia, Md.; and the CIS/Flow Gemini(TM) environmental software business,
which was purchased by Electronic Offsite Systems of Santa Barbara, Calif. The
company had previously announced the sale of its Dynatup(R) materials testing
business unit (formerly known as GRC Instruments) to Instron Corp.
(Amex: ISN), Canton, Mass.; its Vindicator electronic securities systems
business to RAD Partners Ltd. of Austin, Texas; and its OSU(R) Network
Interface business to SOTAS Inc., a privately held Rockville, Md.-based
manufacturer and
developer of performance monitoring telecommunications equipment.
CONSOLIDATED SIX-MONTH FINANCIAL RESULTS
For the first six months of the current fiscal year, the company reported
net income of $3.9 million, or $0.40 per share assuming full dilution, on
revenues from continuing operations of $56.9 million. Net income for the first
half of fiscal 1998 includes a $758,000 gain, net of tax, on the favorable
resolution of a discontinued operations liabilities. In the comparable six
month period in the prior year, the company reported a loss of $21.7 million,
or a loss of $2.30 per share assuming full dilution, on revenues from
continuing operations of $57.0 million. Last year's six-month results include
a loss from discontinued operations of $23.3 million, which includes the
previously discussed fiscal 1997 second quarter write-down of $14.3 million.
Forward-looking statements contained in this release are subject to risks
and uncertainties that could cause actual results to differ materially. These
risks and uncertainties include the company's dependence on continued funding
of U.S. Department of Defense programs and the company's ability to fill
required staff positions to service the contracts granted under those
programs; government contract procurement and termination risks; and other
risks described in the company's Securities and Exchange Commission filings.
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 Six Months Ended
Dec. 31, Dec. 31,
1997 1996 1997 1996
Revenues $29,705 $28,568 $56,870 $57,037
Cost of services 24,479 23,501 46,639 46,768
Indirect costs and other costs 4,031 3,967 7,626 8,177
Operating income 1,195 1,100 2,605 2,092
Interest (expense), net (499) (340) (1,027) (476)
Income from continuing operations
before benefit for income taxes 696 760 1,578 1,616
Benefit for income taxes 1,331 -- 1,585 --
Income from continuing operations 2,027 760 3,163 1,616
Gain (loss) from discontinued
operations (Net of tax) 468 (19,864) 758 (23,330)
Net Income (Loss) $2,495 $(19,104) $3,921 $(21,714)
Basic income (loss) per common share:
Continuing operations $0.21 $.08 $0.32 $0.17
Discontinued operations $0.05 $(2.13) $0.08 $(2.50)
Net income (loss) $0.26 $(2.05) $0.40 $(2.33)
Number of shares used
in EPS calculation 9,777 9,340 9,704 9,321
Diluted income (loss)
per common share:
Continuing operations $0.20 $.08 $0.32 $0.17
Discontinued operations $0.05 $(2.11) $0.08 $(2.47)
Net income (loss) $0.25 $(2.03) $0.40 $(2.30)
Number of shares used
in EPS calculation 9,914 9,427 9,834 9,445
Consolidated Balance Sheets
(Condensed and unaudited)
(in thousands)
Dec. 31, June 30,
1997 1997
Assets
Current assets* $39,253 $39,271
Property and equipment, net 9,789 10,553
Goodwill and other
intangible assets, net 2,263 2,409
Deferred software costs, net 405 461
Deferred taxes* 10,010 8,896
Other assets 4,421 4,374
Total assets $66,141 $65,964
Liabilities and stockholders' equity
Net liabilities of
discontinued operations $2,255 $4,591
Other current liabilities 18,269 18,812
Long-term debt 26,103 28,153
Other non-current liabilities 1,273 1,332
Stockholders' equity 18,241 13,076
Total liabilities and
stockholders' equity $66,141 $65,964
* Total deferred tax assets, current and long-term, amounted to $12.7
million at Dec. 31, 1997, and $11.6 million at June 30, 1997.
SOURCE GRC International
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Related links:
http://www.grci.com
CONTACT:
Wayne Jackson, Director, Corporate
Communications, of GRC International, 703-506-5038
CNOC: http://www.prnewswire.com or fax, 800-758-5804, ext.
320275
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