VIENNA, Va., Oct. 19 /PRNewswire/ -- GRC International (NYSE: GRH) today
reported revenues of $36.8 million for the first quarter of fiscal year 1999
ending Sept. 30, 1998. This was an increase of 35% over the $27.2 million for
the corresponding quarter last year and is the third consecutive quarter of
double-digit revenue growth. Revenue improvement was primarily the result of
significant new work the company is generating by establishing itself as a
prime contractor and systems integrator.
First quarter operating income was $2.1 million, an increase of 50% from
$1.4 million reported last year. First quarter operating margins improved to
5.8% from 5.2% primarily as the result of revenues received for commercial
software it has developed for Lucent Technologies' (NYSE: LU) digital cross-
connect switches.
In addition to improved operating profitability, declining interest
expense resulted in even greater growth in earnings before taxes (EBT). First
quarter EBT was $1.8 million, a 100% gain over the $882,000 reported last
year. EBT margin improved to 8.2% from 4.2% last year.
The company's net income rose to $3.1 million, or $0.30 per share on a
diluted basis, compared with $1.4 million, or $0.15 per share on a diluted
basis last year. This year's first quarter net income included a $1.3 million
tax benefit. Last year's first quarter net income included a $254,000 tax
benefit and a $290,000 gain from discontinued operations.
The company also reported $54,000 of royalty income in the first quarter
resulting from sales by SOTAS of the GRCI-developed Optical Service Unit (OSU)
Network Interface Device. This was the first measurable royalty from that
discontinued product line since the company sold the intellectual property
rights to SOTAS in 1997 for cash and a ten-year royalty agreement.
At the close of the quarter, GRCI's maximum contract backlog reached a
record level of approximately $575 million, up from approximately $450 million
at the close of the prior quarter. Maximum contract backlog improvement
benefited significantly from new tasks for the company's on-going work to
modernize the U.S. Army's logistics information management system and an award
from the U.S. Navy for engineering and management support for aircraft
systems. (Maximum contract backlog includes all exercised and unexercised
options, and ceilings on contracts less expenditures. GRCI conservatively
discounts the maximum contract backlog to reflect its assessment of the
estimated effort and dollars expected over the life of the contract.)
Management Discussion
"This was an excellent quarter for GRCI," said GRC International President
and CEO Dr. Gary Denman. "We are very pleased with our success to date in
positioning the company as a prime contractor and systems integrator. We
intend to continue this strategy, and we believe it will continue to result in
strong earnings growth."
Commenting on market conditions, Dr. Denman said, "Demand for our advanced
professional and technical services continues to be significant and strong. By
primarily focusing on the professional and technical services market within
the U.S. Department of Defense our business has not been affected by the
recent economic turmoil that threatens technology companies serving foreign
commercial markets.
Looking to the future, Dr. Denman added, "As I stated in the company's
1998 Annual Report, it is our objective to continue building GRC International
as a strong, preeminent, independent professional and technical services
company. The three goals we have set for the company are:
* "Double revenues in three years driven by internally generated revenue
growth of 10% to 20% per year and supported by very selective acquisitions
that are compatible with our current business;
* "Achieve a 10% or greater improvement in operating margins -- year-to-
year -- through greater operating efficiencies and more effective management
of our contract profits;
* "Reposition GRCI as a prime contractor in all of our markets,
particularly the information technology market through aggressive marketing to
current and new federal customers and the leveraging of our quality reputation
in the marketplace.
"Our first quarter revenue growth and margin improvement make us even more
confident that our fiscal 1999 operating results will reflect a substantial
improvement over fiscal 1998 and that we are on course to achieve these longer
range goals.
"We are also please to include our first measurable OSU royalties
($54,000) in the first quarter's income statement. While small to date, we
hope these royalties will add a premium to our thriving business."
GRC International Inc., with headquarters in Vienna, Va., is a
professional services company that uses advanced computer, engineering, and
scientific technologies to help its government and commercial customers
fulfill their critical missions. Since 1961, GRCI has succeeded by providing
analytical services and tools; designing and integrating effective information
systems; and developing innovative technology-based solutions. GRC
International is publicly traded on the New York Stock Exchange under the
symbol GRH. Details about the company can be obtained on the Internet at
http://www.grci.com/ and from Company News On-Call at
http://www.prnewswire.com/.
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 (DoD) programs; government contract procurement
and termination risks; the company's ability to fill required staff positions
to service the contracts granted under the DoD programs; the risk that the
company will not be sufficiently prepared for the Y2K problem and/or that the
company may incur Y2K-related liabilities; and other risks described in the
company's Securities and Exchange Commission filings.
-TABLES FOLLOW-
GRC International, Inc.
Consolidated Statements of Income
(in thousands, except for per share data)
(unaudited)
Three Months Ended
September 30,
1998 1997
Revenues $36,756 $27,165
Cost of services 30,964 22,160
Indirect costs and other costs 3,675 3,595
------ ------
Operating income 2,117 1,410
Interest expense, net (352) (528)
------ ------
Income from continuing operations
before benefit for income taxes 1,765 882
Benefit for income taxes 1,265 254
------ ------
Income from continuing operations 3,030 1,136
Gain from discontinued operations
(Net of tax) 54 290
------ ------
Net Income $ 3,084 $ 1,426
====== ======
Basic income per common share:
Continuing operations $ 0.29 $ 0.12
====== ======
Discontinued operations $ 0.01 $ 0.03
====== ======
Net income $ 0.30 $ 0.15
====== ======
Number of shares used in EPS calculation 10,214 9,632
Diluted income per common share:
Continuing operations $ 0.29 $ 0.12
====== ======
Discontinued operations $ 0.01 $ 0.03
====== ======
Net income $ 0.30 $ 0.15
====== ======
Number of shares used in EPS calculation 10,386 9,792
Consolidated Balance Sheets
(Condensed and unaudited)
(in thousands)
September 30, June 30,
1998 1998
Assets
Current assets* $38,236 $39,157
Property and equipment, net 9,200 9,569
Goodwill and other
intangible assets, net 2,101 2,176
Deferred software costs, net - 349
Deferred taxes* 17,978 16,678
Other assets 3,361 3,334
------ ------
Total assets $70,876 $71,263
====== ======
Liabilities and stockholders' equity
Net liabilities of
discontinued operations $ 339 $ 297
Other current liabilities 16,118 20,084
Long-term debt 23,750 23,264
Other non-current liabilities 277 258
Stockholders' equity 30,392 27,360
------ ------
Total liabilities and
stockholders' equity $70,876 $71,263
====== ======
*Total deferred tax assets, current and long-term, amounted to $19.2
million at Sept. 30, 1998 and $17.9 million at June 30, 1998.
SOURCE GRC International, Inc.
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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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