VIENNA, Va., Oct. 21 /PRNewswire/ -- GRC International (NYSE: GRH) today
reported net income of $1.4 million, or $0.15 per share, on revenues of $27.2
million for the first quarter ending Sept. 30, 1997. Current year net income
includes a $290,000 gain, net of tax, on the favorable resolution of a
discontinued operations liability. This compares to a net loss of $2.6
million, or a loss of $0.28 per share, in the corresponding quarter last year,
which included $3.5 million in losses from discontinued operations. Last
year's first quarter revenues were $28.5 million. Since contract backlog is
strong, the company believes that revenues should show growth compared to the
prior year as staffing levels increase throughout the year.
    Operating income before interest for the first quarter of fiscal 1998 was
$1.4 million, a 42% improvement over the corresponding quarter last year when
the company reported operating income of $992,000. The improvement was
primarily due to reduced unrecoverable overhead expenses allocated to
discontinued operations and an increase in higher-margin product sales.
    Income from continuing operations for the first quarter of fiscal 1998
improved to $1.1 million from last year's $856,000 even after a $392,000
increase in net interest expenses attributable to continuing operations.
    "Today, GRC International is operating from a solid and profitable
foundation in a market that is demanding more professional and technical
services of the types we are skilled at delivering," said President and CEO
Jim Roth. "Our highest priority is to continue building on the successes we
have already achieved in our professional services business. These successes
have been achieved by strengthening our relationships with our current
clients, and by adding a number of important new customers within the
Department of Defense and elsewhere.
    "Our maximum contract backlog remains strong," continued Roth," as a
result of our aggressive efforts to capture new business, as well as our
ability to win every prime contract re-compete we have pursued over the past
five years. The underlying strength for GRCI still remains the high quality of
our services. Looking ahead, I am optimistic that we can achieve significant
growth beyond our solid base. Our challenge at the current time is the
industry-wide shortage of qualified and skilled technical employees.
    "To support our revenue expansion efforts, we have reorganized our
marketing and business development group under a senior vice president. They
have already had a major impact by positioning the company to exploit the new
GSA Services schedule, which is becoming a preferred contract approach for
many of our customers. I look forward to even broader impact on our business
base from this group.
    "The second initiative that we are undertaking," Roth continued, "is the
delivery of our technical and professional services and products to new
customers with new partners. As we have proven in the past, GRCI is the rare
company that can generate new and exemplary technologies in the ordinary
course of business that can be commercialized in the future. To be successful
in this effort, however, we will align ourselves with business and financial
partners who can help us take these ideas to market and further enhance the
value of GRCI." This effort is being spearheaded by a triad consisting of
Chairman Joe Wright, Vice Chairman Peter Cohen and President Jim Roth.
    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/.

                           GRC INTERNATIONAL, INC.
                      Consolidated Statements of Income
                  (in thousands, except for per share data)
                                 (unaudited)
                                                Three Months Ended
                                                    September 30,
                                               1997                1996
    Revenues                                 $27,165             $28,469
    Cost of services                          22,160              23,267
    Indirect costs and other costs             3,595               4,210
    Operating income (loss)                    1,410                 992
    Interest (expense) income, net              (528)               (136)
    Income (loss) from continuing operations
     before benefit for income taxes             882                 856
    Benefit (provision) for income taxes         254                  --
    Income from continuing operations          1,136                 856
    Gain (loss) from discontinued operations
     (Net of tax of $182 and $0)                 290              (3,466)
    Net Income (Loss)                         $1,426             $(2,610)

    Income (loss) per common and
      common equivalent share:
     Continuing operations                    $ 0.12             $  0.09
     Discontinued operations                  $ 0.03             $ (0.37)
     Net income (loss)                        $ 0.15             $ (0.28)

    Number of shares used in EPS calculation   9,719               9,496

                           GRC INTERNATIONAL, INC.
                         Consolidated Balance Sheets
                          (Condensed and unaudited)
                                (in thousands)
                                          September 30,        June 30,
                                               1997              1997
    Assets
      Current assets*                        $37,650             $39,271
      Property and equipment, net             10,005              10,553
      Goodwill and other
       intangible assets, net                  2,344               2,409
      Deferred software costs, net               433                 461
      Deferred taxes*                          8,968               8,896
      Other assets                             4,412               4,374

    Total assets                             $63,812             $65,964

    Liabilities and stockholders' equity
      Net liabilities of
       discontinued operations               $ 3,501             $ 4,591
      Other current liabilities               16,511              18,812
      Long-term debt                          26,785              28,153
      Other non-current liabilities            1,290               1,332
      Stockholders' equity                    15,725              13,076

    Total liabilities and stockholders'
     equity                                  $63,812             $65,964

    *Total deferred tax assets, current and long-term, amounted to $11.7
million at Sept. 30, 1997 and $11.6 million at June 30, 1997.

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