ex99-1.htm

Exhibit 99.1

NewsRelease

DYNAMICS RESEARCH CORPORATION

60 FRONTAGE ROAD, ANDOVER, MASSACHUSETTS 01810-5423 TEL. 978/289-1500 www.drc.com

DYNAMICS RESEARCH CORPORATION

REPORTS FIRST QUARTER 2009 RESULTS

--- Continued Strong Business Outlook for 2009 ---

Andover, Mass. - April 29, 2009 - Dynamics Research Corporation (Nasdaq: DRCO), a leading provider of innovative management consulting, engineering, technical and information technology services and solutions to federal and state governments, today announced operating results for the first quarter ended March 31, 2009.

Financial Results

The Company reported revenue of $68.5 million for the first quarter of 2009 as compared with $56.5 million for the same period in 2008. Reported revenue rose 21 percent on a year-over-year basis, including organic revenue growth of 5 percent. Net income for the first quarter of 2009 was $1.8 million, or $0.18 per diluted share, up from $1.4 million, or $0.15 per diluted share, for the first quarter of 2008, excluding a litigation provision in the first quarter of 2008 of $6.7 million, net of taxes. Reported results for the first quarter of 2008, including the litigation provision, reflected a net loss of $5.3 million, or $0.56 per share.

Business Highlights

“We are very pleased to be reporting our eleventh consecutive quarter of improving operating results, which exceeded our guidance expectations in terms of both revenue growth and earnings improvement,” said Jim Regan, DRC’s chairman and chief executive officer. “Organic revenue rose five percent, operating profit was up 33 percent over the first quarter of 2008, excluding the litigation provision in the 2008 results, EBITDA of $5.4 million was up 40% on a year-over-year basis, and cash generated by operating activities of $3.4 million was strong.

“While federal services procurement activity was modest in the quarter we anticipate that proposal activity will pick up as the year progresses and believe we are well positioned for success in these competitions. We remain focused on a selected number of targeted growth markets – Homeland Security, the Federal Financial Civilian Agencies, Health Care, Human Capital Management and Training, Business Transformation, and Cyber-Security – where we are seeing strong demand for our services and solutions. By focusing on providing differentiated, high-value solutions and services to clients in our target markets we are confident in our ability to expand in these markets and successfully respond to Federal priorities,” added Regan.

Company Guidance

The Company’s estimate for revenue for 2009 is in the range of $280 to $290 million, unchanged from previous estimates. Regarding earnings for 2009 the Company anticipates results to be in the range of $0.90 to $1.00 per diluted share, also unchanged from previous estimates. For the second quarter of 2009 the Company anticipates revenue in the range of $69 to $71 million and earnings per diluted share of $0.19 to $0.21.

Conference Call

The Company will conduct a first quarter 2009 conference call tomorrow, April 30, 2009 at 10:00 a.m. ET. The call will be available via telephone at (800)357-9448, and accessible via Web cast at www.drc.com. Recorded replays of the conference call will be available on Dynamics Research Corporation’s investor relations home page at www.drc.com and by telephone at (888)203-1112, passcode #9435179, beginning at 2:01 p.m. ET April 30, 2009 through 11:59 p.m. ET May 14, 2009.

About Dynamics Research Corporation

Dynamics Research Corporation (DRC) is a leading provider of mission-critical technology management services and solutions for government programs. DRC offers the capabilities of a large company and the responsiveness of a small company, backed by a history of excellence and customer satisfaction. Founded in 1955, DRC is a publicly held corporation (Nasdaq: DRCO) and maintains more than 25 offices nationwide with major offices in Andover, Massachusetts and the Washington, D.C. area. For more information please visit our website at www.drc.com.

Safe Harbor

Safe harbor statements under the Private Securities Litigation Reform Act of 1995: Some statements contained or implied in this news release, may be considered forward-looking statements, which by their nature are uncertain. Consequently, actual results could materially differ. For more detailed information concerning how risks and uncertainties could affect the Company's financial results, please refer to DRC's most recent filings with the SEC. The Company assumes no obligation to update any forward-looking information.

The non-GAAP measures used by the Company exclude the provision for litigation charges and related effect for income taxes. The required reconciliations and other disclosures for the non-GAAP measures used by the Company are set forth later in this press release and/or the Current Report on Form 8-K to be filed with the SEC on April 29, 2009.

ATTACHMENT I

DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except share and per share data)


	Three Months Ended
	March 31,
	2009			2008
Contract revenue	$	67,203		$	54,773
Product sales		1,336			1,705
Total revenue		68,539			56,478

Cost of contract revenue		55,943			46,212
Cost of product sales		1,518			1,605
Total cost of revenue		57,461			47,817

Gross profit on contract revenue		11,260			8,561
Gross profit (loss) on product sales		(182	)		100
Total gross profit		11,078			8,661

Selling, general and administrative expenses		6,457			5,401
Provision for litigation		-			8,819
Amortization of intangible assets		973			509
Operating income (loss)		3,648			(6,068	)
Interest expense, net		(619	)		(139	)
Other income (expense)		39			(71	)
Income (loss) before provision for income taxes		3,068			(6,278	)
Provision (benefit) for income taxes		1,297			(1,022	)
Net income (loss)	$	1,771		$	(5,256	)

Earnings (loss) per common share
Basic	$	0.18		$	(0.56	)
Diluted	$	0.18		$	(0.56	)

Weighted average shares outstanding
Basic		9,604,895			9,436,054
Diluted		9,711,084			9,436,054

ATTACHMENT II

DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)


	March 31,		December 31,
	2009		2008
Assets
Current assets
Cash and cash equivalents	$	4,383	$	7,111
Contract receivables, net		71,761		71,438
Prepaid expenses and other current assets		3,401		2,491
Total current assets		79,545		81,040
Noncurrent assets
Property and equipment, net		8,821		9,349
Goodwill		97,641		97,641
Intangible assets, net		6,406		7,379
Deferred tax asset		10,369		10,396
Other noncurrent assets		3,042		3,125
Total noncurrent assets		126,279		127,890
Total assets	$	205,824	$	208,930

Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt	$	8,000	$	8,000
Accounts payable		17,720		18,095
Accrued compensation and employee benefits		13,419		13,644
Deferred taxes		3,492		2,670
Other accrued expenses		20,898		24,760
Total current liabilities		63,529		67,169
Long-term liabilities
Long-term debt		28,296		30,000
Other long-term liabilities		30,523		30,286
Total stockholders' equity		83,476		81,475
Total liabilities and stockholders' equity	$	205,824	$	208,930

ATTACHMENT III

DYNAMICS RESEARCH CORPORATION
SUPPLEMENTAL INFORMATION (unaudited)
(dollars in thousands)


Contract revenues were earned from the following sectors:

	Three Months Ended
	March 31,
	2009			2008
National defense and intelligence agencies	$	36,107		$	40,946
Federal civilian agencies		12,194			6,634
Homeland security		12,804			1,326
State and local government agencies		5,817			5,244
Other		281			623
	$	67,203		$	54,773


Revenues by contract type as a percentage of contract revenue were as follows:

	Three Months Ended
	March 31,
	2009			2008
Time and materials		46	%		55	%
Cost reimbursable		17			19
Fixed price, including service-type contracts		37			26
		100	%		100	%

Prime contract		72	%		54	%
Sub-contract		28			46
		100	%		100	%


	Three Months Ended
	March 31,
	2009			2008
Net cash provided by operating activities	$	3,366		$	1,832
Capital expenditures	$	266		$	402
Depreciation	$	784		$	700
Bookings	$	57,392		$	63,050


	March 31,			December 31,
	2009			2008
Funded backlog	$	142,148		$	149,201
Employees		1,481			1,503

ATTACHMENT IV

DYNAMICS RESEARCH CORPORATION
NON-GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)



	Three Months Ended
	March 31, 2008
Contract revenue	$	54,773
Product sales		1,705
Total revenue		56,478

Cost of contract revenue		46,212
Cost of product sales		1,605
Total cost of revenue		47,817

Gross profit on contract revenue		8,561
Gross profit (loss) on product sales		100
Total gross profit		8,661

Selling, general and administrative expenses		5,401
Amortization of intangible assets		509
Non-GAAP operating income		2,751
Interest expense, net		(139	)
Other expense, net		(71	)
Non-GAAP income before provision for income taxes		2,541
Non-GAAP provision for income taxes		1,102
Non-GAAP net income	$	1,439

Earnings per common share
Basic	$	0.15
Diluted	$	0.15

Weighted average shares outstanding
Basic		9,436,054
Diluted		9,728,042

ATTACHMENT V

DYNAMICS RESEARCH CORPORATION
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except share and per share data)



	Three Months Ended
	March 31, 2008
GAAP operating loss	$	(6,068	)
Provision for litigation		8,819
Non-GAAP operating income	$	2,751

GAAP loss before provision for income taxes	$	(6,278	)
Provision for litigation		8,819
Non-GAAP income before provision for income taxes	$	2,541

GAAP benefit for income taxes	$	(1,022	)
Tax benefit for provision for litigation		2,124
Non-GAAP provision for income taxes	$	1,102

GAAP net loss	$	(5,256	)
Provision for litigation, net of tax benefit		6,695
Non-GAAP net income	$	1,439

Earnings (loss) per common share
GAAP Basic	$	(0.56	)
Per share effect of provision for litigation		0.71
Non-GAAP Basic	$	0.15

GAAP Diluted	$	(0.56	)
Per share effect of provision for litigation		0.70
Non-GAAP Diluted	$	0.15

GAAP Weighted average shares outstanding
Basic and diluted		9,436,054

Weighted average shares outstanding
Basic and GAAP diluted		9,436,054
Non-GAAP Diluted		9,728,042

CONTACT:	Darrow Associates, Inc.
	Investors:
	Chris Witty
	646.438.9385
	cwitty@darrowir.com

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	Marisa Hagerman
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