EX-99.1 3 l02376aexv99w1.txt EXHIBIT 99.1 Exhibit 99.1 [DYNAMICS RESEARCH LETTERHEAD] DYNAMICS RESEARCH CORPORATION REPORTS RECORD SECOND QUARTER 2003 REVENUES UP 30 PERCENT YEAR OVER YEAR Andover, Mass. -- July 29, 2003 -- Dynamics Research Corporation (Nasdaq: DRCO) today reported record revenues of $62.1 million for the second quarter ended June 30, 2003 compared with revenues of $47.8 million for the same period in 2002. Earnings from continuing operations were $2.0 million, or $0.23 per diluted share for the second quarter of 2003. This compares with earnings from continuing operations of $2.0 million, or $0.22 per diluted share for the quarter ended June 30, 2002. For the six months ended June 30, 2003 DRC reported earnings from continuing operations of $3.6 million, or $0.42 per diluted share, on revenues of $120.7 million. For the first half of 2002, DRC had earnings from continuing operations of $3.7 million, or $0.41 per diluted share on revenues of $94.9 million. For the second quarter, the company reported net income of $1.1 million or $0.13 per diluted share, which includes a loss from discontinued operations of $855 thousand, or $0.10 per diluted share, reflecting the accrual of remaining Encoder facility lease expenses and Encoder division losses incurred prior to its divestiture during the quarter. For the six months ended June 30, 2003, net income was $2.1 million or $0.25 per diluted share, including losses related to the discontinued Encoder business. Regarding operating results for the quarter James P. Regan, chairman and chief executive officer, said, "I'm pleased that we delivered a solid second quarter, with results at the top and bottom lines consistent with our expectations. DRC had another productive quarter as evidenced by important new business contract wins, an increase in proposals under consideration, contributions from our acquisitions and strong cash collections." "The company is seeing accelerated business development momentum and operating performance improvement consistent with our operating plan. That, coupled with the strong demand we continue to see from our federal market customers, gives me confidence in the outlook for the balance of 2003 and beyond", Regan added. DRC announced its updated projections for 2003, with revenues expected to be in the range of $246 to $252 million and earnings per diluted share from continuing operations expected to be in the range of $0.99 to $1.04. For the third quarter of the year the company expects to book revenues in the range of $62 to $65 million and earnings per diluted share from continuing operations of $0.26 to $0.30. The company will conduct a conference call today at 1:00 p.m. ET to discuss its second quarter results and the outlook for the second half of 2003 in more detail. The call will be available via telephone at (800) 915-4836, 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 (800) 428-6051, passcode #299535, beginning at 3:00 p.m. July 29, 2003 through 12:00 p.m. August 3, 2003. CONTACT: Elise P. Caffrey, Treasurer & Director, Investor Relations (978) 475-9090, Ext. 1309 ABOUT DYNAMICS RESEARCH CORPORATION Dynamics Research Corporation is an innovative solutions provider that partners with government customers to apply proven processes and technologies. DRC delivers engineering, logistics, training, simulation, modeling, and information technology services that enhance the performance and cost effectiveness of its customers' mission critical systems. For additional information please visit the website at www.drc.com. SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Some of the statements contained or implied in this news release, may be considered forward-looking statements, that are subject to material risks and uncertainties. Actual results could differ materially from these forward-looking statements. For more detailed information concerning how risks and uncertainties could affect the company's financial results, please refer to DRC's report Form 10-K and other reports filed with the SEC. The company assumes no obligation to update any forward-looking information. CONTACT: Elise P. Caffrey, Treasurer & Director, Investor Relations (978) 475-9090, Ext. 1309 ATTACHMENT I. DYNAMICS RESEARCH CORPORATION RESULTS OF OPERATIONS (unaudited) (in thousands, except share and per share data)
Three Three Months Ended Months Ended June 30, 2003 June 30, 2002 ------------- ------------- Contract revenue $ 60,310 $ 45,653 Product sales 1,829 2,152 ----------- ----------- Total revenue 62,139 47,805 Cost of contract revenue 50,851 38,788 Cost of product sales 1,283 1,331 Selling, engineering and administrative expenses 6,109 4,202 Amortization expense 423 67 ----------- ----------- Total operating costs and expenses 58,666 44,388 Operating income 3,473 3,417 Other income 37 3 Interest expense, net (236) (44) ----------- ----------- Income from continuing operations before provision for income taxes 3,274 3,376 Provision for income taxes 1,317 1,373 ----------- ----------- Income from continuing operations 1,957 2,003 Loss from discontinued operations, net of tax benefit of $574 in 2003 and $136 in 2002 (855) (199) ----------- ----------- Net income $ 1,102 $ 1,804 =========== =========== NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Per common share - basic Income from continuing operations $ 0.24 $ 0.25 Loss from discontinued operations, net of tax (0.11) (0.02) ----------- ----------- Net income $ (0.13) $ 0.23 =========== =========== Per common share - diluted Income from continuing operations $ 0.23 $ 0.22 Loss from discontinued operations, net of tax (0.10) (0.02) ----------- ----------- Net income $ 0.13 $ 0.20 =========== =========== Weighted average shares outstanding Weighted average shares outstanding - basic 8,181,314 7,936,252 Dilutive effect of options 504,706 1,066,775 ----------- ----------- Weighted average shares outstanding - diluted 8,686,020 9,003,027 =========== ===========
ATTACHMENT II. DYNAMICS RESEARCH CORPORATION RESULTS OF OPERATIONS (unaudited) (in thousands, except share and per share data)
Six Six Months Ended Months Ended June 30, 2003 June 30, 2002 ------------- ------------- Contract revenue $ 117,238 $ 90,424 Product sales 3,506 4,440 ----------- ----------- Total revenue 120,744 94,864 Cost of contract revenue 99,003 77,449 Cost of product sales 2,535 2,699 Selling, engineering and administrative expenses 11,890 8,350 Amortization expense 878 67 ----------- ----------- Total operating costs and expenses 114,306 88,565 Operating income 6,438 6,299 Other income 80 3 Interest expense, net (514) (83) ----------- ----------- Income from continuing operations before provision for income taxes 6,004 6,219 Provision for income taxes 2,414 2,530 ----------- ----------- Income from continuing operations 3,590 3,689 Loss from discontinued operations, net of tax benefit of $814 in 2003 and $273 in 2002 (1,213) (399) Loss on disposal of discontinued operations, net of tax benefit of $157 in 2003 and $273 in 2002 (233) -- ----------- ----------- Net income $ 2,144 $ 3,290 =========== =========== NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Per common share - basic Income from continuing operations $ 0.44 $ 0.47 Loss from discontinued operations, net of tax (0.15) (0.05) Loss on disposal of discontinued operations, net of tax (0.03) -- ----------- ----------- Net income $ 0.26 $ 0.42 =========== =========== Per common share - diluted Income from continuing operations $ 0.42 $ 0.41 Loss from discontinued operations, net of tax (0.14) (0.04) Loss on disposal of discontinued operations, net of tax (0.03) -- ----------- ----------- Net income $ 0.25 $ 0.37 =========== =========== Weighted average shares outstanding Weighted average shares outstanding - basic 8,160,932 7,900,627 Dilutive effect of options 487,927 1,026,805 ----------- ----------- Weighted average shares outstanding - diluted 8,648,859 8,927,432 =========== ===========
ATTACHMENT III. DYNAMICS RESEARCH CORPORATION CONDENSED BALANCE SHEETS (unaudited) (in thousands)
ASSETS June 30, 2003 December 31, 2002 ------------- ----------------- Cash and cash equivalents $ 2,057 $ 1,076 Receivables 28,161 29,819 Unbilled expenditures and fees 27,745 26,614 Prepaid expenses and other current assets 3,741 1,727 Current assets -discontinued operations -- 3,432 -------- -------- Total current assets 61,704 62,668 Net property, plant and equipment 17,305 15,608 Deferred income tax asset 1,429 1,559 Goodwill 26,277 26,169 Intangible assets, net of amortization 3,188 4,066 Other non current assets 1,456 1,275 Non current assets - discontinued operations -- 331 -------- -------- Total assets $111,359 $111,676 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $ 500 $ 500 Notes payable and revolver 10,000 14,644 Current deferred income taxes 6,008 6,524 Accounts payable 13,370 12,334 Accrued payroll and employee benefits 12,439 11,898 Other accrued expenses 5,226 4,540 -------- -------- Total current liabilities 47,543 50,440 Long-term debt 8,000 8,250 Deferred income taxes -- -- Accrued pension liability 11,778 11,778 Other non current liabilities 1,068 1,399 Total stockholders' equity 42,970 39,809 -------- -------- Total liabilities and stockholders' equity $111,359 $111,676 ======== ========
ATTACHMENT IV. DYNAMICS RESEARCH CORPORATION SUPPLEMENTAL INFORMATION (unaudited) (dollars in thousands)
Second Quarter Ended Six Months Ended ---------------------------------- ----------------------------------- June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002 ------------- ------------- ------------- ------------- Capital Expenditures -continuing operations $ 2,627 $ 879 $ 3,460 $ 1,602 Capital Expenditures -total company $ 2,627 $ 888 $ 3,460 $ 1,639 Depreciation - continuing operations $ 950 $ 944 $ 1,750 $ 1,662 Depreciation - total company $ 963 $ 1,014 $ 1,803 $ 1,815 Bookings - continuing operations $ 61,473 $ 33,319 $128,184 $ 81,799 Booking - total company $ 61,930 $ 37,684 $130,125 $ 87,478 Funded Backlog - continuing company $118,510 $100,552 $118,510 $100,552 Funded Backlog - total company $ -- $ -- $118,510 $101,336
June 30, 2003 December 30, 2002 June 30, 2002 ------------- ----------------- ------------- Employment - continuing company 1,797 1,765 1,259 Employment - total company 1,841 1,858 1,598