EX-99.1 2 ex99-1.htm FOURTH QUARTER & FULL YEAR 2007 RESULTS NEWS RELEASE ex99-1.htm
 
 
Exhibit 99.1

   NewsRelease
60 FRONTAGE ROAD, ANDOVER, MASSACHUSETTS 01810                                                                                   TEL. 800-522-4321        FAX: 978-474-9204

 

DYNAMICS RESEARCH CORPORATION REPORTS
FOURTH QUARTER AND FULL YEAR 2007 RESULTS
--- New Contract Wins For Higher-End Services Driving 63 Percent Increase in Earnings ---



Andover, Mass.—February 27, 2008—Dynamics Research Corporation (Nasdaq: DRCO), a leading provider of innovative engineering, technical and information technology services and solutions to federal and state governments today announced operating results for the fourth quarter and year ended December 31, 2007.

Financial Results
 
The company reported revenue for the fourth quarter of 2007 of $56.5 million, compared with $60.3 million for the fourth quarter of 2006. For the year ended December 31, 2007 revenue was $229.6 million, compared with $259.0 million for 2006.  Revenues for 2006 included $6.3 million from the completion of an Air National Guard contract in May 2006 and subcontractor revenue of $5.6 million for the fourth quarter and $28.1 million for the full year, which are not reflected in results for 2007.  Absent the effect of this transition, revenue growth for the fourth quarter and full year 2007 was 3.2 percent and 2.2 percent, respectively.  Net income for the fourth quarter of 2007 was $2.5 million, or $0.26 per diluted share for the fourth quarter of 2007, a 63 percent rise in earnings per diluted share when compared with $1.5 million, or $0.16 per diluted share, for the fourth quarter of 2006.  Net income for the year ended December 31, 2007 was $7.1 million, or $0.74 per diluted share for 2007, compared with $4.1 million, or $0.43 per share for 2006.

Business Highlights

“We are pleased that the company has reported sharply improving results throughout 2007.  These favorable trends have resulted from our sustained focus on winning an increasing share of work in growing markets where we are seeing strong demand for the high quality, higher-end business transformation, business intelligence, training systems, automated case management, and engineering services for which DRC is known and distinguished,” said Jim Regan, DRC’s chairman and chief executive officer.  “We already have received this year two significant new contract awards.  Also, we are now operating and bidding as a prime contractor with the Air Force Aeronautical Systems Center.  Clearly, we are well positioned for continued success in 2008.”
 
Company Guidance
 
For the calendar year 2008 the company estimates revenues in the range of $220 to $235 million and earnings per diluted share in the range of $0.74 to $0.84.  For the first quarter of the 2008 the company anticipates revenues in the range of $54 to $56 million and earnings per diluted share of $0.13 to $0.15.
 

 
 

 
 
 
Conference Call
 
The company will conduct a fourth quarter 2007 conference call on Thursday, February 28, 2008 at 10:00 a.m. ET.  The call will be available via telephone at (877) 718-5092, 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 #2824839, beginning at 12:30 p.m. ET February 28, 2008 through 11:59 p.m. ET February 29, 2008.
 
About Dynamics Research Corporation
 
Dynamics Research Corporation is a leading provider of mission-critical technology management services and solutions for government programs.  DRC offers forward-thinking solutions 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; Reston, Virginia; and Fairborn, Ohio.  For additional information about DRC please visit our website at www.drc.com.
 
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.
 


CONTACT:     Investors:       Dave Keleher, Senior Vice President and Chief Financial Office
           (978) 289-1615, dkeleher@drc.com
 
      Media:            Marisa Hagerman, Sage Communications (for DRC)
  (703) 584-5637, marisah@aboutsage.com
 
 

 
 

ATTACHMENT I
 
   
DYNAMICS RESEARCH CORPORATION
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
 
(in thousands, except share and per share data)
 
   
   
   
Three Months Ended
 
   
December 31,
 
   
2007
   
2006
 
Contract revenue
  $ 54,554     $ 58,864  
Product sales
    1,905       1,471  
Total revenue
    56,459       60,335  
                 
Cost of contract revenue
    45,315       49,922  
Cost of product sales
    1,394       1,124  
Selling, general and administrative expenses
    5,203       5,908  
Amortization of intangible assets
    651       702  
Total operating costs and expenses
    52,563       57,656  
                 
Operating income
    3,896       2,679  
Interest expense, net
    (239 )     (349 )
Other income
    249       160  
Income before provision for income taxes
    3,906       2,490  
Provision for income taxes
    1,360       989  
Net income
  $ 2,546     $ 1,501  
                 
Earnings per common share
               
Basic
  $ 0.27     $ 0.16  
Diluted
  $ 0.26     $ 0.16  
                 
Weighted average shares outstanding
               
Basic
    9,390,205       9,188,603  
Diluted
    9,717,968       9,412,409  


 
 

 

 
   
DYNAMICS RESEARCH CORPORATION
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
 
(in thousands, except share and per share data)
 
   
   
   
Twelve Months Ended
 
   
December 31,
 
   
2007
   
2006
 
             
Contract revenue
  $ 224,676     $ 252,890  
Product sales
    4,901       6,097  
Total revenue
    229,577       258,987  
                 
Cost of contract revenue
    187,516       218,976  
Cost of product sales
    4,954       4,895  
Selling, general and administrative expenses
    21,826       24,136  
Amortization of intangible assets
    2,602       2,809  
Total operating costs and expenses
    216,898       250,816  
                 
Operating income
    12,679       8,171  
Interest expense, net
    (1,541 )     (2,042 )
Other income
    646       589  
Income before provision for income taxes
    11,784       6,718  
Provision for income taxes
    4,682       2,730  
Income before cumulative effect of accounting change
    7,102       3,988  
Cumulative effect of accounting change (1)
    -       84  
Net income
  $ 7,102     $ 4,072  
                 
Earnings per common share
               
Basic
               
Income before cumulative effect of accounting change
  $ 0.76     $ 0.44  
Cumulative effect of accounting change
    -       0.01  
Net income per common share
  $ 0.76     $ 0.45  
                 
Diluted
               
Income before cumulative effect of accounting change
  $ 0.74     $ 0.42  
Cumulative effect of accounting change
    -       0.01  
Net income per common share
  $ 0.74     $ 0.43  
                 
Weighted average shares outstanding
               
Basic
    9,326,907       9,099,897  
Diluted
    9,649,897       9,426,535  
                 
                 
(1) Due to the adoption of SFAS 123R on January 1, 2006.
 

 
 

 


ATTACHMENT III
 
   
DYNAMICS RESEARCH CORPORATION
 
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
 
(in thousands)
 
   
   
   
December 31,
   
December 31,
 
   
2007
   
2006
 
         
(restated) (1)
 
Assets
           
Cash and cash equivalents
  $ 2,006     $ 7,887  
Accounts receivable, net
    30,981       27,072  
Unbilled expenditures and fees on contracts
    32,036       36,174  
Prepaid expenses and other current assets
    2,508       2,933  
Total current assets
    67,531       74,066  
Property and equipment, net
    10,182       11,509  
Goodwill
    63,055       63,055  
Intangible assets, net
    3,069       5,671  
Deferred tax asset
    1,484       1,507  
Other noncurrent assets
    4,632       4,044  
Total assets
  $ 149,953     $ 159,852  
                 
Liabilities and stockholders' equity
               
Accounts payable
  $ 12,163     $ 18,195  
Accrued compensation and employee benefits
    13,728       14,473  
Deferred income taxes
    8,486       9,864  
Other accrued expenses
    3,248       5,201  
Total current liabilities
    37,625       47,733  
Long-term debt
    7,737       15,000  
Other long-term liabilities
    8,087       12,805  
Stockholders' equity
    96,504       84,314  
Total liabilities and stockholders' equity
  $ 149,953     $ 159,852  
                 
                 
(1) The December 31, 2006 balance sheet has been adjusted to correct certain tax liabilities, which resulted in an increase in stockholders' equity of $549, which was more fully described in the Company's first quarter 2007 Form 10-Q filing with the Securities and Exchange Commission.
 

 
 

 


ATTACHMENT IV
 
   
DYNAMICS RESEARCH CORPORATION
 
SUPPLEMENTAL INFORMATION (unaudited)
 
(dollars in thousands)
 
   
   
Contract revenues were earned from the following sectors:
 
                         
   
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
   
December 31,
 
   
2007
   
2006
   
2007
   
2006
 
National defense and intelligence agencies
  $ 43,707     $ 46,961     $ 179,067     $ 205,956  
Federal civilian agencies
    7,919       7,584       31,327       30,567  
State and local government agencies
    2,765       4,018       13,602       15,254  
Other
    163       301       680       1,113  
    $ 54,554     $ 58,864     $ 224,676     $ 252,890  
                                 
                                 
Revenues by contract type as a percentage of contract revenue were as follows:
 
                                 
   
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
   
December 31,
 
   
2007
   
2006
   
2007
   
2006
 
Time and materials
    58 %     61 %     57 %     62 %
Cost reimbursable
    21       19       22       19  
Fixed price, including service-type contracts
    21       20       21       19  
      100 %     100 %     100 %     100 %
                                 
Prime contract
    59 %     65 %     56 %     67 %
Sub-contract
    41       35       44       33  
      100 %     100 %     100 %     100 %
                                 
                                 
   
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
   
December 31,
 
   
2007
   
2006
   
2007
   
2006
 
Net cash provided by operating activities
  $ 6,172     $ 14,212     $ 2,945     $ 17,584  
Capital expenditures
  $ 603     $ 419     $ 1,788     $ 2,482  
Depreciation
  $ 787     $ 778     $ 3,081     $ 3,203  
Bookings
  $ 74,322     $ 60,335     $ 253,146     $ 252,327  
                                 
                                 
   
December 31,
                 
   
2007
   
2006
                 
Funded backlog
  $ 116,471     $ 92,903                  
Employees
    1,414       1,513