-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qn5+ROLAL3/rYEw1kV8Cv6OM+hj79nMZrJ5u6G+W9zxRhYTX7xpvYJfkEqQwTZks Qp7PmSsNPBHekZImPAWfmQ== 0000030822-98-000011.txt : 19981118 0000030822-98-000011.hdr.sgml : 19981118 ACCESSION NUMBER: 0000030822-98-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNAMICS RESEARCH CORP CENTRAL INDEX KEY: 0000030822 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 042211809 STATE OF INCORPORATION: MA FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-02479 FILM NUMBER: 98753076 BUSINESS ADDRESS: STREET 1: 60 FRONTAGE ROAD CITY: ANDOVER STATE: MA ZIP: 01810-5498 BUSINESS PHONE: 9784759090 MAIL ADDRESS: STREET 1: 60 FRONTAGE ROAD CITY: ANDOVER STATE: MA ZIP: 01810-5498 10-Q 1 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 1998. OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to . Commission File No.1-7348 DYNAMICS RESEARCH CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 04-2211809 (State or other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 60 Frontage Road, Andover, Massachusetts 01810-5498 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (978) 475-9090 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No . The number of shares outstanding of the Registrant's Common stock, par value $.10 per share, at November 12, 1998 was 7,369,190 shares. DYNAMICS RESEARCH CORPORATION INDEX Page Part I Financial Information Number Item 1. Financial Statements Consolidated Balance Sheets - September 30, 1998 and December 31, 1997 . . . . . 3 Consolidated Statements of Operations - Three and Nine Months Ended September 30, 1998 and September 30, 1997 . . . . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows - Nine Months Ended September 30, 1998 and September 30, 1997 . . . . . . . . . . . . . . . . 5 Notes to Consolidated Financial Statements . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . 7 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 12 Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 PART I. FINANCIAL INFORMATION DYNAMICS RESEARCH CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands of dollars except share data) (unaudited) ASSETS September 30, 1998 December 31, 1997 CURRENT ASSETS: Cash and cash equivalents $ 704 $ 542 Receivables, less allowances of $198 in 1998 and $217 in 1997 32,470 17,397 Unbilled expenditures and fees on contracts in process 27,616 32,175 Inventories 2,697 3,377 Refundable income taxes 873 878 Prepaid expenses and other current assets 1,340 1,668 Total current assets 65,700 56,037 Property, plant and equipment, at cost Land 1,126 1,126 Building 7,774 7,774 Machinery and equipment 44,078 41,426 Less accumulated depreciation and amortization (32,582) (28,098) Net property, plant and equipment 20,396 22,228 Excess of purchase price over net assets of business acquired, net - 594 Total assets $ 86,096 $ 78,859 LIABILITIES AND SHAREHOLDERS' INVESTMENT CURRENT LIABILITIES: Accounts and drafts payable $ 6,489 $ 8,355 Accrued payroll and employee benefits 8,753 8,032 Other accrued expenses 3,089 4,251 Accrued and current deferred income taxes 8,685 8,999 Total current liabilities 27,016 29,637 Long-term debt 22,000 10,000 Deferred income taxes 75 75 SHAREHOLDERS' INVESTMENT: Preferred stock, par value $.10 per share - 5,000,000 shares authorized, none issued Common stock, par value $.10 per share - Authorized - 30,000,000 shares Issued - 8,733,016 shares in 1998 and 7,366,484 in 1997 873 737 Less: Treasury stock - 1,363,826 in 1998 and 1,077,612 in 1997, at par value (136) (108) Capital in excess of par value 27,474 14,506 Retained earnings 8,794 24,012 Total shareholders' investment 37,005 39,147 Total liabilities and shareholders' investment $ 86,096 $ 78,859 The accompanying notes are an integral part of these consolidated financial statements. DYNAMICS RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of dollars, except per share data) (unaudited) Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1997 Product sales and contract revenue: Contract revenue $ 38,103 $ 36,206 $ 114,871 $ 96,402 Product sales 6,528 7,063 21,802 20,021 Total revenue 44,631 43,269 136,673 116,423 Cost and expenses: Cost of contract revenue 34,270 33,310 103,902 87,125 Cost of product sales 5,274 4,940 16,926 15,319 Selling, engineering and administrative expenses 5,559 3,548 15,058 10,135 Total operating costs and expenses 45,103 41,798 135,886 112,579 Operating income (loss) (472) 1,471 787 3,844 Interest expense (income), net 408 (470) 1,163 (72) Income (loss) before provision for (benefit from) income taxes (880) 1,941 (376) 3,916 Provision for (benefit from) income taxes (375) 218 (164) 1,043 Net income (loss) $ (505) $ 1,723 $ (212) $ 2,873 Net income (loss) per common share - Basic * $ (.07) $ .23 $ (.03) $ .38 Net income (loss) per common share - Diluted * $ (.07) $ .22 $ (.03) $ .37 Weighted average common shares outstanding - Basic* 7,504,679 7,534,508 7,541,328 7,526,430 Weighted average common shares outstanding - Diluted* 7,504,679 7,795,155 7,541,328 7,787,077 * Retroactively adjusted for the May 1998 20% stock dividend. The accompanying notes are an integral part of these consolidated financial statements. DYNAMICS RESEARCH CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars) (unaudited) Nine Nine Months Ended Months Ended September 30, 1998 September 30, 1997 Cash provided by (used for) operations: Net income (loss) $ (212) $ 2,873 Depreciation and amortization 5,074 3,781 Deferred Income Taxes - (186) Provision for receivable reserves (19) (16) 4,843 6,452 Cash provided by (used for) working capital: Receivables (15,054) (5,901) Unbilled expenditures and fees on contracts in process 4,559 (4,816) Inventories 680 90 Refundable income taxes 5 155 Prepaid expenses and other current assets 328 154 Accounts and drafts payable (1,866) (1,735) Accrued payroll and employee benefits 721 1,923 Other accrued expenses (1,162) 2,028 Accrued and current deferred income taxes (314) 1,941 (12,103) (6,161) Net cash provided by (used for) operations (7,260) 291 Cash used for investing activities: Additions to property, plant and equipment, net (2,652) (4,343) Excess of purchase price over net assets of business acquired, net - (125) Net cash used for investing activities: (2,652) (4,468) Cash provided by (used for) financing activities: Net borrowings under line of credit agreements 12,000 5,625 Principal payments under long-term borrowings - (1,501) Proceeds from the exercise of stock options 346 430 Purchase of treasury shares (2,272) (518) Net cash provided by financing activities 10,074 4,036 Net increase (decrease) in cash and cash equivalents 162 (141) Cash and cash equivalents at the beginning of the year 542 234 Cash and cash equivalents at the end of the period $ 704 $ 93 Supplemental disclosures of cash flow information: Cash paid during the nine month period for: Interest $ 531 $ 612 Income taxes $ 10 $ 339 The accompanying notes are an integral part of these consolidated financial statements. DYNAMICS RESEARCH CORPORATION Notes to Consolidated Financial Statements Note 1. The unaudited consolidated financial statements presented herein have been prepared by the registrant pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information in footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to such rules and regulations, although the registrant believes that the disclosures are adequate to make the information presented not misleading. The accompanying consolidated financial statements have not been audited by independent accountants, but in the opinion of the management such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to fairly present the results of operations. The results of operations for the three and nine months ended September 30, 1998 may not be indicative of the results that may be expected for the year ending December 31, 1998. Note 2. Inventories are comprised of the following (in thousands of dollars): September 30, 1998 December 31, 1997 Work in process $ 598 $ 1,364 Raw materials and subassemblies 2,099 2,013 Total inventories $ 2,697 $ 3,377 Note 3. The Company adopted Statement of Financial Accounting Standard No. 128, "Earnings per Share," ("SFAS 128") in the year ended December 31, 1997. SFAS 128 requires the presentation of basic and diluted EPS. Basic net income per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income per share is computed using the weighted average number of common shares outstanding plus the dilutive effect of common stock equivalents (using the treasury stock method). The following table presents the calculation of earnings per share: (in thousands except share and per share data) Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1997 Net income (loss) $ (505) $ 1,723 $ (212) $ 2,873 Basic: Weighted average common shares outstanding 7,504,679 7,534,508 7,541,328 7,526,430 Net income (loss) per share $ (.07) $ .23 $ (.03) $ .38 Diluted: Weighted average common shares outstanding 7,504,679 7,534,508 7,541,328 7,526,430 Dilutive effect of stock options - 260,647 - 260,647 Weighted average common and common equivalent shares outstanding 7,504,679 7,795,155 7,541,328 7,787,077 Net income (loss) per share $ (.07) $ .22 $ (.03) $ .37 Item 2. Management's Discussion and Analysis Overview Dynamics Research Corporation (the "Company" or "DRC") provides information technology services for government and private-sector clients. The Company develops and operates complex computer systems and communications networks, and provides engineering and management consulting services. DRC also designs and manufactures high-precision components for industrial measurement and control. The Company has focused on broadening its customer base utilizing the expertise and systems developed in serving the Department of Defense, to service other government agencies and businesses. Non-defense information technology services and sales of precision manufactured products accounted for approximately 41% of revenues for the first nine months of 1998, up from 34% in calendar year 1997. Results of Operations Three Months Ended September 30, 1998 Compared to Three Months Ended September 30, 1997 Total revenues increased 3% to $44,631,000 in the third quarter of 1998 compared with $43,269,000 in the third quarter of 1997. Contract revenue for the systems and service segment increased 5% for the third quarter of 1998 compared with the third quarter of 1997. The growth was principally attributable to performance on two major state contracts as well as broad-based growth in the Company's defense business. The Company is providing the State of Ohio's Department of Health and Human Services with statewide computer network infrastructure. Similar infrastructure as well as software implementation services are being provided for the State of Colorado's child protection and juvenile justice agencies. Revenue from sales of telecommunications fraud control systems decreased 57% to $250,000 in the third quarter of 1998 compared with $620,000 in the third quarter of 1997. The reduction in revenues is attributable to a limited market for the current version of the software pending release of a new version currently under development and delays in introduction of a related software product. There were no sales of VisualMagic software for the third quarter of 1998 and $3,000 for the third quarter of 1997. Third quarter 1998 product sales decreased 8% compared to the same period in 1997. This decrease was primarily related to decreased sales of precision components to the medical products sector and decreased sales to certain of the Company's customers who have significant sales in Asian markets, partially offset by increased sales of custom encoders to a customer in the automotive industry. Cost of contract revenue as a percentage of contract revenue decreased to 90% in the third quarter of 1998 compared to 92% in the third quarter of 1997. Included in costs of contract revenues are costs related to sales of telecommunications fraud control systems of $987,000 and $1,087,000 in the third quarter of 1998 and 1997, respectively. Cost of product sales as a percentage of product sales for the third quarter of 1998 increased to 81% from 70% for the same period in 1997. This increase was related to a change in the precision manufactured products sales mix away from certain high margin electroformed components in the third quarter of 1998 as compared to the same period in 1997. Selling, engineering and administrative expenses increased 57% for the third quarter of 1998 compared to the third quarter of 1997. The increase is a result of an increase in the Company's selling and engineering expenses in connection with the Company's business development initiative in the telecommunications industry. DRC has made significant investments in telecommunications fraud control systems and software technologies. Third quarter 1998 results include $1,959,000 of net operating costs related to the telecommunications business and $494,000 of costs related to VisualMagic development. Third quarter 1997 results include $536,000 and $463,000 of costs related to the telecommunications business and VisualMagic development, respectively. Net interest expense increased to $408,000 in the third quarter of 1998 compared with income of $470,000 in the third quarter of 1997. The third quarter of 1997 includes interest income of $688,000 related to a research and development tax credit. Substantial revenue growth and delays in billing certain state and government customers in 1998 resulted in higher working capital requirements that were funded with additional borrowings. The Company's effective income tax rate for the third quarter of 1998 was a benefit of 43% compared with a provision of 11% for the third quarter of 1997. The Company's tax provision for the third quarter of 1997 reflects a one-time benefit of $586,000 resulting from a refund of income taxes due to the Company's prior years' research and development expenses. The Company accounts for income taxes using the liability method as set forth in Statement of Financial Accounting Standards No. 109 (SFAS 109). Nine Months Ended September 30, 1998 Compared to Nine Months Ended September 30, 1997 Total revenues increased 17% to $136,673,000 in the first nine months of 1998 compared with $116,423,000 in the same period of 1997. Contract revenue for the systems and service segment increased 19% for the first nine months of 1998 compared with the same period of 1997. The growth was principally attributable to performance on the two major state contracts discussed previously, as well as broad based growth in the Company's defense business. Revenue from the sale of telecommunications fraud control systems increased 24% to $1,989,000 in the first nine months of 1998 compared with $1,609,000 in the first nine months of 1997. The increase in revenues is attributable to software sales and ongoing maintenance revenues. Revenue for VisualMagic software for the first nine months of 1998 and 1997 was minimal. Product sales during the first nine months of 1998 increased 9% compared to the same period in 1997. This growth was primarily related to increases in sales of electroformed components to an inkjet printer manufacturer and sales of custom encoders to a customer in the automotive industry. The first nine months of 1998 reflect reduced sales to certain of the Company's customers with significant Asian markets. To date, the impact of the Asian crisis on the Company's product sales has been more than offset by the sales increases discussed above. Cost of contract revenue as a percentage of contract revenue increased to 90.5% in the first nine months of 1998 compared to 90.4% in the same period of 1997. Included in cost of contract revenue are costs related to sales of telecommunications fraud control systems of $4,175,000 and $2,716,000 in the first nine months of 1998 and 1997, respectively. Cost of goods as a percentage of product sales increased to 78% in the first nine months of 1998 from 77% for the same period in 1997. Selling, engineering and administrative expenses increased 49% in the first nine months of 1998 compared to the same period in 1997. As discussed previously, this increase is a result of higher levels of selling and engineering costs in connection with the Company's telecommunications business initiative. Results for the first nine months of 1998 include $5,304,000 of net operating costs related to the telecommunications business and $1,502,000 of costs related to Visual Magic development. Nine month 1997 results include $1,440,000 and $1,516,000 of costs related to the telecommunications business and Visual Magic development, respectively. Net interest expense increased to $1,163,000 in the first nine months of 1998 compared with interest income of $72,000 in the first nine months of 1997. The first nine months of 1997 includes interest income of $688,000 related to a research and development tax credit. Substantial revenue growth and delays in billing certain government customers resulted in higher working capital requirements that were funded with additional borrowings. The Company's effective income tax rates for the first nine months of 1998 and 1997 were a benefit of 44% and a provision of 23%, respectively. As mentioned previously, the Company's tax provision for the third quarter of 1997 reflects a one-time benefit resulting from a refund of income taxes due to the Company's prior years' research and development expenses. Liquidity and Capital Resources During the first nine months of 1998, the Company's primary source of liquidity has been its revolving credit facility. Working capital requirements related to the substantial increase in sales and delays in billing certain government customers have been funded with additional borrowings under the Company's credit facility. Working capital increased to $38,684,000 at September 30, 1998 from $26,400,000 at December 31, 1997. This increase was primarily attributable to increases in receivables partially offset by decreases in unbilled expenditures and fees on contracts in process. Debt increased $12,000,000 to $22,000,000 to support the increase in working capital. Capital spending during the first nine months of 1998 was $2,652,000, consisting principally of office computer equipment. The Company spent $2,272,000 during the first nine months of 1998 for the purchase of treasury shares compared with $518,000 during the first nine months of 1997. At September 30, 1998, $8,000,000 was available for working capital purposes under the Company's revolving credit facility. The Company believes that its current assets, cash flow from operations and available bank lines of credit will be sufficient to support its normal operating and capital requirements for the balance of 1998. The Company does not have any significant capital commitments at September 30, 1998 outside the ordinary course of business. Year 2000 Disclosure Many existing computer programs use only two digits, rather than four, to represent a year. Date-sensitive software or hardware written or developed in this fashion may not be able to distinguish between 1900 and 2000, and programs written in this manner that perform arithmetic operations, comparisons or sorting of date fields may yield incorrect results when processing a Year 2000 date. This Year 2000 problem could potentially cause system failures or miscalculations that could disrupt operations. The Company's State of Readiness The Company is in the process of identifying and remediating Year 2000 issues in four areas: (i) information technology ("IT") and financial systems, (ii) non-IT systems, (iii) third-party vendors and suppliers and (iv) systems it has implemented and maintains for various customers. The Company believes its IT and non-IT systems will be Year 2000 compliant by the end of 1999. The Company has completed a review of its financial and other significant IT systems and is in the process of remediating identified material Year 2000 problems. The primary required hardware and operating system platform upgrade is scheduled for completion in January 1999. Necessary application upgrades or remediation and testing are expected to be completed by mid-1999. The Company also conducted a review of all its other computers earlier this year (including desktops, servers and mainframes) and has addressed all material Year 2000 problems. All of the Company's computer and equipment vendors have been contacted to verify Year 2000 compliance. Based on their responses, all products requiring replacement or upgrade are expected to be Year 2000 compliant by the end of 1998. In the case of third party licensed commercial off-the-shelf products, the Company has determined that they are either Year 2000 compliant or the licensor has released a compliant version that the Company will migrate to by mid-1999. While the Company expects that all financial and significant IT-related systems will be Year 2000 compliant by mid-1999, there can be no assurance that corrective actions will be completed in a timely manner. The Company has completed a full review of all process control components, including safety equipment, in manufacturing and production facilities. Currently, the Company is in the process of upgrading or replacing certain components of the phone, security, building access, HVAC and lighting systems, which is expected to be completed in early 1999. The Company anticipates that all other process control components will be Year 2000 compliant by mid-1999. However, there can be no assurance that such upgrades and replacements will occur in a timely manner. The Company is in the process of requesting Year 2000 compliance information from its employee benefit service suppliers and expects responses from each supplier by early 1999. The Company is currently aware of one supplier that has a Year 2000 compliance issue and is working toward a resolution of such issue. The Company is also in the process of developing Year 2000 questionnaires to be sent to its major power, energy and communications service suppliers beginning in early 1999. The Company expects to have addressed all Year 2000 issues with third party suppliers by mid-year 1999. The Company has contacted its suppliers of financial services regarding computer interface changes and has requested the status of their Year 2000 programs, if this information is not readily available on their web-sites. Any necessary interface upgrades are expected to be completed by mid-1999, although the completion of such upgrades in a timely manner depends upon the readiness and willingness of suppliers to cooperate and provide this information in a timely manner, and cannot be assured. However, the Company intends to identify and prioritize critical suppliers and communicate with them regarding their plans and progress in addressing Year 2000 issues. The Company is in the process of completing its Year 2000 remediation, validation testing and implementation activities for systems it had previously implemented and has continued to maintain for various customers. This process is scheduled to be completed and tested in early 1999. The Company previously developed and marketed commercial off-the-shelf products which are currently Year 2000 compliant. The Company's Year 2000 Risk Based on the efforts described above, the Company currently believes that its systems will be Year 2000 compliant in a timely manner. The Company has completed the process of identifying Year 2000 issues in its IT and non-IT systems and expects to complete any remediation efforts by mid-1999. However, there can be no assurance that all Year 2000 problems will be successfully identified, or that the necessary corrective actions will be completed in a timely manner. Failure to successfully identify and remediate Year 2000 problems in critical systems in a timely manner could have a material adverse effect on the Company's results of operations, financial position or cash flow. In addition, the Company believes that there is risk relating to significant service suppliers' failure to remediate their Year 2000 issues in a timely manner. Although the Company is communicating with its suppliers regarding the Year 2000 problem, the Company does not know whether these suppliers' systems will be Year 2000 compliant in a timely manner. If one or more significant suppliers are not Year 2000 compliant, this could have a material adverse effect on the Company's results of operations, financial position or cash flow. The Company's Contingency Plans The Company plans by mid-year 1999 to develop contingency plans to be implemented in the event planned solutions prove ineffective in solving Year 2000 compliance. If it were to become necessary for the Company to implement a contingency plan, it is uncertain whether such plan would succeed in avoiding a Year 2000 issue which may otherwise have a material adverse effect on the Company's results of operations, financial position or cash flow. The Company's Costs of Year 2000 Remediation The Company anticipates the total identified cost of its Year 2000 effort will be between $382,000 and $475,000, of which it has expensed approximately $83,000 as of September 30, 1998. The estimate excludes labor costs which predated the formal corporate Year 2000 effort and certain current labor costs at the divisional level which would be difficult to track. The total cost estimate includes estimated and actual amounts to remediate or replace certain software, routers, security chips, the phone system and any other items or systems identified in the Year 2000 effort, consulting fees for a Year 2000 review, and approximately $198,000 of redeployed labor expense. The total estimated cost of redeployed labor within the corporate information systems department is equal to approximately 9% of that department's total maintenance labor budget through the end of the Year 2000 effort. There can be no assurance that the costs associated with the Year 2000 problem will not be greater than anticipated. The Company has deferred a financial and project accounting system upgrade due to its Year 2000 efforts, but does not believe such deferral will have a material adverse effect on the Company's business. Forward-Looking Information This report includes certain forward-looking statements about the Company's business including developments and intentions relating to strategic investment programs, cash flow requirements, research and development spending, cash flow expectations and Year 2000 readiness. Such forward-looking statements are subject to risk and uncertainties that could cause the actual results to vary materially. These risks and uncertainties, discussed in more detail in the Company's Form 10-K for the year ended December 31, 1997, include ability to consummate strategic transactions related to the Company's commercial business investments, possible reductions in federal funding for the Company's customers and potential customers, concentration of customers, risks of sustaining existing contracts and orders thereunder at the same or increasing levels and of obtaining new contracts, high levels of competition and difficulties of entering new markets, government contracting issues, including audit adjustments and costs of completing fixed-price contracts, supply difficulties, warranty claims, and factors affecting the business segments in which the Company operates and the economy generally. PART II. OTHER INFORMATION Item 6. (a) Exhibits (27.1) Financial Data Schedule Item 6. (b) Reports on Form 8-K The Registrant did not file any reports on Form 8-K during the three month period for which this report is filed. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DYNAMICS RESEARCH CORPORATION (Registrant) Date: November 16, 1998 By: /s/ Douglas R. Potter Douglas R. Potter Vice President of Finance and Chief Financial Officer (Principal financial and accounting officer) EX-27 2
5 1000 9-MOS DEC-31-1998 SEP-30-1998 704 0 60,086 0 2,697 65,700 52,978 32,582 86,096 27,016 22,000 0 0 873 36,132 86,096 21,802 136,673 16,926 120,828 15,058 0 1,163 (376) (164) (212) 0 0 0 (212) (.03) (.03)
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