updated 10/28/2010 4:45:20 AM ET 2010-10-28T08:45:20

ANDOVER, Mass., Oct. 27, 2010 (GLOBE NEWSWIRE) -- 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 third quarter ended September 30, 2010.

Financial Results

The Company reported income from continuing operations for the third quarter of 2010 of $3.0 million, or $0.30 per diluted share, up 3.8 percent from $2.9 million, or $0.29 per diluted share, for the third quarter of 2009, which included $0.05 of non-recurring tax benefits. Revenue for the third quarter of 2010 was $68.4 million compared with $67.5 million for the same period in 2009. Excluding the expiration of restricted 8(a) contracts assumed with the Kadix acquisition in 2008, third quarter 2010 revenue for the Federal business was up 5.9 percent compared with the same period a year ago. Reflecting our improved business mix and reduced overhead, operating margins rose to 7.6 percent, up 40 basis points sequentially from the second quarter and representing a 160 basis point increase over the prior year period. The Company also posted free cash flow of $15.7 million for the quarter and 61 days sales of receivables outstanding for the federal business, down from 73 days at December 31, 2009.

For the nine month period ended September 30, 2010 income from continuing operations was $8.3 million, or $0.83 per diluted share, compared with $7.0 million, or $0.71 per diluted share, for the same period in 2009. For the nine months ended September 30, 2010 revenue was $202.3 million compared with $202.8 million for the same period in 2009. Excluding the expiration of restricted 8(a) contracts assumed with the Kadix acquisition in 2008, revenue for the Federal business during the nine month period rose 3.9 percent compared with the same period a year ago.

As previously reported, the Company received new business awards having a total contract value of $80 million in the third quarter, bringing the 2010 year-to-date total to $142 million. Measured on the basis of first year value, the 2010 year-to-date new business contract awards totaled $77 million, an increase of more than 30 percent over the first nine months of 2009.

Business Highlights

"DRC posted impressive results again this quarter, with solid organic revenue growth and continued margin expansion," said Jim Regan, DRC's chairman and chief executive officer. "Our performance this quarter demonstrates our strengths across the board – solid organic growth, expanded operating margins, strong cash flow, and strong leading indicators of growth in strategic markets. We're pleased with our performance, and our outlook for the future is bright."

Company Guidance

The Company's estimate for revenue for 2010 is in the range of $271 to $274 million. Regarding earnings from continuing operations for 2010, the Company anticipates results to be in the range of $1.19 to $1.22 per diluted share.  For the fourth quarter of 2010 the Company anticipates revenue in the range of $69 to $72 million and earnings from continuing operations per diluted share of $0.36 to $0.39.

Conference Call

The Company will conduct a third quarter 2010 conference call tomorrow, October 28, 2010 at 10:00 a.m. ET. The call will be available via telephone at (877) 303-4382 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) 642-1687, passcode #11328524, beginning at 1:00 p.m. ET on October 28, 2010.

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.

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