SCHEDULE 14A
(Rule 14A-101)
Information Required in Proxy Statement
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
[ ] Confidential, For Use of the Commission Only (as Permitted by
Rule 14a-6(e)(2))
GRC INTERNATIONAL, INC.
-----------------------
(Name of Registrant as Specified in its Charter)
-----------------------
(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid: -------------------------------------------------
2. Form, Schedule or Registration Statement No.: ---------------------------
3. Filing Party: -----------------------------------------------------------
4. Date Filed: -------------------------------------------------------------
From the Desk of
Dr. Gerald "Mac" McNichols
October 22, 1999
Dear Fellow GRC International Shareholder:
In September 1999, I made the largest investment of my life when I sold my
company Management Consulting & Research Inc. (MCR) to GRC. As a result, I am
now the largest shareholder of GRC International, and most of my net worth is in
GRC stock. I made this investment largely because of my full confidence in Dr.
Gary L. Denman and Joseph R. Wright, Jr. and their successful business plan, and
I urge you to re-elect them to GRC's Board of Directors.
One of the key reasons I sold my company to GRC - for GRC stock - was that I was
impressed by the new management team's success in refocusing GRC on its core
competencies and the Company's outstanding financial results. This was
especially brought home to me by GRC's earnings announcement on October 19. GRC
revenue for the quarter increased 25 percent to $45.8 million, and operating
income for the quarter doubled to $4.2 million. This was the seventh consecutive
quarter of year-to-year double-digit revenue growth for GRC. (See enclosed copy
of press release.)
I am sure you would agree that GRC President & CEO Gary Denman and Chairman Joe
Wright are doing a tremendous job and that now is certainly not the right time
to change direction. They have a solid business plan that is succeeding and a
strong proven track record.
As shareholders, we should support our management that is producing these great
results. The strong results that they have brought us since becoming CEO and
Chairman, respectively, indicate that GRC is heading in the right direction.
Please join me in voting to re-elect Gary Denman and Joe Wright.
Sincerely,
/s/ Dr. Gerald "Mac" McNichols
Dr. Gerald "Mac" McNichols
Shareholder
Enclosures (GRC Press Release and Proxy Card)
(please see other side for voting instructions)
Sign and return the WHITE proxy
-------------------------------
YOUR VOTE IS IMPORTANT! Please sign and date the enclosed WHITE proxy card and
return it promptly in the enclosed postage-paid envelope. The prompt return of
your proxy will ensure that your vote is counted. If you have already given a
proxy to Cilluffo Associates on behalf of its nominees, you may revoke that
proxy by signing and returning the enclosed WHITE proxy.
================================================================================
IMPORTANT
1. Vote on the WHITE proxy card. Do not sign any proxy card sent by Cilluffo
Associates.
2. If any of your shares are held in the name of a bank, broker or other
nominee, please contact the person responsible for your account and direct
him or her to vote on the WHITE proxy "FOR" management's nominees, "FOR"
approval of Deloitte & Touche as accountants and "AGAINST" the shareholder
proposal to terminate the Shareholder Rights Plan.
3. If you have questions or need assistance in voting your shares, please call
toll free:
GEORGESON SHAREHOLDER
COMMUNICATIONS INC.
17 State Street, 10th Floor
New York, NY 10004
Call Toll-Free (800) 223-2064
================================================================================
[GRAPHIC OMITTED] 1900 Gallows Road
NEWS Vienna, Virginia 22182
NYSE: GRH
- --------------------------------------------------------------------------------
GRC International Reports First Quarter Financial Results:
Revenues Rise 25% to $45.8 Million
Operating Income Doubles to $4.2 Million
Vienna, Va., October 19, 1999 - GRC International (NYSE: GRH) today reported its
seventh consecutive quarter of year-to-year double-digit revenue growth and its
fifth consecutive quarter of year-to-year operating income improvement of 50
percent or more.
For the first quarter ended September 30, 1999, revenues were up 25 percent to
$45.8 million, compared to revenues of $36.8 million for the first quarter of
last year. Current quarter revenues included a $2.5 million contribution by GRCI
subsidiary Management Consulting & Research Inc., which was acquired on
September 2, 1999, as one element of management's long-term growth strategy for
the company. Excluding the MCR contribution, revenues increased 18 percent
year-to-year from a broad base of contracts, further demonstrating the company's
fundamental strength.
"GRCI's continuing strong revenue growth, which is now being supplemented by our
recent acquisition of MCR, unquestionably demonstrates we are on the right
course to continue building additional shareholder value," said President and
CEO Gary Denman. "Our three-part revenue enhancement strategy to grow revenues
from existing customers, capture new customers, and add to revenues through
selective, accretive acquisitions is clearly delivering positive results."
Operating income for the first quarter of the current year doubled to $4.2
million compared to $2.1 million for the same quarter last year. The operating
margin percentage for the current quarter rose sharply to 9.1 percent from 5.8
percent last year. Current quarter operating income includes $920,000 from the
favorable resolution of prior year contract audits and settlement of a contract
claim. Excluding these benefits, operating income would have risen 57 percent to
$3.3 million with an operating margin of 7.1 percent, both of which are
significantly above goals set by management.
Income from continuing operations before taxes for the quarter was up 123
percent to $3.9 million from $1.8 million last year.
Net income for the first quarter of the current year was $2.4 million, or $0.21
per diluted share. This includes a $1.6 million tax provision. Last year, the
company reported first quarter net income of $3.1 million, or $0.30 per diluted
share. Those results included a $1.3 million net tax benefit related to the
recognition of prior year tax net operating loss carryforwards.
Management Discussion
"Revenue growth is only one component of our improvement strategy for GRCI,"
said Denman. "We understand that sustainable value requires strong margin
improvement and growing cash flows in addition to top line revenue growth. I am
pleased to report we are delivering on all three parts of our plan. The basis
for the significant increase in recurring margins this quarter is two fold. We
are managing and controlling our indirect costs more closely and we are placing
-MORE-
greater emphasis on profit performance for our time-and-materials contracts,
which now account for approximately 60 percent of our business.
"The margin improvement we are reporting this quarter goes well beyond our
stated goal of increasing pre-tax margin by 10 percent year-over-year," said
Denman. "We continue to build measurable value at GRCI and plan to continue
doing so for the foreseeable future.
"We also have continued to make excellent progress on our balance sheet," said
Denman. "Even during a quarter when we used a portion of our credit line to
acquire MCR, we ended the quarter with only $16.5 million in long-term debt,
down substantially from one year ago when long-term debt stood at $23.8 million.
This is further proof that we can execute our acquisition strategy, sustain
growth and profitability, and maintain healthy ratios on the balance sheet.
These are excellent results, top to bottom.
"Performance from our growth and profitability improvement plan continues to
exceed all expectations. These results reported on the heels of the strong
performance we have delivered over past seven quarters demonstrate that our new
management team has put the company's poor performance behind it. I look forward
to continue implementing our plan."
GRC International Inc., headquartered in Vienna, Va., is a leading provider of
professional services focusing on information technology, management consulting,
and scientific engineering for a national clientele in the government and
commercial sectors. GRCI is a publicly traded company listed on the New York
Stock Exchange under the symbol GRH. Additional details about GRC International
can be obtained on the Internet at http://www.grci.com/. Details concerning MCR
can be viewed at http://www.mcri.com.
Forward-looking statements contained in this release are subject to risks and
uncertainties that could cause actual results to differ materially. These risks
and uncertainties include the company's dependence on continued funding of U.S.
Department of Defense programs and the company's ability to fill required staff
positions to service the contracts granted under those programs; government
contract procurement and termination risks; and other risks described in the
company's Securities and Exchange Commission filings.
Inquiries: James Allen, CFO, (703) 506-5574, or Wayne Jackson, Director,
Corporate Communications, (703) 506-5038. GRCI press releases are available on
the Internet through Company News On-Call at http://www.prnewswire.com/.
-TABLES FOLLOW-
GRC International, Inc.
Consolidated Condensed Statements of Income
(in thousands, except for per share data)
(unaudited)
Three Months Ended
September 30,
1999 1998
------------------
Revenues $45,821 $36,756
Cost of services 36,992 30,964
Indirect costs and other costs 4,656 3,675
------ ------
Operating income 4,173 2,117
Interest expense, net (230) (352)
------ ------
Income from continuing operations before
income tax benefit (provision) 3,943 1,765
Income tax benefit (provision) (1,585) 1,265
------ ------
Income from continuing operations 2,358 3,030
Gain from discontinued operations
(Net of tax) - 54
------ ------
Net Income $ 2,358 $ 3,084
======= ======
Basic income per common share:
Continuing operations $ 0.22 $ 0.29
Discontinued operations - 0.01
------ ------
Net income $ 0.22 $ 0.30
====== ======
Number of shares used in EPS calculation 10,959 10,214
Diluted income per common share:
Continuing operations $ 0.21 $ 0.29
Discontinued operations - 0.01
------ -------
Net income $ 0.21 $ 0.30
====== ======
Number of shares used in EPS calculation 11,418 10,386
Consolidated Balance Sheets
(Condensed and unaudited)
(in thousands)
September 30, June 30,
1999 1999
---- ----
Assets
Current assets $53,864 $48,182
Property and equipment, net 9,689 9,095
Goodwill and other
intangible assets, net 22,715 1,989
Deferred taxes 15,070 15,428
Other assets 2,104 1,387
------ ------
Total assets $103,442 $76,081
====== ======
Liabilities and stockholders' equity
Current liabilities $25,827 $23,100
Long-term debt 16,500 12,623
Other non-current liabilities 1,444 299
Stockholders' equity 59,671 40,059
------- ----
Total liabilities and
stockholders' equity $103,442 $76,081
======== ======
###