Dynamics Research Corporation to Acquire Kadix Systems

Acquisition Enhances DRC's High-End Management Consulting Capabilities and
Broadens Presence in Homeland Security and Other Critical Federal Markets

ANDOVER, Mass., July 31 /PRNewswire-FirstCall/ -- Dynamics Research
Corporation (Nasdaq: DRCO), a leading provider of innovative engineering,
technology and information technology services and solutions to federal and
state governments, today announced it has signed a definitive agreement to
acquire Kadix Systems, LLC, a rapidly growing, high-end management consulting
firm. Kadix maintains practice specialties in organizational change, human
capital, information technology, public and environmental health and learning
and organizational development. It is focused on the U.S. Department of
Homeland Security (DHS), Marine Corps information technology, military medical
health, and federal civilian markets.
"Kadix Systems' high-end management consulting capabilities fully
complement DRC's current core competencies in IT infrastructure, business
intelligence, business transformation and training and enable greater access
to key markets that we have targeted for growth," said Jim Regan, DRC's
chairman and chief executive officer. "We look forward to welcoming Kadix
employees to the DRC family of dedicated professionals serving our nation's
highest priorities. We are committed to strategic growth that expands the
mission-critical management and consulting work we provide to clients, fosters
our long-standing culture of quality and excellence and enhances shareholder
value."
Kadix Systems currently has about 270 employees and is headquartered in
Arlington, Va. with additional offices in Greater Washington, Aberdeen, Md.,
and Fort Sam Houston, Texas -- areas that are targeted for significant
expansion due to the DOD BRAC. About 95 percent of Kadix' contracts have been
awarded as prime and approximately 40 percent are performance-based.
Doug Layman, Kadix' President, will be appointed DRC Senior Vice President
and Group Manager and continue to lead Kadix' business operations as a fourth
operating unit, reporting directly to Mr. Regan. Mr. Layman said, "We are
extremely excited to join the DRC family and leverage our combined
capabilities to quickly create stronger expansion with both existing and new
customers in target growth markets. DRC provides long-term continuity for our
senior management team and expanded professional development opportunities for
our employees. With a mutual regard for integrity and an exemplary track
record of quality customer service, DRC is a natural fit for Kadix."
Kadix Systems has outstanding visibility into all DHS program management
and management consulting efforts. It is one of two companies to have prime
contracts on both the DHS Enterprise Acquisition Gateway for Leading Edge
Solutions (EAGLE) contract (functional area 5 -- Program Management and
functional area 3 -- Independent Verification and Validation Services) and DHS
Program Management Strategic Sourcing (PMSS) vehicles.
Terms of the purchase agreement include a cash price of $42 million with
the potential for additional consideration of up to $5 million, based on the
achievement of certain conditions. Kadix Systems, LLC reported revenue and
earnings before interest, taxes, depreciation and amortization for the year
ended December 31, 2007 of $23.0 million and $3.8 million, respectively. For
tax purposes, the transaction will be treated as an asset purchase resulting
in tax benefits to DRC, which have an estimated value of $10 million.
Concurrent with the transaction, DRC will restructure its credit agreement
with its current bank group, which is led by Brown Brothers Harriman & Co. and
includes Bank of America and TD Banknorth, into a $40 million term loan and a
$25 million revolving credit facility. The transaction is expected to close
by early August 2008. KippsDeSanto & Co. is acting as exclusive financial
advisor to Kadix in this transaction.
DRC management will further discuss the benefits of this acquisition on
its previously scheduled second quarter 2008 earnings conference call to be
held at 4:30 p.m. ET today. The call will be available via telephone at
(877) 741-4251, and accessible via Web cast at http://www.drc.com.
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 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 more information please visit our website at http://www.drc.com.
Forward-Looking Disclaimer
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.
CONTACTS: Investors: Dave Keleher Media: Duyen "Jen" Truong
SVP and Chief Financial Officer Sage Communications (for DRC)
978.289.1615 703.584.5645
dkeleher@drc.com duyent@aboutsage.com

SOURCE Dynamics Research Corporation

Investors, Dave Keleher, SVP and Chief Financial Officer of Dynamics Research
Corporation, +1-978-289-1615, dkeleher@drc.com; or Media, Duyen "Jen" Truong
of Sage Communications for Dynamics Research Corporation, +1-703-584-5645,
duyent@aboutsage.com