BTG Reports Record Year-End Net Income.

Business Editors

FAIRFAX, Va.--(BUSINESS WIRE)--May 18, 2000

Posts Strong Operating Results for Fiscal Year 2000

BTG, Inc. (Nasdaq: BTGI), an information systems and technical services company, reported audited year-end and fourth quarter financial results for its fiscal year 2000, which ended March 31, 2000.

Net income for the year was $4.4 million, the highest in BTG's 18-year history. This compares to net income of $2.0 million reported for BTG's fiscal 1999. Fully diluted earnings per share (EPS) for fiscal 2000 were $0.49, an increase of 113% from the $0.23 reported last year. Revenue from the company's core information systems and technical services business increased 18% from $173.6 million in fiscal 1999 to $204.2 million in fiscal 2000. Total revenue was $249.0 million, down from $316.4 million in fiscal 1999. This was due to a 69% decrease in product sales, resulting from BTG's divestiture of its product reselling unit in February 1998 and the discontinuance of the company's remaining product reselling contracts in late 1999. Operating income increased more than 64% in fiscal 2000 when compared to fiscal 1999. Earnings from continuing operations before interest, taxes, depreciation, and amortization (EBITDA) were $12.3 million, or a fully diluted cash-flow-per-share of $1.36, in fiscal 2000.

For the fourth quarter, BTG reported revenue of $59.4 million, net income of $1.3 million, and fully diluted EPS of $0.14. EBITDA in the fourth quarter was $3.6 million, or a fully diluted cash-flow-per-share of $0.39.

Both the fourth quarter and fiscal year-end results include a one-time, non-recurring expense of $492,000 ($0.03 after-tax EPS impact) for employee severance costs related to the company's flattening of its operational management structure in the fourth quarter. Excluding this one-time expense, pro forma net income for the year was $4.7 million and fully diluted EPS was $0.52. In the fourth quarter, pro forma net income was $1.5 million and fully diluted EPS was $0.17.

Highlights of the company's 2000 fiscal year included:

-- an 18% increase in information systems and technical services revenue;

-- a 64% increase in operating income;

-- a 51% decrease in interest costs;

-- a 122% increase in net income;

-- a 113% increase in fully diluted EPS;

-- the award to BTG of more than $259 million in new services and solutions contracts;

-- continued strong customer satisfaction ratings, according to surveys conducted by an independent third party firm;

-- the purchase of the assets of the enterprise network solutions division of SSDS, Inc. (closed in April 2000), bringing BTG an expanded customer base and 150 new employees with expert credentials in network security, technologies in schools, and Microsoft and Remedy applications;

-- the implementation of a state-of-the-art Oracle-based enterprise-wide financial system that will allow BTG to better manage its business, support its customers, and improve overall liquidity through enhanced cash management; and

-- continued investment in employee training and development, which resulted in lower voluntary employee turnover rates in fiscal 2000 compared to the previous fiscal year.

BTG's President and CEO Ed Bersoff said: "We are pleased with our strong fiscal 2000 results and the continued strength and growth in our core business. BTG is now beginning to execute on every level, and has achieved its stated financial earnings targets for the last eight quarters in a row." He attributed the improved results to the exceptional efforts of all the company's employees.

Bersoff said that during the fourth quarter of fiscal 2000, BTG reorganized and instituted a new business unit structure that aligns the company's business units by customer base and technical capability, flattens the operational management structure, and reduces overhead costs. "While our fourth quarter EPS was impacted by $0.03 due to the employee severance costs associated with the reorganization, the realignment of the company's operations will better position BTG in the marketplace to focus on strategic growth opportunities." Bersoff added, "In addition to the benefits of better strategic focus, the reorganization will result in substantial cost savings. This will positively impact BTG's fiscal 2001 performance."

Bersoff highlighted BTG's continuing focus on expanding its core services and solutions business with the development of expert practice areas, including:

-- Information and Network Security - the protection of networks and information resources. In March, BTG entered into a strategic business relationship with SPYRUS, Inc., a leading information and network security firm. The two firms are providing information security and Public Key Infrastructure (PKI) services and smart card products to commercial and government customers.

-- E-Commerce (both business-to-business and business-to-government) - solutions that permit secure dealings over the Internet. A BTG team is developing a system that allows one of the largest telecommunications companies in the country to conduct confidential business-to-business (B2B) transactions electronically. The company is also launching a business-to-government (B2G) initiative that focuses on helping businesses employ web-based technologies to simplify the electronic submission of information to federal, state, and local governments.

-- Technologies in Schools - bringing advanced technology to classrooms. BTG is providing school systems nationwide with comprehensive technology services and support for the K-12 environment, from strategic planning and teacher training to network design and operation. In February, BTG announced a partnership with eduTest.com, an Internet-based company that provides testing and assessment services to educators and parents for state-mandated K-12 academic standards.

-- Geographic Information Systems (GIS) - systems that help military and civilian planners identify and manage their physical resources. A BTG team used GIS and global positioning system (GPS) technology to shorten the time required to clear debris from an Air Force bombing range, increasing the time available for pilot training.

BTG is an information systems and technical services firm that provides computer-based solutions for clients in the private sector and in federal, state, and local governments. The company has approximately 1,600 employees in 93 locations worldwide. Additional information about BTG is available on the web at http://www.btg.com, by e-mail at [e-mail], or by calling 703-383-8140.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The statements contained in this release which are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to different materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include the amount of work actually to be awarded under any contract or subcontract, dependence on continued funding of U.S. government programs, government contract procurement and termination risks, included risks associated with protests, and other risks described in the company's Securities and Exchange Commission filings.

                      BTG, Inc. and Subsidiaries
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except Per Share Data)

                                    Quarter   Quarter   Year     Year
                                     Ended     Ended    Ended    Ended
                                    3/31/00   3/31/99  3/31/00  3/31/99
                                    -------   -------  -------  -------
Revenue:
  Contract revenue                $ 54,142  $ 49,490  $204,229 $173,574
  Product sales                      5,249    11,152    44,766  142,861
                                  --------- --------  -------- --------
                                    59,391    60,642   248,995  316,435
Direct costs:
   Contract costs                   35,073    32,840   134,033  113,346
   Cost of product sales             4,857    10,779    42,823  137,985
                                  --------   -------   -------  -------
                                    39,930    43,619   176,856  251,331

Indirect, general and
 administrative expenses            15,933    13,903    60,933   56,512
Amortization expense                   169       198       694      695
Provision for employee severance       492        --       492      --
Restructuring charge                    --       264        --    1,796
                                   -------   -------   -------  -------

Operating income                  $  2,867  $  2,658  $ 10,020 $  6,101

Interest expense, net                 (569)     (643)   (1,917)  (3,949)
Gain on sale of investments, net        --     2,245        --    3,532
Unusual charge                          --        --        --   (1,201)
Other expense                           --        --        --     (155)
                                   -------    -------  --------  -------

Income from continuing operations
 before taxes                        2,298     4,260     8,103    4,328

Provision for income taxes           1,023     1,562     3,548    1,567
                                   -------    -------   ------   ------

Income from continuing
 operations                       $  1,275  $  2,698  $  4,555 $  2,761

Loss from discontinued operations,
 net of income taxes                    --      (609)     (116)    (765)
                                  --------  ---------  -------- --------

Net income                        $  1,275  $  2,089  $  4,439 $  1,996
                                  ========  ========   =======  =======

Basic earnings per share          $   0.14  $   0.24  $   0.50 $   0.23
                                  ========  ========  ======== ========

Diluted earnings per share        $  0.14   $   0.24  $   0.49 $   0.23
                                  =======   ========  ======== ========

Weighted average shares
 outstanding (used in the
 calculation of basic EPS)         8,923       8,816     8,853    8,774
                                  ======      ======    ======   ======
Weighted average shares
 outstanding (used in the
 calculation of diluted EPS)       9,150       8,844     9,035    8,827
                                  ======      ======    ======   ======

                      BTG, Inc. and Subsidiaries
                      CONSOLIDATED BALANCE SHEETS
                        March 31, 2000 and 1999
                            (In thousands)

                                             March 31,       March 31,
                                               2000             1999
                                             ---------       --------
                    ASSETS

Receivables, net                         $    69,352       $   53,281
Inventory, net                                   507              378
Prepaid expenses                               1,400            2,786
Deferred income taxes                          1,048            3,360
Other                                          1,080            1,486
                                          ----------      -----------
  Total current assets                        73,387           61,291
                                          ----------      -----------

Property and equipment, net                    9,043            5,202
Goodwill, net                                 14,551           15,211
Restricted investments                         6,429            6,429
Notes receivable                               1,000            1,500
Deferred income taxes                            357              462
Other                                          2,615              282
                                          ----------      ------------
                                         $   107,382      $    90,377
                                         ===========      ============



LIABILITIES AND SHAREHOLDERS' EQUITY

Current maturities of long-term debt     $      --        $     1,700
Accounts payable                             21,342            18,203
Accrued expenses                             12,840            11,359
Other                                         1,644             3,134
                                         ----------        -----------
  Total current liabilities                  35,826            34,396

Line of credit, excluding current
 maturities                                  30,466            17,666
      Other                                     877             2,304
                                           --------          ---------
  Total liabilities                          67,169            54,366
                                           --------          ---------

Common stock                                 54,308            54,545
Accumulated deficit                         (14,095)          (18,534)
                                          ----------        ----------
  Total shareholders' equity                 40,213            36,011
                                          ----------        ----------
                                        $   107,382       $    90,377
                                         ===========       ===========

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