Library Technology Guides

St. Louis, Missouri, July 16, 1998 -- Data Research Associates, Inc. (DRA) (NASDAQ: DRAI) announced today that revenues for its third quarter of fiscal 1998, ended June 30, were $8.3 million, compared with $8.7 million for the third quarter of fiscal 1997. Earnings for the third quarter of fiscal 1998 were $973,000, or 18 cents per share, compared with $1 million, or 19 cents per share, for the same period in fiscal 1997.

DRA President and CEO Michael J. Mellinger cited a strong increase in software revenues as a very positive result for the quarter. Software revenues increased 26% to $2.3 million, compared with $1.8 million for the same period in fiscal 1997. This increase was primarily due to delivery of software for the ILCSO project, a consortium of more than 40 institutions in the state of Illinois.

At the same time, however, Mellinger noted that hardware revenues decreased 43% to $1.2 million, compared with $2 million in the same period in fiscal 1997. The decrease in hardware sales was due in part to customers' increasing ability to buy high-performance systems at lower prices, and in part to DRA's lack of "turnkey" system sales, which include both hardware and software, during the third fiscal quarter of 1998. The company's hardware revenues carry a much lower gross margin than software and service revenues.

"We are pleased by the strong growth in our software revenues during the quarter," said Mellinger. "The increase in these revenues was the result of sales of our DRA Classic software. At the same time, the library marketplace has shown increasing enthusiasm for the object-oriented technologies contained in our next-generation Taos system, which continues to be on schedule for initial revenue shipment during the fourth fiscal quarter."

The first Taos installation, at the University of California - Los Angeles (UCLA), is scheduled to "go live" later this summer. UCLA staff underwent training on Taos in June.

Also during the third quarter, DRA announced that it had signed a letter ofintent with Harvard University, the largest academic research library in North America, to use Taos as the basis for Harvard's next-generation library automation system. In addition, the MnLINK project, an online library information network that will link public, academic, state government and school libraries throughout the state of Minnesota, announced the selection of Taos as the automation system for University of Minnesota's online system and the Minnesota State Colleges and Universities online system, as well as those state government libraries, private college libraries, and public and K-12 school library media centers choosing to participate in MnLINK. DRA also signed a contract during the third quarter for a Taos installation with the University of Texas at San Antonio.

Mellinger noted that DRA had completed in excess of 75% of its stock repurchase program at the end of the third fiscal quarter. At its July 1997 meeting, the company's board of directors authorized the repurchase of its Common Stock in an aggregate amount of up to $4 million in purchase price.

Data Research Associates, headquartered in St. Louis, is a leading systems integrator for libraries and other information providers, offering its own proprietary information services software; third-party software and hardware; Internet, World Wide Web and other networking services; and other related support services.

This news release contains forward-looking statements, including statements as to anticipated or expected results, beliefs, opinions and future financial performance. These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties that could cause DRA's actual results to differ materially. Specific risk factors for the statements contained herein include, but are not limited to, the company's ability to complete and ship the Taos product; customer acceptance of that product; and timing of negotiations for sites who have selected Taos but have not yet signed a contract. Some of these risk factors, as well as additional risk factors, are discussed in detail in DRA's Annual Report and in Exhibit 99-1 of its Form 10-K for fiscal year 1997. DRA does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.