8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  April 28, 2011

VSE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or Other Jurisdiction of Incorporation) 0-3676  (Commission File Number) 54-0649263  (IRS Employer Identification Number)

2550 Huntington Avenue
Alexandria, VA	22303-1499
(Address of Principal Executive Offices)	(Zip Code)

(703) 960-4600

(Registrant’s Telephone Number, Including Area Code)

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

VSE CORPORATION

Item 2.02.  Results of Operations and Financial Condition

On April 28, 2011 VSE Corporation issued a press release announcing its financial results for the first quarter ended March 31, 2011.  A copy of the press release is being furnished as Exhibit 99.1 to this Form 8-K and is hereby incorporated by reference.

Item 9.01.  Financial Statements and Exhibits

         (d)  Exhibits

Exhibit

               Number

               99.1    Press Release dated April 28, 2011, entitled, "VSE Reports Financial Results for First Quarter 2011."

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		VSE CORPORATION
		(Registrant)
Date:  April 29, 2011	By:	/s/ Thomas. R. Loftus
		Thomas R. Loftus
		Executive Vice President and Chief Financial Officer

EX-99.1

VSE Reports Financial Results for First Quarter 2011

Revenues & Operating Income Decline; Operating Margin Improves

Alexandria, Virginia, April 28, 2011 - VSE Corporation (Nasdaq: VSEC) reported the following unaudited consolidated financial results for its first quarter ended March 31, 2011.

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 “The federal government continues to experience funding delays and budget constraints, presenting certain challenges for firms operating in our industry,” said Maurice “Mo” Gauthier, VSE CEO. “This challenging budget environment, along with emerging global insecurity, affirms our continuing strategy to focus on markets that are closely aligned with federal budget priorities. Our long term strategic diversification into selected federal markets and service offerings through acquisitions, combined with our planned efforts to grow organically in our sustainable markets, continues to show intended results. We remain committed to this strategy.”

For the first quarter of 2011, revenues were $151.2 million compared to $228.2 million in the first quarter of 2010. Operating income for the first quarter of 2011 was $6.9 million compared to $8.7 million in the first quarter of 2010.

The decrease in revenue for the first quarter 2011 as compared to the first quarter 2010 was primarily due to the expiration of delivery orders on our U.S. Army CECOM Rapid Response “R2” contract in January 2011, including the delivery orders supporting our Assured Mobility Systems and Route Clearance Vehicle “RCV” Modernization Programs.

Operating margin for the first quarter of 2011 was 4.6%, an increase of 80 bp compared to 3.8% in the first quarter of 2010. The year-over-year increase in operating margin was primarily due to the inclusion of Akimeka, LLC, which we acquired in August 2010, improved profitability on services provided by our Systems Engineering Division, an increase in energy and management consulting work by our Energetics subsidiary, and a reduction in low margin revenue.

Net income for the first quarter of 2011 was $4.2 million, or $.80 per diluted share, compared to $5.4 million, or $1.04 per diluted share in the first quarter of 2010.

Bookings were $107 million in the first quarter of 2011 compared to $210 million in the first quarter of 2010. Funded contract backlog at March 31, 2011 was $357 million, compared to $407 million at December 31, 2010. Federal budget constraints have affected the timeliness of awards in our market and the decrease in government funding activity has impacted our bookings and funded backlog in the first quarter of 2011.

The Federal Group was awarded a $410M, 5-year LOGWORLD task order at the end of January 2011 to continue providing equipment engineering, maintenance, and logistics readiness support services to the U.S. Army Reserve Command (USARC) and the 63rd and 88th Regional Support Commands (RSC). The award represents a recompete of existing work for Federal Group’s Engineering and Logistics Directorate supporting the U.S. Army Reserve.

About VSE

VSE is a diversified federal services company of choice with over 52 years of experience in solving issues of global significance with integrity, agility, and value. VSE is dedicated to making our clients successful by delivering talented people and innovative solutions for logistics, engineering, IT services, construction management and consulting. For additional information on VSE services and products, please see the Company's web site at www.vsecorp.com or contact Randy Hollstein, VSE Corporate Vice President of Sales and Marketing, at (703) 329-3206.

VSE encourages investors and others to review the detailed reporting and disclosures contained in VSE’s public filings with the U.S. Securities and Exchange Commission for further information and analysis of VSE’s financial condition and results of operations. The public filings include additional discussion about the status of specific customer programs and contract awards, risks, revenue sources and funding, dependence on material customers, and management’s discussion of short and long term business challenges and opportunities.

Safe Harbor

This news release contains statements that to the extent they are not recitations of historical fact, constitute “forward looking statements” under federal securities laws. All such statements are intended to be subject to the safe harbor protection provided by applicable securities laws. For discussions identifying some important factors that could cause actual VSE results to differ materially from those anticipated in the forward looking statements in this news release, see VSE’s public filings with the Securities and Exchange Commission, including VSE’s annual report on Form 10-K for the year ended December 31, 2010 and subsequent reports filed with the Securities and Exchange Commission.

VSE Financial News Contact: Christine Peters -- (703) 329-3263.

VSE Corporation and Subsidiaries

Unaudited Consolidated Financial Statements

 Unaudited Consolidated Balance Sheets 

(in thousands except share and per share amounts)

	March 31,		December 31,
	2011		2010
Assets
Current assets:
Cash and cash equivalents	$	2,303	$	5,764
Receivables, principally U.S. Government, net		137,931		156,938
Deferred tax assets		403		1,602
Other current assets		9,894		9,552
Total current assets		150,531		173,856
Property and equipment, net		43,324		42,315
Intangible assets		24,140		25,003
Goodwill		37,396		36,282
Deferred tax assets		958		838
Other assets		14,217		10,132
Total assets	$	270,566	$	288,426
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	6,667	$	6,667
Accounts payable		59,609		75,724
Accrued expenses		29,413		36,584
Dividends payable		314		312
Total current liabilities		96,003		119,287
Long-term debt		9,444		11,111
Deferred compensation		8,882		6,034
Long-term lease obligations		21,868		20,258
Other liabilities		5,528		7,960
Total liabilities		141,725		164,650
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.05 per share, authorized 15,000,000 shares; issued and outstanding 5,235,947 and 5,193,891, respectively		262		260
Additional paid-in capital		16,898		15,692
Retained earnings		111,681		107,824
Total stockholders’ equity		128,841		123,776
Total liabilities and stockholders’ equity	$	270,566	$	288,426

VSE Corporation and Subsidiaries

Unaudited Consolidated Financial Statements

Unaudited Consolidated Statements of Income

 (in thousands except share and per share amounts)

	For the three months
	ended March 31,
	2011		2010
Revenues	$	151,244	$	228,176
Contract costs		143,514		219,227
Selling, general and administrative expenses		821		298
Operating income		6,909		8,651
Interest expense (income), net		144		(5	)
Income before income taxes		6,765		8,656
Provision for income taxes		2,593		3,258
Net income	$	4,172	$	5,398
Basic earnings per share:	$	0.80	$	1.04
Basic weighted average shares outstanding		5,214,334		5,180,410
Diluted earnings per share:	$	0.80	$	1.04
Diluted weighted average shares outstanding		5,214,334		5,180,410
Dividends declared per share	$	0.060	$	0.050

VSE Corporation and Subsidiaries

Unaudited Consolidated Financial Statements

Unaudited Consolidated Statements of Cash Flows

 (in thousands)

	For the three months
	ended March 31,
	2011			2010
Cash flows from operating activities:
Net income	$	4,172		$	5,398
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization		2,382			2,152
Loss on sale of property and equipment		3			3
Deferred taxes		1,079			308
Stock-based compensation		164			205
Changes in operating assets and liabilities:
Receivables, net		19,007			20,976
Other current assets and noncurrent assets		(4,456	)		(544	)
Accounts payable and deferred compensation		(13,267	)		(26,041	)
Accrued expenses		(6,971	)		(6,577	)
Long-term lease obligations		10			6
Other liabilities		(2,432	)		-
Net cash used in operating activities		(309	)		(4,114	)
Cash flows from investing activities:
Purchases of property and equipment		(904	)		(1,019	)
Proceeds from the sale of property and equipment		2			-
Contingent consideration payments		(270	)		(445	)
Net cash used in investing activities		(1,172	)		(1,464	)
Cash flows from financing activities:
Borrowings on loan arrangement		78,661			56,808
Repayments on loan arrangement		(80,328	)		(56,808	)
Dividends paid		(313	)		(258	)
Net cash used in financing activities		(1,980	)		(258	)
Net decrease in cash and cash equivalents		(3,461	)		(5,836	)
Cash and cash equivalents at beginning of period		5,764			8,024
Cash and cash equivalents at end of period	$	2,303		$	2,188