8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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)  February 24, 2010

DYNAMICS RESEARCH CORPORATION

(Exact name of registrant as specified in its charter)

Commission file number 001-34135

MASSACHUSETTS	04-2211809
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

TWO TECH DRIVE, ANDOVER, MASSACHUSETTS 01810-5498

(Address of principal executive offices) (Zip Code)

978-289-1500

(Registrant’s telephone number, including area code)

N/A

(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 (see General Instruction A.2. below):

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

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

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

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

Item 2.02.  Results of Operations and Financial Condition

Financial Results

 On February 24, 2010, Dynamics Research Corporation issued a press release announcing financial results as of and for the three and twelve months ended December 31, 2009.  A copy of the press release is attached hereto as Exhibit 99.1.

 The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing of the company under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Non-GAAP Financial Measures

 The attached press release contains non-GAAP financial measures. In evaluating the Company’s performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under generally accepted accounting principles in the United States (“GAAP”).

 More specifically, the Company uses the following non-GAAP financial measures: non-GAAP operating profit, non-GAAP income before income taxes, non-GAAP provision for income taxes, non-GAAP net income and non-GAAP earnings per share.

 The Company uses these measures in its public statements. Management believes these non-GAAP measures help indicate the Company’s operating performance before charges that are considered by management to be outside on-going operating results. Accordingly, management uses these non-GAAP measures to gain a better understanding of the Company’s comparative operating performance from period-to-period and as a basis for planning and forecasting future periods. Management believes these non-GAAP measures, when read in conjunction with the Company’s GAAP financials, provide useful information to investors by offering:

• the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results;

• the ability to better identify trends in the Company’s underlying business and perform related trend analysis;

• a higher degree of transparency for certain expenses (particularly when a specific charge impacts multiple line items);

• a better understanding of how management plans and measures the Company’s underlying business; and

• an easier way to compare the Company’s most recent results of operations against investor and analyst financial models.

 The non-GAAP measures used by the Company excludes the provision for litigation charge and related tax effect that management believes is unusual and outside of the Company’s on-going operations for the period presented in the press release.

 These non-GAAP measures have limitations, however, because they do not include all items of income and expense that impact the Company’s operations. Management compensates for these limitations by also considering the Company’s GAAP results. The non-GAAP financial measures the Company uses are not prepared in accordance with, and should not be considered an alternative to, measurements required by GAAP, such as operating loss, net loss and loss per share, and should not be considered measures of the Company’s liquidity. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. In addition, these non-GAAP financial measures may not be comparable to similar measures reported by other companies.

Item 9.01.  Financial Statements and Exhibits.

(c)	Exhibits
	Number
	99.1	Press release dated February 24, 2010.

SIGNATURES

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 hereunto duly authorized.

	DYNAMICS RESEARCH CORPORATION
	(Registrant)
Date:  February 24, 2010	/s/ David Keleher
	Senior Vice President, Chief Financial Officer and Treasurer

Exhibit Index

Exhibit Number	Exhibit Name	Location
99.1	Press release dated February 24, 2010.	Furnished herewith*

__________________________

*   Exhibit 99.1 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

EX-99.1

Exhibit 99.1

   NewsRelease

DYNAMICS RESEARCH CORPORATION
60 FRONTAGE ROAD, ANDOVER, MASSACHUSETTS 01810-5423	TEL. 978/289-1500	www.drc.com

DRC REPORTS

FOURTH QUARTER AND YEAR-END 2009 RESULTS

--- 2009 Revenue Up 13 Percent, Earnings Up 30 Percent ---

--- Company Classifies Metrigraphics Unit as Discontinued, Anticipating Sale - ---

--- Company Re-affirms 2010 Earnings Growth Projections in the Range of Twenty Percent ---

Andover, Mass. - February 24, 2010 - Dynamics Research Corporation (Nasdaq: DRCO), a leading provider of innovative management consulting, engineering, technical and information technology services and solutions to federal and state governments, today announced operating results for the fourth quarter and year ended December 31, 2009.

Financial Results

The Company reported net income of $3.4 million, or $0.34 per diluted share (including $0.01 from discontinued operations) for the fourth quarter of 2009, up from $2.6 million, or $0.27 per diluted share (net of a $0.01 loss from discontinued operations), for the fourth quarter of 2008.

Revenue for the fourth quarter of 2009 was $65.8 million, as compared with $66.0 million for the same period in 2008.  The 2009 period included $0.4 million in revenues derived from 8(a) contracts received with the Kadix Systems acquisition compared with $3.1 million for the 2008 period.  Absent the effect of the 8(a) contracts, revenue grew 4.1 percent in the fourth quarter of 2009 compared with the same period in 2008.

Net income for the year ended December 31, 2009 was $10.2 million, or $1.04 per diluted share (net of a $0.02 loss from discontinued operations) up from $7.8 million, or $0.80 per diluted share (also net of a $0.02 loss from discontinued operations), for 2008 before litigation charges.  Including the litigation charge in 2008, the Company reported a net loss of $1.3 million, or $0.13 per diluted share.

For the year ended December 31, 2009 revenue was $268.7 million compared with $236.8 million for 2008.  The 2009 period included $5.2 million in revenues derived from 8(a) contracts received with the Kadix Systems acquisition compared with $12.2 million for the 2008 period.  Absent the effect of the 8(a) contracts, revenue grew 5.7 percent in 2009 compared with 2008.

The Company anticipates the sale of its Metrigraphics Division in the first half of 2010 and has classified this segment as a discontinued operation.  Historical financial results of the Company have been recast to segregate the Metrigraphics segment as a discontinued operation in the Statement of Operations and Balance Sheet.  Historical Metrigraphics results are shown in Appendices VII and VIII to this announcement.

Business Highlights

“We are very pleased with this quarter’s financial results, capping off twelve months of improving fundamentals at DRC.  For the second consecutive year we have reported a book-to-bill ratio of 1.1, ending 2009 with nearly seven months of funded backlog,” said Jim Regan, DRC’s chairman and chief executive officer.  “Our business development investments resulted in a sharp increase in bids submitted, and we anticipate an even higher level of bid activity in 2010.  During 2009 we also saw an increase in prime contract wins, the result of our impressive portfolio of multiple-award schedule, agency-wide contracts.  Margin expansion trended favorably throughout the year, as earnings before interest, taxes, depreciation, amortization and litigation provisions rose to $25 million, or 9 percent of revenue, up 23% from 2008.  We’ve now completed our fourteenth consecutive quarter of improving earnings and anticipate continued growth, strong margin expansion and cash flow generation in 2010.”

Company Guidance

The Company’s estimate for revenue for 2010, updated to exclude discontinued operations, is in the range of $277 to $286 million, reflecting anticipated total top-line growth of 3 to 6 percent.  Earnings from continuing operations for 2010 are estimated to be in the range of $1.18 to $1.26 per diluted share, reflecting an increase of 15 to 25 percent over 2009.  Operating margin expectations for 2010, also updated to exclude discontinued operations, are anticipated to be between 7.7 and 7.9 percent.

For the first quarter of 2010, revenues and earnings from continuing operations per diluted share are forecast to be $66.5 to $68.5 million and $0.22 to $0.24, respectively.

Conference Call

The Company will conduct a fourth quarter and year-end 2009 conference call on Thursday, February 25, 2010 at 10:00 a.m. ET.  The call will be available via telephone at (877) 856-1961, and accessible via Web cast at www.drc.com.  Recorded replays of the conference call will be available on Dynamics Research Corporation’s investor relations home page at www.drc.com and by telephone at (888) 203-1112, passcode #1221492, beginningat 1:00 p.m. ET February 25, 2010.

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 the capabilities of a large company and the responsiveness of a small company, 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 and the Washington, D.C. area.  For more information please visit our website at www.drc.com.

Safe Harbor

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.

The non-GAAP measures used by the Company exclude the provision for litigation charges and related effect for income taxes.  The required reconciliations and other disclosures for the non-GAAP measures used by the Company are set forth later in this press release and/or the Current Report on Form 8-K to be filed with the SEC on February 24, 2010.

ATTACHMENT I
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
	Three Months Ended
	December 31,
	2009			2008
Contract revenue	$	65,826		$	66,015
Cost of contract revenue		53,854			53,735
Gross profit on contract revenue		11,972			12,280
Selling, general and administrative expenses		5,477			6,069
Amortization of intangible assets		551			883
Operating income		5,944			5,328
Interest expense, net		(494	)		(718	)
Other income (expense), net		106			(172	)
Income from continuing operations before provision for income taxes		5,556			4,438
Provision for income taxes		2,270			1,743
Income from continuing operations		3,286			2,695
Income (loss) from discontinued operations, net of taxes		110			(91	)
Net income	$	3,396		$	2,604
Earnings (loss) per share
Basic
Income from continuing operations	$	0.34		$	0.28
Income (loss) from discontinued operations		0.01			(0.01	)
Net income	$	0.35		$	0.27
Diluted
Income from continuing operations	$	0.33		$	0.28
Income (loss) from discontinued operations		0.01			(0.01	)
Net income	$	0.34		$	0.27
Weighted average shares outstanding
Basic		9,753,555			9,553,546
Diluted		9,981,292			9,638,969

ATTACHMENT II
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
	Twelve Months Ended
	December 31,
	2009			2008
Contract revenue	$	268,661		$	236,796
Cost of contract revenue		223,694			197,802
Gross profit on contract revenue		44,967			38,994
Selling, general and administrative expenses		23,754			21,705
Provision for litigation		-			14,819
Amortization of intangible assets		3,305			2,620
Operating income (loss)		17,908			(150	)
Interest expense, net		(2,024	)		(1,423	)
Other income, net		691			35
Income (loss) from continuing operations before provision for income taxes		16,575			(1,538	)
Provision (benefit) for income taxes		6,262			(454	)
Income (loss) from continuing operations		10,313			(1,084	)
Loss from discontinued operations, net of taxes		(141	)		(171	)
Net income (loss)	$	10,172		$	(1,255	)
Earnings (loss) per share
Basic
Income (loss) from continuing operations	$	1.08		$	(0.11	)
Loss from discontinued operations		(0.02	)		(0.02	)
Net income (loss)	$	1.06		$	(0.13	)
Diluted
Income (loss) from continuing operations	$	1.06		$	(0.11	)
Loss from discontinued operations		(0.02	)		(0.02	)
Net income (loss)	$	1.04		$	(0.13	)
Weighted average shares outstanding
Basic		9,551,614			9,493,495
Diluted		9,772,722			9,493,495

ATTACHMENT III
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
	December 31,		December 31,
	2009		2008
Assets
Current assets
Cash and cash equivalents	$	55	$	7,111
Contract receivables, net		72,569		70,632
Prepaid expenses and other current assets		5,702		1,706
Discontinued operations		2,058		1,591
Total current assets		80,384		81,040
Noncurrent assets
Property and equipment, net		13,915		8,999
Goodwill		97,641		97,641
Intangible assets, net		4,074		7,379
Deferred tax asset		7,949		10,396
Other noncurrent assets		3,335		3,125
Discontinued operations		-		350
Total noncurrent assets		126,914		127,890
Total assets	$	207,298	$	208,930
Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt	$	8,000	$	8,000
Accounts payable		18,299		17,874
Accrued compensation and employee benefits		16,357		13,644
Deferred taxes		10,743		2,670
Other accrued expenses		3,708		24,702
Discontinued operations		186		279
Total current liabilities		57,293		67,169
Long-term liabilities
Long-term debt		23,973		30,000
Other long-term liabilities		31,936		30,286
Total stockholders' equity		94,096		81,475
Total liabilities and stockholders' equity	$	207,298	$	208,930

ATTACHMENT IV
DYNAMICS RESEARCH CORPORATION
SUPPLEMENTAL INFORMATION (unaudited)
(dollars in thousands)
Contract revenues were earned from the following sectors:
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2009			2008			2009			2008
National defense and intelligence agencies	$	36,368		$	38,830		$	146,978		$	156,812
Homeland security		12,865			10,226			53,167			19,280
Federal civilian agencies		9,803			9,874			42,375			32,899
State and local government agencies		5,747			6,976			23,997			25,800
Other		1,043			109			2,144			2,005
	$	65,826		$	66,015		$	268,661		$	236,796
Revenues by contract type as a percentage of contract revenue were as follows:
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2009			2008			2009			2008
Time and materials		36	%		45	%		42	%		49	%
Fixed price, including service-type contracts		45			39			40			33
Cost reimbursable		19			16			18			18
		100	%		100	%		100	%		100	%
Prime contract		71	%		69	%		71	%		63	%
Sub-contract		29			31			29			37
		100	%		100	%		100	%		100	%
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2009			2008			2009			2008
Net cash provided by (used in) operating activities - continuing operations	$	5,726		$	(1,245	)	$	6,304		$	18,602
Capital expenditures	$	2,710		$	497		$	4,906		$	1,973
Depreciation	$	807		$	914		$	2,987		$	2,961
Bookings	$	73,736		$	66,004		$	282,311		$	262,832
	December 31,			December 31,
		2009			2008
Funded backlog	$	158,518		$	146,619
Employees		1,469			1,503

ATTACHMENT V
DYNAMICS RESEARCH CORPORATION
NON-GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
	Twelve Months Ended
	December 31,
	2008
Contract revenue	$	236,796
Cost of contract revenue		197,802
Gross profit on contract revenue		38,994
Selling, general and administrative expenses		21,705
Amortization of intangible assets		2,620
Operating income		14,669
Interest expense, net		(1,423	)
Other income, net		35
Income from continuing operations before provision for income taxes		13,281
Provision for income taxes		5,303
Income from continuing operations		7,978
Loss from discontinued operations, net of taxes		(171	)
Net income	$	7,807
Earnings per share
Basic
Income from continuing operations	$	0.84
Loss from discontinued operations		(0.02	)
Net income	$	0.82
Diluted
Income from continuing operations	$	0.82
Loss from discontinued operations		(0.02	)
Net income	$	0.80
Weighted average shares outstanding
Basic		9,493,495
Diluted		9,704,789

ATTACHMENT VI
DYNAMICS RESEARCH CORPORATION
RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except share and per share data)
	Twelve Months Ended
	December 31,
	2008
GAAP operating loss	$	(150	)
Provision for litigation		14,819
Non-GAAP operating income	$	14,669
GAAP loss from continuing operations before provision for income taxes	$	(1,538	)
Provision for litigation		14,819
Non-GAAP income from continuing operations before provision for income taxes	$	13,281
GAAP benefit for income taxes	$	(454	)
Tax benefit for provision for litigation		5,757
Non-GAAP provision for income taxes	$	5,303
GAAP loss from continuing operations	$	(1,084	)
Provision for litigation, net of tax benefit		9,062
Non-GAAP income from continuing operations	$	7,978
GAAP net loss	$	(1,255	)
Provision for litigation, net of tax benefit		9,062
Non-GAAP net income	$	7,807
Earnings (loss) per share
GAAP Basic	$	(0.13	)
Per share effect of provision for litigation		0.95
Non-GAAP Basic	$	0.82
GAAP Diluted	$	(0.13	)
Per share effect of provision for litigation		0.93
Non-GAAP Diluted	$	0.80
Weighted average shares outstanding
Basic (GAAP diluted for 2008)		9,493,495
Diluted (Non-GAAP for 2008)		9,704,789

ATTACHMENT VII
DYNAMICS RESEARCH CORPORATION
FISCAL 2009 QUARTERLY STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
	Three months ended			Three months ended			Three months ended			Three months ended
	March 31,			June 30,			September 30,			December 31,
Contract revenue	$	67,203		$	68,128		$	67,504		$	65,826
Cost of contract revenue		55,943			57,015			56,882			53,854
Gross profit of contract revenue		11,260			11,113			10,622			11,972
Selling, general and administrative expenses		6,311			6,211			5,755			5,477
Amortization of intangible assets		973			972			809			551
Operating income		3,976			3,930			4,058			5,944
Interest expense, net		(619	)		(477	)		(434	)		(494	)
Other income, net		39			282			264			106
Income from continuing operations before provision for income taxes		3,396			3,735			3,888			5,556
Provision for income taxes		1,439			1,561			992			2,270
Income from continuing operations		1,957			2,174			2,896			3,286
Income (loss) from discontinued operations, net of taxes		(186	)		(124	)		59			110
Net income	$	1,771		$	2,050		$	2,955		$	3,396
Earnings per common share
Basic
Income from continuing operations	$	0.20		$	0.23		$	0.30		$	0.34
Income (loss) from discontinued operations	$	(0.02	)	$	(0.01	)	$	0.01		$	0.01
Net income	$	0.18		$	0.21		$	0.31		$	0.35
Diluted
Income from continuing operations	$	0.20		$	0.22		$	0.29		$	0.33
Income (loss) from discontinued operations	$	(0.02	)	$	(0.01	)	$	0.01		$	0.01
Net income	$	0.18		$	0.21		$	0.30		$	0.34
Weighted average shares outstanding
Basic		9,604,895			9,610,428			9,678,983			9,753,555
Diluted		9,711,084			9,729,721			9,983,825			9,981,292
Supplemental Data
Net cash provided by (used in) operating activities - continuing operations	$	3,565		$	5,057		$	(8,044	)	$	5,726
Capital expenditures	$	223		$	545		$	1,428		$	2,710
Depreciation	$	737		$	703		$	740		$	807
Bookings	$	55,827		$	66,324		$	86,424		$	73,736
EBITDA from continuing operations:
Income from continuing operations	$	1,957		$	2,174		$	2,896		$	3,286
Interest expense, net		619			477			434			494
Provision for income taxes		1,439			1,561			992			2,270
Depreciation expense		737			703			740			807
Amortization expense		973			972			809			551
EBITDA from continuing operations	$	5,725		$	5,887		$	5,871		$	7,408

ATTACHMENT VII
DYNAMICS RESEARCH CORPORATION
FISCAL 2008 QUARTERLY STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
	Three months ended			Three months ended			Three months ended			Three months ended
	March 31,			June 30,			September 30,			December 31,
Contract revenue	$	54,773		$	53,708		$	62,300		$	66,015
Cost of contract revenue		46,212			45,599			52,256			53,735
Gross profit of contract revenue		8,561			8,109			10,044			12,280
Selling, general and administrative expenses		5,244			4,998			5,394			6,069
Provision for litigation		8,819			-			6,000			-
Amortization of intangible assets		509			510			718			883
Operating income		(6,011	)		2,601			(2,068	)		5,328
Interest expense, net		(139	)		(142	)		(424	)		(718	)
Other income, net		(71	)		239			39			(172	)
Income from continuing operations before provision for income taxes		(6,221	)		2,698			(2,453	)		4,438
Provision (benefit) for income taxes		(991	)		1,120			(2,326	)		1,743
Income (loss) from continuing operations		(5,230	)		1,578			(127	)		2,695
Income (loss) from discontinued operations, net of taxes		(26	)		51			(105	)		(91	)
Net income (loss)	$	(5,256	)	$	1,629		$	(232	)	$	2,604
Earnings (loss) per common share
Basic
Income (loss) from continuing operations	$	(0.55	)	$	0.17		$	(0.01	)	$	0.28
Income (loss) from discontinued operations	$	(0.01	)	$	0.00		$	(0.01	)	$	(0.01	)
Net income	$	(0.56	)	$	0.17		$	(0.02	)	$	0.27
Diluted
Income from continuing operations	$	(0.55	)	$	0.16		$	(0.01	)	$	0.28
Income (loss) from discontinued operations	$	(0.01	)	$	0.01		$	(0.01	)	$	(0.01	)
Net income	$	(0.56	)	$	0.17		$	(0.02	)	$	0.27
Weighted average shares outstanding
Basic		9,436,054			9,443,347			9,487,155			9,553,546
Diluted		9,436,054			9,724,839			9,487,155			9,638,969
Supplemental Data
Net cash provided by (used in) operating activities - continuing operations	$	1,640		$	3,956		$	14,251		$	(1,245	)
Capital expenditures	$	397		$	396		$	683		$	497
Depreciation	$	654		$	672		$	721		$	914
Bookings	$	60,637		$	63,429		$	72,762		$	66,004
EBITDA from continuing operations:
Income (loss) from continuing operations	$	(5,230	)	$	1,578		$	(127	)	$	2,695
Interest expense, net		139			142			424			718
Provision (benefit) for income taxes		(991	)		1,120			(2,326	)		1,743
Depreciation expense		654			672			721			914
Amortization expense		509			510			718			883
EBITDA from continuing operations	$	(4,919	)	$	4,022		$	(590	)	$	6,953
Add back provision for litigation, net of tax		6,695			-			2,367			-
EBITDA from continuing operations, excluding provision for litigation	$	1,776		$	4,022		$	1,777		$	6,953

ATTACHMENT VIII
DYNAMICS RESEARCH CORPORATION
2009 QUARTERLY BALANCE SHEET SUMMARY (unaudited)
(in thousands)
	March 31,		June 30,		September 30,
Assets
Current assets
Cash and cash equivalents	$	4,383	$	6,622	$	213
Contract receivables, net		71,061		72,184		70,934
Prepaid expenses and other current assets		2,513		2,376		3,441
Discontinued operations		1,933		2,122		2,444
Total current assets		79,890		83,304		77,032
Noncurrent assets
Property and equipment, net		8,476		8,284		8,966
Goodwill		97,641		97,641		97,641
Intangible assets, net		6,406		5,434		4,625
Deferred tax asset		10,369		10,298		10,314
Other noncurrent assets		3,042		3,028		3,146
Total noncurrent assets		125,934		124,685		124,692
Total assets	$	205,824	$	207,989	$	201,724
Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt	$	8,000	$	8,000	$	8,000
Accounts payable		17,441		16,330		15,422
Accrued compensation and employee benefits		13,419		16,082		17,121
Deferred taxes		3,492		3,248		9,670
Other accrued expenses		20,844		22,378		2,695
Discontinued operations		333		287		262
Total current liabilities		63,529		66,325		53,170
Long-term liabilities
Long-term debt		28,296		26,000		28,298
Other long-term liabilities		30,523		29,695		30,611
Total stockholders' equity		83,476		85,969		89,645
Total liabilities and stockholders' equity	$	205,824	$	207,989	$	201,724
Supplemental Data
Funded backlog	$	139,337	$	135,271	$	150,246

ATTACHMENT VIII
DYNAMICS RESEARCH CORPORATION
2008 QUARTERLY BALANCE SHEET SUMMARY (unaudited)
(in thousands)
	March 31,		June 30,		September 30,
Assets
Current assets
Cash and cash equivalents	$	1,061	$	108	$	10,818
Contract receivables, net		60,978		63,184		66,902
Prepaid expenses and other current assets		2,621		1,923		5,582
Discontinued operations		1,685		1,855		1,497
Total current assets		66,345		67,070		84,799
Noncurrent assets
Property and equipment, net		9,425		9,149		9,425
Goodwill		63,055		63,055		94,826
Intangible assets, net		2,560		2,050		6,232
Deferred tax asset		1,484		1,484		1,182
Other noncurrent assets		3,918		4,303		4,915
Discontinued operations		459		427		393
Total noncurrent assets		80,901		80,468		116,973
Total assets	$	147,246	$	147,538	$	201,772
Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt	$	-	$	-	$	8,000
Accounts payable		10,954		13,460		18,261
Accrued compensation and employee benefits		11,943		13,433		15,932
Deferred taxes		5,994		5,696		7,605
Other accrued expenses		13,335		12,724		18,402
Discontinued operations		179		169		217
Total current liabilities		42,405		45,482		68,417
Long-term liabilities
Long-term debt		5,000		607		32,000
Other long-term liabilities		8,172		7,931		7,615
Total stockholders' equity		91,669		93,518		93,740
Total liabilities and stockholders' equity	$	147,246	$	147,538	$	201,772
Supplemental Data
Funded backlog	$	111,658	$	113,204	$	146,661

CONTACT:	Darrow Associates, Inc.
	Investors:
	Chris Witty
	646.438.9385
	cwitty@darrowir.com
	Sage Communications
	Media:
	Marisa Hagerman
	703.584.5637
	marisah@aboutsage.com