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)  November 1, 2011

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 DR, ANDOVER, MASSACHUSETTS 01810-2434

(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 November 1, 2011, Dynamics Research Corporation issued a press release announcing financial results as of and for the three and nine months ended September 30, 2011.  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.

Item 9.01.  Financial Statements and Exhibits.

(c)	Exhibits
	Number
	99.1	Press release dated November 1, 2011.

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:  November 1, 2011	/s/ David Keleher
	Senior Vice President, Chief Financial Officer and Treasurer

Exhibit Index

Exhibit Number	Exhibit Name	Location
99.1	Press release dated November 1, 2011.	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

   News Release

DYNAMICS RESEARCH CORPORATION

TWO TECH DRIVE, ANDOVER, MASSACHUSETTS 01810-2434                                                                     TEL. 978/289-1500 www.drc.com

DRC REPORTS THIRD QUARTER 2011 RESULTS

--- Strong Bookings, Record Backlog Bolster Solid Financial Results ---

Andover, Mass. - November 1, 2011 - Dynamics Research Corporation (Nasdaq: DRCO), a leading provider of innovative management consulting, science, engineering, and information technology services and solutions to federal and state governments, today announced operating results for the third quarter ended September 30, 2011.

Financial Results

The Company reported income from continuing operations for the third quarter of 2011 of $3.3 million, or $0.32 per diluted share, up from $3.0 million, or $0.30 per diluted share, for the third quarter of 2010.  Revenue for the third quarter of 2011 was $96.4 million, up from $68.4 million for the same period in 2010, reflecting the Company’s merger with High Performance Technologies Inc. (HPTi), which closed on June 30, 2011.  Third quarter 2011 federal business revenue was up 3.4 percent compared with the same period a year ago on a pro forma basis, as if HPTi had been owned by DRC in both periods.

For the nine month period ended September 30, 2011 income from continuing operations, excluding second quarter transaction costs, was $8.7 million, or $0.86 per diluted share, compared with $8.3 million, or $0.83 per diluted share, for the same period in 2010.  For the nine months ended September 30, 2011 revenue was $234.4 million compared with $202.3 million for the same period in 2010.

Business Highlights

“We are pleased to report our first full quarter with High Performance Technologies as a DRC operating group,” said Jim Regan, DRC’s chairman and chief executive officer.  “The integration of HPTi into DRC is proceeding very successfully, and for the combined companies we ended the quarter with the highest backlog in DRC’s history.  Even given the general market uncertainties tied to the Congressional budget process, we believe that DRC, now more than ever, is well positioned with the right customers and contract vehicles to succeed going forward.

“We are seeing continued demand for our high end information technology solutions and management consulting services within the cyber security, healthcare, homeland security, intelligence and financial regulatory markets.  Third quarter results once again showed the strength of our market presence, with operating margins of 9.2 percent and cash generation from operations of $14.3 million.  As a result we have accelerated the de-levering of our balance sheet, prepaying $15 million of debt in the quarter.

From a business development viewpoint our pipeline of opportunities remains robust – with total backlog of $841 million, including funded backlog of $214 million, which represents more than six months of revenue.  With a third quarter book-to-bill ratio of 1.7-to-1.0 and a 1.1-to-1.0 trailing

twelve months ratio, funded bookings in the quarter were strong based on a 98 percent re-compete win rate and nearly $60 million of new business contract wins in the quarter.”

Company Guidance

The Company’s estimate for 2011 full year revenue is in the range of $326 to $330 million.  The Company’s estimate for 2011 earnings are in the range of $1.24 to $1.27 per diluted share, excluding one-time transaction costs incurred in the second quarter of 2011, which represented $0.13 per share.  For the fourth quarter of 2011, the Company anticipates revenue in the range of $91.5 to $95 million and earnings per diluted share of $0.38 to $0.41.

Conference Call

The Company will conduct a third quarter 2011 conference call tomorrow, November 2, 2011 at 10:00 a.m. ET.  The call will be available by telephone at 877-303-4382 and accessible by webcast at www.drc.com. Recorded replays of the conference call will be available on the Company’s website and by telephone at 800-585-8367, replay passcode # 18576450, beginning at 1:00 p.m. ET on November 2, 2011.

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.

ATTACHMENT I
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
	Three Months Ended
	September 30,
	2011			2010
Revenue	$	96,379		$	68,420
Cost of revenue		78,941			57,630
Gross profit		17,438			10,790
Selling, general and administrative expenses		7,041			5,197
Amortization of intangible assets		1,553			385
Operating income		8,844			5,208
Interest expense, net		(3,027	)		(339	)
Other income (expense), net		(157	)		151
Income from continuing operations before provision for income taxes		5,660			5,020
Provision for income taxes		2,382			2,014
Income from continuing operations		3,278			3,006
Effect of discontinued operations, net of tax		-			87
Net income	$	3,278		$	3,093
Earnings per share
Basic
Income from continuing operations	$	0.32		$	0.30
Effect of discontinued operations, net of tax		-			0.01
Net income	$	0.32		$	0.31
Diluted
Income from continuing operations	$	0.32		$	0.30
Effect of discontinued operations, net of tax		-			0.01
Net income	$	0.32		$	0.31
Weighted average shares outstanding
Basic		10,244,868			9,937,470
Diluted		10,314,413			10,060,980

ATTACHMENT II
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
	Nine Months Ended
	September 30,
	2011			2010
Revenue	$	234,375		$	202,312
Cost of revenue		195,746			170,568
Gross profit		38,629			31,744
Selling, general and administrative expenses		19,519			16,233
Amortization of intangible assets		2,301			1,156
Operating income		16,809			14,355
Interest expense, net		(4,047	)		(1,082	)
Other income, net		6			234
Income from continuing operations before provision for income taxes		12,768			13,507
Provision for income taxes		5,345			5,185
Income from continuing operations		7,423			8,322
Effect of discontinued operations, net of tax		-			392
Net income	$	7,423		$	8,714
Earnings per share
Basic
Income from continuing operations	$	0.74		$	0.84
Effect of discontinued operations, net of tax		-			0.04
Net income	$	0.74		$	0.88
Diluted
Income from continuing operations	$	0.73		$	0.83
Effect of discontinued operations, net of tax		-			0.04
Net income	$	0.73		$	0.87
Weighted average shares outstanding
Basic		10,060,585			9,879,905
Diluted		10,205,603			10,057,211

ATTACHMENT III
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
	September 30,		December 31,
	2011		2010
Assets
Current assets
Cash and cash equivalents	$	3,417	$	30,163
Contract receivables, net		74,731		48,394
Prepaid expenses and other current assets		3,725		2,924
Total current assets		81,873		81,481
Noncurrent assets
Property and equipment, net		15,993		12,219
Goodwill		210,895		97,641
Intangible assets, net		20,232		2,533
Deferred tax asset		-		585
Other noncurrent assets		4,314		3,757
Total noncurrent assets		251,434		116,735
Total assets	$	333,307	$	198,216
Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt	$	11,688	$	8,000
Accounts payable		28,227		16,883
Accrued compensation and employee benefits		25,747		18,046
Deferred tax liability		2,762		2,418
Other accrued expenses		6,041		4,617
Total current liabilities		74,465		49,964
Long-term liabilities
Long-term debt		114,976		14,000
Deferred tax liability		637		-
Other long-term liabilities		26,015		27,067
Total stockholders' equity		117,214		107,185
Total liabilities and stockholders' equity	$	333,307	$	198,216

ATTACHMENT IV
DYNAMICS RESEARCH CORPORATION
SUPPLEMENTAL INFORMATION (unaudited)
(dollars in thousands)
Contract revenues were earned from the following sectors:
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
National defense and intelligence agencies	$	59,479	$	45,464	$	154,761	$	130,360
Homeland security		12,963		13,533		36,573		39,706
Federal civilian agencies		20,148		5,438		31,738		17,564
Total revenue from federal agencies		92,590		64,435		223,072		187,630
State and local government agencies		3,774		3,980		11,274		14,658
Other		15		5		29		24
Total revenue	$	96,379	$	68,420	$	234,375	$	202,312

Revenues by contract type as a percentage of contract revenue were as follows:
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Fixed price, including service-type contracts		46	%		45	%		48	%		45	%
Time and materials		33			34			31			34
Cost reimbursable		21			21			21			21
		100	%		100	%		100	%		100	%
Prime contract		82	%		73	%		78	%		72	%
Sub-contract		18			27			22			28
		100	%		100	%		100	%		100	%

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Net cash provided by operating activities - continuing operations	$	14,277	$	16,421	$	14,278	$	31,471
Capital expenditures	$	663	$	685	$	1,525	$	4,266
Depreciation	$	1,067	$	896	$	2,774	$	2,660
Bookings	$	160,881	$	95,445	$	274,634	$	225,588

	September 30,		December 31,
	2011		2010
Total backlog	$	840,957	$	400,881
Funded backlog	$	213,995	$	133,516
Employees		1,604		1,298

CONTACT:	Darrow Associates, Inc.
	Investors:
	Chris Witty
	646.438.9385
	cwitty@darrowir.com
	Sage Communications (for DRC)
	Media:
	Duyen "Jen" Truong
	703.584.5645
	duyent@aboutsage.com