10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

R	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2012
	OR
£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE TRANSITION PERIOD FROM TO

Commission file number 001-34135

DYNAMICS RESEARCH CORPORATION

(Exact name of registrant as specified in its charter)

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

TWO TECH DRIVE, ANDOVER, MASSACHUSETTS 01810-2434

(Address of principal executive offices) (Zip Code)

978-289-1500

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes R   No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  R    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	£	Accelerated filer  R
Non-accelerated filer	£ (Do not check if a smaller reporting company)	Smaller reporting company  £

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act).   Yes £   No R

As of August 6, 2012, there were 10,490,880 shares of the registrant's common stock outstanding.

EXPLANATORY NOTE

This Amendment No. 1 to the Quarterly Report on Form 10-Q for the period ended June 30, 2012 of Dynamics Research Corporation. (the "Company"), as filed with the Securities and Exchange Commission on August 9, 2012 (the "Original Filing"), is being filed solely to furnish Exhibits 101 to the Original Filing, as required by Rule 405 of Regulation S-T.  Under Rule 405(a)(2)(ii) of Regulation S-T, Exhibit 101 is permitted to be furnished by amendment within 30 days after the date of the Original Filing. Exhibits 101 provide certain items from the Original Filing formatted in eXtensible Business Reporting Language (XBRL).

This Amendment No. 1 does not affect any other information contained in the Original Filing.  This Amendment No. 1 speaks as of the original filing date of the Original Filing, does not reflect events that occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the Original Filing.

ITEM 6. EXHIBITS

The following Exhibits are filed or furnished, as applicable, herewith, unless otherwise indicated:

3.1*	Amended and restated by-laws of Dynamics Research Corporation, dated June 13, 2012.
10.1	Amendment No. 2 to Credit Agreement, dated as of June 29, 2012, among Dynamics Research Corporation, the Borrower, the Guarantors, each Lender party and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 3, 2012 (File no. 001-34135).
10.2	Amendment No. 1 to Senior Subordinated Loan Agreement, dated as of June 29, 2012, among Dynamics Research Corporation, the Borrower, the Guarantors, Ares Mezzanine Partners, L.P., as a Lender and Lead Investor and the other lenders from time to time party thereto (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on July 3, 2012 (File no. 001-34135).
10.3*	Amendment No. 3 to Credit Agreement, dated as of August 8, 2012, among Dynamics Research Corporation, the Borrower, the Guarantors, each Lender party and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.
10.4*	Amendment No. 2 to Senior Subordinated Loan Agreement, dated as of August 8, 2012, among Dynamics Research Corporation, the Borrower, the Guarantors, Ares Mezzanine Partners, L.P., as a Lender and Lead Investor and the other lenders from time to time party thereto.
31.1*	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

*	Incorporated by reference to the Original Filing.
**	XBRL (eXtensible Business Reporting Language) information is furnished and not filed as part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these Sections.

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.

	DYNAMICS RESEARCH CORPORATION
	(Registrant)
Date:  September 7, 2012	/s/ David Keleher
	Senior Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer)
Date:  September 7, 2012	/s/ Shaun N. McCarthy
	Vice President, Corporate Controller and Chief Accounting Officer
	(Principal Accounting Officer)

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SHARE-BASED COMPENSATION (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Share-based compensation costs [Line Items]
Share-based compensation costs	$ 175,000	$ 142,000	$ 351,000	$ 329,000
Additional Disclosures [Abstract]
Fair value of restricted shares vested			600,000	400,000
Stock Options [Member]
Stock Options [Roll Forward]
Outstanding at beginning of period (in shares)			90,840
Granted (in shares)			0
Exercised (in shares)			0
Cancelled (in shares)			(13,840)
Outstanding at end of period (in shares)	77,000		77,000		90,840
Weighted Average Excerise Price [Roll Forward]
Outstanding, weighted average exercise price at beginning of period (in dollars per share)			$ 15.04
Granted, weighted average exercise price (in dollars per share)			$ 0
Exercised, weighted average exercise price (in dollars per share)			$ 0
Cancelled, weighted average exercise price (in dollars per share)			$ 19.71
Outstanding, weighted average exercise price (in dollars per share)	$ 14.20		$ 14.20		$ 15.04
Options, Additional Disclosures [Abstract]
Outstanding, weighted average remaining contractual term			5 years 1 month 6 days		4 years 9 months 18 days
Outstanding, aggregate intrinsic value at beginning of period			0
Exercisable at end of periods (in shares)	60,333		60,333		64,173
Exercisable, weighted average exercise price (in dollars per share)	$ 14.41		$ 14.41		$ 15.73
Exercisable, weighted average remaining contractual terms			4 years 3 months 18 days		3 years 2 months 12 days
Exercisable, aggregate intrinsic value	0		0		0
Outstanding, weighted average remaining contractual term			5 years 1 month 6 days		4 years 9 months 18 days
Outstanding, aggregate intrinsic value at end of periods	0		0		0
Amounts realized or received from stock option exercises: [Abstract]
Cash proceeds received	0	1,241,000	0	1,541,000
Intrinsic value realized	0	1,885,000	0	2,415,000
Income tax benefit realized	0	687,000	0	846,000
Additional Disclosures [Abstract]
Compensation cost not yet recognized	100,000		100,000
compensation cost not yet recognized, period for recognition			1 year 1 month 6 days
Restricted Stock [Member]
Restricted Stock Award Activity [Roll Forward]
Nonvested at beginning of period (in shares)			80,079
Granted (in shares)			131,334
Vested (in shares)			(58,750)
Cancelled (in shares)			(6,634)
Nonvested at end of period (in shares)	146,029		146,029
RSU's Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Outstanding, weighted average grant-date fair value at beginning of period (in dollars per share)			$ 11.89
Grants, weighted average grant-date fair value (in dollars per share)			$ 10.32
Vested, weighted average grant-date fair value (in dollars per share)			$ 10.82
Cancelled, weighted average grant-date fair value			$ 11.89
Outstanding, weighted average grant-date fair value at end of period, (in dollars per share)	$ 10.97		$ 10.97
Additional Disclosures [Abstract]
Compensation cost not yet recognized	1,400,000		1,400,000
compensation cost not yet recognized, period for recognition			2 years 4 months 24 days
Cost of products and services [Member]
Share-based compensation costs [Line Items]
Share-based compensation costs	95,000	99,000	195,000	186,000
Selling, general and administrative [Member]
Share-based compensation costs [Line Items]
Share-based compensation costs	$ 80,000	$ 43,000	$ 156,000	$ 143,000

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GOODWILL AND INTANGIBLE ASSETS (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Goodwill And Intangible Assets [Abstract]
Range of estimated goodwill impairment, lower range	$ 12,000,000
Range of estimated goodwill impairment, upper range	212,000,000
Goodwill	199,805,000		199,805,000		211,805,000
Goodwill Impairment	12,000,000	0	12,000,000	0
Impairment of goodwill	12,000,000	0	12,000,000	0
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization life			7 years 3 months 18 days		7 years
Cost	25,400,000		25,400,000		26,800,000
Accumulated amortization	(8,721,000)		(8,721,000)		(8,059,000)
Net	16,679,000		16,679,000		18,741,000
Writeoff of non compete agreements			1,400,000
Amortization of intangible assets	1,031,000	374,000	2,062,000	748,000
Remainder of 2012	2,062,000		2,062,000
Amortization expense 2013	3,722,000		3,722,000
Amortization expense 2014	3,663,000		3,663,000
Amortization expense 2015	2,887,000		2,887,000
Amortization expense 2016	2,139,000		2,139,000
Finite-Lived Intangible Assets, Amortization Expense, after Year Five	2,206,000		2,206,000
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization life			8 years 3 months 18 days		8 years 3 months 18 days
Cost	14,600,000		14,600,000		14,600,000
Accumulated amortization	(2,470,000)		(2,470,000)		(1,214,000)
Net	12,130,000		12,130,000		13,386,000
Customer Backlog [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization life			6 months 60 days		6 months 60 days
Cost	6,700,000		6,700,000		6,700,000
Accumulated amortization	(2,452,000)		(2,452,000)		(1,943,000)
Net	4,248,000		4,248,000		4,757,000
Customer Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization life			5 years 4 months 24 days		5 years 4 months 24 days
Cost	3,500,000		3,500,000		3,500,000
Accumulated amortization	(3,401,000)		(3,401,000)		(3,307,000)
Net	99,000		99,000		193,000
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization life			1 year 6 months 0 days		1 year 6 months 0 days
Cost	600,000		600,000		600,000
Accumulated amortization	(398,000)		(398,000)		(195,000)
Net	202,000		202,000		405,000
Non-competitioin agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted average amortization life					3 years
Cost					1,400,000
Accumulated amortization					(1,400,000)
Net					$ 0

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FINANCING ARRANGEMENTS (Tables)

6 Months Ended

Jun. 30, 2012

Financing Arrangements [Abstract]

Schedule of Debt

The Company's outstanding debt consisted of the following:

	Senior
	Term			Subordinated
	Loan			Debt			Revolver			Total
Balance at December 31, 2011	$	76,111		$	38,717		$	-		$	114,828
Borrowings		-			-			53,300			53,300
Repayments		(6,500	)		-			(52,500	)		(59,000	)
Amortization of loan origination fees		677			115			-			792
Balance at June 30, 2012		70,288			38,832			800			109,920
Less:  Current portion of long-term debt		(13,750	)		-			-			(13,750	)
Long term debt, net of current portion	$	56,538		$	38,832		$	800		$	96,170
Weighted average interest rate at December 31, 2011 (1)		4.47	%		13.00	%		-			7.32	%
Weighted average interest rate at June 30, 2012 (1)		3.99	%		13.00	%		5.75	%		7.15	%

(1) The weighted average interest rate includes the effect of the interest rate swap agreements.  See Note 7 for additional information.

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COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Commitments And Contingencies [Abstract]
Number of unregistered share in the employee stock purchase plan (in shares)	148,000	148,000
Employee Stock Purchase Plan (ESPP), purchase price, lower range (in dollars per share)		$ 6.63
Employee Stock Purchase Plan (ESPP), purchase price, upper range (in dollars per share)		$ 14.12
Number of shares intended to be repurchased (in shares)		78,000
Aggregate value to be repurchased		$ 0.7
Cost per share to purchase ESOP shares (in dollars per share)	$ 5.81	$ 5.81
Amount exceeding market value expensed	$ 0.2	$ 0.3

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FAIR VALUE MEASUREMENTS (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Fair Value, Measurements, Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Goodwill	$ 199,805
Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Goodwill	0
Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Goodwill	0
Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Goodwill	199,805
Other noncurrent assets [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Investments held in Rabbi Trusts	1,374	1,395
Other noncurrent assets [Member] | Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Investments held in Rabbi Trusts	1,374	1,395
Other noncurrent assets [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Investments held in Rabbi Trusts	0	0
Other noncurrent assets [Member] | Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Investments held in Rabbi Trusts	0	0
Other long-term liabilities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Interest rate swap	57	6
Other long-term liabilities [Member] | Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Interest rate swap	0	0
Other long-term liabilities [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Interest rate swap	57	6
Other long-term liabilities [Member] | Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Interest rate swap	$ 0	$ 0

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BUSINESS ACQUISITION

6 Months Ended

Jun. 30, 2012

Business Acquisition [Abstract]

Business Acquisition

NOTE 2.  BUSINESS ACQUISITION

On June 30, 2011, the Company completed an acquisition by merger of 100% of the outstanding shares of High Performance Technologies, Inc. ("HPTi") for $143 million in cash plus net working capital of $3.4 million.  HPTi is a leading provider of high-end technology services to the federal healthcare and military technology markets. The merger strengthens and expands the Company's market presence as a provider of high-end services and solutions in the federal market.

The following pro forma results of operations have been prepared as though the merger of HPTi had occurred on January 1, 2010. These pro forma results include adjustments for interest expense and amortization of deferred financing costs on the term loan used to finance the transaction, amortization expense for the identifiable intangible asset determined in the independent appraisal and the effect of income taxes.  This pro forma information does not purport to be indicative of the results of operations that would have been attained had the merger been made as of January 1, 2010, or of results of operations that may occur in the future.

	Three		Six
	Months		Months
	Ended		Ended
	June 30,		June 30,
		2011		2011
Revenue	$	96,119	$	191,563
Operating income	$	7,431	$	14,366
Net income	$	2,612	$	4,992
Earnings per common share:
Basic	$	0.26	$	0.50
Diluted	$	0.26	$	0.49

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SHARE-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2012

Share-Based Compensation [Abstract]

Schedule of Share-based Compensation, Activity

Total share-based compensation recorded in the Condensed Consolidated Statements of Operations was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
		2012		2011		2012		2011
Cost of products and services	$	95	$	99	$	195	$	186
Selling, general and administrative		80		43		156		143
Total share-based compensation expense	$	175	$	142	$	351	$	329

Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value

The following table summarizes stock option activity under all plans:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2011		90,840		$	15.04		4.8	$	-
Granted		-		$	-
Exercised		-		$	-
Cancelled		(13,840	)	$	19.71
Outstanding at June 30, 2012		77,000		$	14.20		5.1	$	-
Exercisable at December 31, 2011		64,173		$	15.73		3.2	$	-
Exercisable at June 30, 2012		60,333		$	14.41		4.3	$	-

Schedule of Cash Proceeds Received from Share-based Payment Awards

Cash proceeds received, the intrinsic value and the total tax benefits realized resulting from stock option exercises were as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
		2012		2011		2012		2011
Amounts realized or received from stock option exercises:
Cash proceeds received	$	-	$	1,241	$	-	$	1,541
Intrinsic value realized	$	-	$	1,885	$	-	$	2,415
Income tax benefit realized	$	-	$	687	$	-	$	846

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

The following table summarizes restricted stock activity:

	Number of Shares			Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2011		80,079		$	11.89
Granted		131,334		$	10.32
Vested		(58,750	)	$	10.82
Cancelled		(6,634	)	$	11.89
Nonvested at June 30, 2012		146,029		$	10.97

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DEFINED BENEFIT PENSION PLAN (Tables)

6 Months Ended

Jun. 30, 2012

Defined Benefit Pension Plan [Abstract]

Schedule of Accumulated and Projected Benefit Obligations

The components of net periodic pension expense for the Company's defined benefit pension plan are as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2012			2011			2012			2011
Interest cost on projected benefit obligation	$	997		$	1,030		$	1,995		$	2,060
Expected return on plan assets		(1,197	)		(1,275	)		(2,394	)		(2,550	)
Recognized actuarial loss		424			302			848			605
Net periodic pension expense	$	224		$	57		$	449		$	115

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

Schedule of Calculation of Numerator and Denominator in Earnings Per Share

The following table illustrates the reconciliation of the weighted average shares outstanding:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Weighted average shares outstanding - Basic		10,319,901		10,050,545		10,330,851		9,971,411
Diluted effect of stock options and restricted stock grants		-		143,626		-		174,327
Weighted average shares outstanding - Diluted		10,319,901		10,194,171		10,330,851		10,145,738

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BUSINESS ACQUISITION (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
Business Acquisition, Pro Forma Information [Line Items]
Ownership percentage	100.00%	100.00%
Purchase price - cash	$ 143,000,000	$ 143,000,000
Purchase price - working capital cash payment	3,400,000	3,400,000
Revenue	96,119,000	191,563,000
Operating income	7,431,000	14,366,000
Net income	$ 2,612,000	$ 4,992,000
Earnings Per Share [Abstract]
Basic	$ 0.26	$ 0.50
Diluted	$ 0.26	$ 0.49

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2012

Basis Of Presentation [Abstract]

BASIS OF PRESENTATION

NOTE 1. BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements of Dynamics Research Corporation (the "Company") and its subsidiaries included herein have been prepared in accordance with accounting principles generally accepted in the United States of America.  The year end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

In the opinion of management, all material adjustments that are of a normal and recurring nature necessary for a fair presentation of the results for the periods presented have been reflected. All material intercompany transactions and balances have been eliminated in consolidation. The results for the three and six months ended June 30, 2012 may not be indicative of the results that may be expected for the year ending December 31, 2012. The accompanying financial information should be read in conjunction with the consolidated financial statements and notes contained in the Company's Form 10-K, filed with the United States Securities and Exchange Commission ("SEC") for the year ended December 31, 2011.

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SUPPLEMENTAL BALANCE SHEET INFORMATION (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Contract Receivables, Net [Abstract]
Billed receivables	$ 29,242,000	$ 25,821,000
Other unbilled receivables, non-current, included above	500,000	500,000
Prepaid Expense and Other Current Assets [Abstract]
Restricted cash	251,000	240,000
Other	3,999,000	2,326,000
Prepaid expenses and other assets	4,250,000	2,566,000
Property and Equipment [Line Items]
Property and equipment	32,549,000	32,380,000
Less accumulated depreciation	(18,898,000)	(17,115,000)
Property and equipment, net	13,651,000	15,265,000
Other Noncurrent Assets [Abstract]
Deferred compensation plan investments	1,374,000	1,395,000
Equity investments	914,000	1,038,000
Other	1,686,000	1,879,000
Other noncurrent assets	3,974,000	4,312,000
Accrued compensation and employee benefits [Abstract]
Accrued vacation	6,778,000	6,036,000
Accrued compensation and related taxes	6,224,000	11,601,000
Accrued pension liability	5,122,000	5,480,000
Other employee related benefits	1,959,000	1,785,000
Accrued compensation and employee benefits	20,083,000	24,902,000
Other Accrued Expenses [Abstract]
Accrued interest	193,000	1,525,000
Deferred rent liability	1,136,000	554,000
Deferred gain on sale of building	676,000	676,000
Net working capital payment accrual	0	2,388,000
Other	3,240,000	3,413,000
Other accrued expenses	5,245,000	8,556,000
Other long-term liabilities
Accrued pension liability	21,743,000	21,576,000
Deferred rent liability	6,068,000	6,610,000
Deferred gain on sale of building	1,690,000	2,028,000
Deferred compensation plan liabilities	1,374,000	1,395,000
Other	970,000	1,457,000
Other long-term liabilities	31,845,000	33,066,000
Software [Member]
Property and Equipment [Line Items]
Property and equipment	11,338,000	11,334,000
Leasehold Improvements [Member]
Property and Equipment [Line Items]
Property and equipment	11,127,000	10,861,000
Furniture and Other Equipment [Member]
Property and Equipment [Line Items]
Property and equipment	10,084,000	10,185,000
Contract Receivables, net [Member]
Contract Receivables, Net [Abstract]
Allowance for doubtful accounts	(985,000)	(866,000)
Contract receivables, net	64,072,000	66,466,000
Contract Receivables, net [Member] | Unbilled Revenues [Member]
Contract Receivables, Net [Abstract]
Revenues recorded in excess of milestone billings on fixed price contracts with state and local government agencies	6,075,000	7,058,000
Retainage and fee withholdings, long term	573,000	518,000
Other unbilled receivables	29,167,000	33,935,000
Total unbilled receivables	35,815,000	41,511,000
Other unbilled receivables, non-current, included above		$ 200,000

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EARNINGS PER SHARE (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	246,700	86,500	202,300	86,500
Weighted Average Number of Shares Outstanding Reconciliation [Abstract]
Weighted average shares outstanding - basic (in shares)	10,319,901	10,050,545	10,330,851	9,971,411
Diluted effect of stock options and restricted stock grants (in shares)	0	143,626	0	174,327
Weighted average shares outstanding - diluted (in shares)	10,319,901	10,194,171	10,330,851	10,145,738

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Current assets
Cash and cash equivalents	$ 8	$ 3,908
Contract receivables, net	64,072	66,466
Prepaid expenses and other current assets	4,250	2,566
Total current assets	68,330	72,940
Noncurrent assets
Property and equipment, net	13,651	15,265
Goodwill	199,805	211,805
Intangible assets, net	16,679	18,741
Deferred tax asset	1,964	497
Other noncurrent assets	3,974	4,312
Total noncurrent assets	236,073	250,620
Total assets	304,403	323,560
Current liabilities
Current portion of long-term debt	13,750	12,375
Accounts payable	22,915	24,504
Accrued compensation and employee benefits	20,083	24,902
Deferred tax liability	3,479	3,383
Other accrued expenses	5,245	8,556
Total current liabilities	65,472	73,720
Long-term liabilities
Long-term debt	96,170	102,453
Other long-term liabilities	31,845	33,066
Total long-term liabilities	128,015	135,519
Total liabilities	193,487	209,239
Stockholders' equity
Preferred stock, $0.10 par value; 5,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock, $0.10 par value; 30,000,000 shares authorized; 10,459,394 and 10,321,749 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively	1,046	1,032
Capital in excess of par value	56,712	55,528
Accumulated other comprehensive loss, net of taxes	(27,745)	(27,430)
Retained earnings	80,903	85,191
Total stockholders' equity	110,916	114,321
Total liabilities and stockholders' equity	$ 304,403	$ 323,560

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities:
Net income (loss)	$ (4,288)	$ 4,145
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment of goodwill	12,000	0
Depreciation	2,018	1,707
Amortization of intangible assets	2,062	748
Share-based compensation	351	329
Investment loss (income) from equity interest	38	(75)
Tax benefit from stock plan transactions	34	(575)
Loss on extinguishment of debt	0	193
Settlement of derivative instrument	0	340
Deferred income taxes	(1,165)	835
Other	662	(235)
Change in operating assets and liabilities:
Contract receivables, net	2,394	(7,423)
Prepaid expenses and other current assets	(1,684)	321
Accounts payable	(1,589)	4,235
Accrued compensation and employee benefits	(4,819)	(2,873)
Other accrued expenses	(309)	(810)
Other long-term liabilities	(1,587)	(861)
Net cash provided by operating activities	4,118	1
Cash flows from investing activities:
Purchase of business, net of cash acquired	(2,388)	(142,822)
Additions to property and equipment	(215)	(862)
Dividends from equity investment	86	35
Increase in other assets	0	(24)
Net cash used in investing activities	(2,517)	(143,673)
Cash flow from financing activities:
Borrowings under loan agreements	0	144,021
Repayments under previous term loan	0	(22,000)
Repayments under new term loan	(6,500)	0
Borrowings under revolving credit agreement	53,300	0
Repayments under revolving credit agreement	(52,500)	0
Payments of deferred financing cost	0	(1,900)
Proceeds from the exercise of stock plan transactions	233	1,713
Payments of repurchased shares	0	(310)
Tax benefit from stock plan transactions	(34)	575
Net cash provided by (used in) financing activities	(5,501)	122,099
Net decrease in cash and cash equivalents	(3,900)	(21,573)
Cash and cash equivalents, beginning of period	3,908	30,163
Cash and cash equivalents, end of period	$ 8	$ 8,590

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FINANCING ARRANGEMENTS (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 109,920	$ 114,828
Proceeds from Long-term Lines of Credit	53,300
Repayments of debt - total	(59,000)
Amortization of loan origination fees	792
Less: Current portion of long-term debt	(13,750)	(12,375)
Long-term Debt, Excluding Current Maturities [Abstract]	96,170	102,453
Weighted average interest rate	7.15%	7.32%
Senior Term Loan [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross	70,288	76,111
Proceeds from Long-term Lines of Credit	0
Repayments of Senior Debt, Total	(6,500)
Amortization of loan origination fees	677
Less: Current portion of long-term debt	(13,750)
Long-term Debt, Excluding Current Maturities [Abstract]	56,538
Weighted average interest rate	3.99%	4.47%
Subordinated Debt [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross	38,832	38,717
Proceeds from Long-term Lines of Credit	0
Amortization of loan origination fees	115
Repayments of Subordinated Debt, Total	0
Less: Current portion of long-term debt	0
Long-term Debt, Excluding Current Maturities [Abstract]	38,832
Weighted average interest rate	13.00%	13.00%
Revolver [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross	800	0
Proceeds from Long-term Lines of Credit	53,300
Repayments of Long-term Lines of Credit	(52,500)
Amortization of loan origination fees	0
Less: Current portion of long-term debt	0
Long-term Debt, Excluding Current Maturities [Abstract]	$ 800
Weighted average interest rate	5.75%	0.00%

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SUPPLEMENTAL BALANCE SHEET INFORMATION (Tables)

6 Months Ended

Jun. 30, 2012

Supplemental Balance Sheet Information [Abstract]

Schedule of Supplemental Balance Sheet Detail

The composition of selected balance sheet accounts are as follows:

	June 30, 2012			December 31, 2011
Contract receivables, net:
Billed receivables	$	29,242		$	25,821
Unbilled receivables(1):
Revenues recorded in excess of milestone billings on fixed price contracts with state and local government agencies		6,075			7,058
Retainages and fee withholdings		573			518
Other unbilled receivables		29,167			33,935
Total unbilled receivables		35,815			41,511
Allowance for doubtful accounts		(985	)		(866	)
Contract receivables, net	$	64,072		$	66,466
Prepaid expenses and other current assets:
Restricted cash	$	251		$	240
Other		3,999			2,326
Prepaid expenses and other current assets	$	4,250		$	2,566
Property and equipment, net:
Software	$	11,338		$	11,334
Furniture and other equipment		10,084			10,185
Leasehold improvements		11,127			10,861
Property and equipment		32,549			32,380
Less accumulated depreciation		(18,898	)		(17,115	)
Property and equipment, net	$	13,651		$	15,265
Other noncurrent assets:
Deferred compensation plan investments	$	1,374		$	1,395
Equity investments		914			1,038
Other		1,686			1,879
Other noncurrent assets	$	3,974		$	4,312
Accrued compensation and employee benefits:
Accrued vacation	$	6,778		$	6,036
Accrued compensation and related taxes		6,224			11,601
Accrued pension liability		5,122			5,480
Other		1,959			1,785
Accrued compensation and employee benefits	$	20,083		$	24,902
Other accrued expenses:
Accrued interest	$	193		$	1,525
Deferred rent liability		1,136			554
Deferred gain on sale of building		676			676
Net working capital payment accrual		-			2,388
Other		3,240			3,413
Other accrued expenses	$	5,245		$	8,556

	June 30, 2012		December 31, 2011
Other long-term liabilities:
Accrued pension liability	$	21,743	$	21,576
Deferred rent liability		6,068		6,610
Deferred gain on sale of building		1,690		2,028
Deferred compensation plan liability		1,374		1,395
Other		970		1,457
Other long-term liabilities	$	31,845	$	33,066

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DERIVATIVE FINANCIAL INSTRUMENTS (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Sep. 30, 2011
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount						$ 40,000,000
Description of Trading Activities and Management of Related Risks			Under this agreement, the Company receives a floating rate based on the 90-day LIBOR rate and pays a fixed rate of 4.18% (including the applicable margin of 3.50%) on the outstanding notional amount. The swap fixed rate was structured to mirror the payment terms of the senior term loan for the period hedged. The fair value of the swap at inception was zero.
Derivative Liability, Fair Value, Gross Liability	57,000		57,000		0
Derivative Asset, Fair Value, Gross Asset	0		0		6,000
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net, Total	$ 7,000	$ 228,000	$ (37,000)	$ 282,000

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INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2012

Income Tax [Abstract]

Schedule of Income Tax Benefits [Table Text Block]

The Company is permitted to deduct certain intangible assets and goodwill balances over a period of 15 years from the date of the historic acquisitions, thereby reducing the Company's taxable income as reported on the income tax return.  The Company estimates the annual cash savings from these deductions, as compared with tax expense to be provided for in the Company's financial statements, from these deductions as follows:

Year		Income Tax Benefit
	2012	$	4,500
	2013	$	4,700
	2014	$	4,700
	2015	$	5,000
	2016	$	5,300
2017 and thereafter		$	43,400
		$	67,600

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands, except Share data, unless otherwise specified	Common Stock [Member]	Capital in Excess of Par Value [Member]	Accumulated Other Comprehensive Loss [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2010	$ 1,004	$ 54,138	$ (21,691)	$ 73,734	$ 107,185
Balance (in shares) at Dec. 31, 2010	10,040,000
Comprehensive income:
Comprehensive income	0	0	282	4,145	4,427
Issuance of common stock through stock plan transactions	26	1,687	0	0	1,713
Issuance of common stock through stock plan transactions (in shares)	268,000
Issuance of restricted stock	5	(5)	0	0	0
Issuance of restricted stock (in shares)	46,000
Repurchased shares	(2)	(308)	0	0	(310)
Repurchased shares (in shares)	(21,000)
Forfeiture of restricted stock	(1)	1	0	0	0
Forfeiture of restricted stock (in shares)	(9,000)
Release of restricted stock	(1)	(139)	0	0	(140)
Release of restricted stock (in shares)	(9,000)
Share-based compensation	0	329	0	0	329
Tax benefit from stock plan transactions	0	575	0	0	575
Balance at Jun. 30, 2011	1,031	56,278	(21,409)	77,879	113,779
Balance (in shares) at Jun. 30, 2011	10,315,000
Balance at Mar. 31, 2011	1,010	54,504	(21,637)	76,442	110,319
Balance (in shares) at Mar. 31, 2011	10,104,000
Comprehensive income:
Comprehensive income	0	0	228	1,437	1,665
Issuance of common stock through stock plan transactions	20	1,307	0	0	1,327
Issuance of common stock through stock plan transactions (in shares)	206,000
Issuance of restricted stock	2	(2)	0	0	0
Issuance of restricted stock (in shares)	16,000
Repurchased shares	0	(25)	0	0	(25)
Repurchased shares (in shares)	(2,000)
Forfeiture of restricted stock	(1)	1	0	0	0
Forfeiture of restricted stock (in shares)	(9,000)
Share-based compensation	0	142	0	0	142
Tax benefit from stock plan transactions	0	351	0	0	351
Balance at Jun. 30, 2011	1,031	56,278	(21,409)	77,879	113,779
Balance (in shares) at Jun. 30, 2011	10,315,000
Balance at Dec. 31, 2011	1,032	55,528	(27,430)	85,191	114,321
Balance (in shares) at Dec. 31, 2011	10,322,000				10,321,749
Comprehensive income:
Comprehensive income	0	0	(315)	(4,288)	(4,603)
Issuance of common stock through stock plan transactions	3	230	0	0	233
Issuance of common stock through stock plan transactions (in shares)	28,000
Issuance of restricted stock	13	(13)	0	0	0
Issuance of restricted stock (in shares)	129,000
Forfeiture of restricted stock	(1)	1	0	0	0
Forfeiture of restricted stock (in shares)	(5,000)
Release of restricted stock	(1)	(155)	0	0	(156)
Release of restricted stock (in shares)	(15,000)
Share-based compensation	0	351	0	0	351
Common stock subject to recession rights	0	804	0	0	804
Tax benefit from stock plan transactions	0	(34)	0	0	(34)
Balance at Jun. 30, 2012	1,046	56,712	(27,745)	80,903	110,916
Balance (in shares) at Jun. 30, 2012	10,459,000				10,459,394
Balance at Mar. 31, 2012	1,045	55,738	(27,474)	86,982	116,291
Balance (in shares) at Mar. 31, 2012	10,447,000
Comprehensive income:
Comprehensive income	0	0	(271)	(6,079)	(6,350)
Issuance of common stock through stock plan transactions	2	118	0	0	120
Issuance of common stock through stock plan transactions (in shares)	17,000
Issuance of restricted stock	0	0	0	0	0
Issuance of restricted stock (in shares)	2,000
Forfeiture of restricted stock	(1)	1	0	0	0
Forfeiture of restricted stock (in shares)	(6,000)
Release of restricted stock	0	(10)	0	0	(10)
Release of restricted stock (in shares)	(1,000)
Share-based compensation	0	175	0	0	175
Common stock subject to recession rights	0	724	0	0	724
Tax benefit from stock plan transactions	0	(34)	0	0	(34)
Balance at Jun. 30, 2012	$ 1,046	$ 56,712	$ (27,745)	$ 80,903	$ 110,916
Balance (in shares) at Jun. 30, 2012	10,459,000				10,459,394

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Stockholders' equity
Preferred stock, par value (in dollars per share)	$ 0.10	$ 0.10
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized (in shares)	30,000,000	30,000,000
Common stock, shares issued (in shares)	10,459,394	10,321,749
Common stock, shares outstanding (in shares)	10,459,394	10,321,749

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SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2012

Share-Based Compensation [Abstract]

Share-Based Compensation

NOTE 10. SHARE-BASED COMPENSATION

Share-Based Compensation Costs

Total share-based compensation recorded in the Condensed Consolidated Statements of Operations was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
		2012		2011		2012		2011
Cost of products and services	$	95	$	99	$	195	$	186
Selling, general and administrative		80		43		156		143
Total share-based compensation expense	$	175	$	142	$	351	$	329

Stock Option Award Activity

The following table summarizes stock option activity under all plans:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2011		90,840		$	15.04		4.8	$	-
Granted		-		$	-
Exercised		-		$	-
Cancelled		(13,840	)	$	19.71
Outstanding at June 30, 2012		77,000		$	14.20		5.1	$	-
Exercisable at December 31, 2011		64,173		$	15.73		3.2	$	-
Exercisable at June 30, 2012		60,333		$	14.41		4.3	$	-

As of June 30, 2012 the total unrecognized compensation cost related to stock option awards was $0.1 million which is expected to be amortized over a weighted-average period of 1.1 years.

Cash proceeds received, the intrinsic value and the total tax benefits realized resulting from stock option exercises were as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
		2012		2011		2012		2011
Amounts realized or received from stock option exercises:
Cash proceeds received	$	-	$	1,241	$	-	$	1,541
Intrinsic value realized	$	-	$	1,885	$	-	$	2,415
Income tax benefit realized	$	-	$	687	$	-	$	846

Restricted Stock Award Activity

The following table summarizes restricted stock activity:

	Number of Shares			Weighted Average Grant-Date Fair Value
Nonvested at December 31, 2011		80,079		$	11.89
Granted		131,334		$	10.32
Vested		(58,750	)	$	10.82
Cancelled		(6,634	)	$	11.89
Nonvested at June 30, 2012		146,029		$	10.97

The total fair value of restricted shares vested during the six months ended June 30, 2012 and 2011 was $0.6 million and $0.4 million, respectively. As of June 30, 2012, the total unrecognized compensation cost related to restricted stock awards was $1.4 million, which is expected to be amortized over a weighted-average period of 2.4 years.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 06, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Dynamics Research Corp
Entity Central Index Key	0000030822
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		10,490,880
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2012

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 11. EARNINGS PER SHARE

For the three and six months ended June 30, 2012 and 2011, basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Unexercised stock options and unvested restricted shares are excluded from this calculation but are included in the diluted earnings per share calculation using the treasury stock method so long as their effect is not anti-dilutive.

For the three and six months ended June 30 2012, the diluted effect of stock options and restricted stock grants of approximately 246,700 and 202,300 shares, respectively, were not included in the computation of diluted loss per share as the net loss would have made their effect anti-dilutive.  For the three and six months ended June 30, 2011, diluted earnings per share are determined by using the weighted average number of common and dilutive common equivalent shares outstanding during the period.  Due to the anti-dilutive effect, approximately 86,500 options to purchase common stock and restricted stock awards were excluded from the calculation of diluted earnings per share for the three and six months ended June 30, 2011.

The following table illustrates the reconciliation of the weighted average shares outstanding:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
Weighted average shares outstanding - Basic		10,319,901		10,050,545		10,330,851		9,971,411
Diluted effect of stock options and restricted stock grants		-		143,626		-		174,327
Weighted average shares outstanding - Diluted		10,319,901		10,194,171		10,330,851		10,145,738

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Revenue	$ 80,834	$ 68,472	$ 166,703	$ 137,996
Cost of revenue	68,307	58,045	140,580	116,805
Gross profit on revenue	12,527	10,427	26,123	21,191
Selling, general and administrative expenses	6,410	6,809	13,301	12,478
Amortization of intangible assets	1,031	374	2,062	748
Impairment of goodwill	12,000	0	12,000	0
Operating income (loss)	(6,914)	3,244	(1,240)	7,965
Interest expense, net	(2,621)	(768)	(5,400)	(1,020)
Other income (expense), net	(71)	67	64	163
Income (loss) before provision (benefit) for income taxes	(9,606)	2,543	(6,576)	7,108
Provision (benefit) for income taxes	(3,527)	1,106	(2,288)	2,963
Net income (loss)	$ (6,079)	$ 1,437	$ (4,288)	$ 4,145
Earnings (loss) per common share
Basic	$ (0.59)	$ 0.14	$ (0.42)	$ 0.42
Diluted	$ (0.59)	$ 0.14	$ (0.42)	$ 0.41
Weighted average shares outstanding
Basic	10,319,901	10,050,545	10,330,851	9,971,411
Diluted	10,319,901	10,194,171	10,330,851	10,145,738

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INCOME TAXES

6 Months Ended

Jun. 30, 2012

Income Tax [Abstract]

Income tax

NOTE 5. INCOME TAXES

The Company recorded income tax benefits of $3.5 million and $2.3 million in the second quarter and first half of 2012, respectively, and income tax provisions of $1.1 million and $3.0 million in the second quarter and first half of 2011, respectively.  The effective income tax rate was 34.8% and 41.7% in the first half of 2012 and 2011, respectively.  Excluding the goodwill impairment charge, the effective income tax for the first half of 2012 was 40.8%.

At June 30, 2012, the Company's unrecognized tax benefits, which if recognized in future periods, could favorably impact the effective tax rate by approximately $0.3 million.  The total amount of accrued interest and penalties resulting from such unrecognized tax benefits was $0.3 million and $0.2 million at June 30, 2012 and December 31, 2011, respectively.

The Company is permitted to deduct certain intangible assets and goodwill balances over a period of 15 years from the date of the historic acquisitions, thereby reducing the Company's taxable income as reported on the income tax return.  The Company estimates the annual cash savings from these deductions, as compared with tax expense to be provided for in the Company's financial statements, from these deductions as follows:

Year		Income Tax Benefit
	2012	$	4,500
	2013	$	4,700
	2014	$	4,700
	2015	$	5,000
	2016	$	5,300
2017 and thereafter		$	43,400
		$	67,600

In the year in which these benefits are realized, the Company recognizes a long term deferred tax liability. 

The Internal Revenue Service ("IRS") had challenged the deferral of income for tax reporting purposes related to unbilled receivables including the applicability of a Letter Ruling issued by the IRS to the Company in January 1976 which granted to the Company deferred tax treatment of the unbilled receivables.  This issue was elevated to the IRS National Office for determination.  On October 23, 2008, the Company received a notification of ruling from the IRS National Office.  This ruling provided clarification regarding the IRS position relating to revenue recognition for tax purposes regarding its unbilled receivables.  During September 2009, the IRS completed its examination of the Company's tax returns for 2004 through 2007 and issued a Revenue Agent Report ("RAR"), which reduced the deferral of income for tax reporting purposes.  As a result the Company reclassified approximately $1.0 million from deferred to current taxes payable.  The RAR also included an assessment of interest of $0.5 million. The Company has filed a protest letter with the IRS to appeal the assessment.  The Company believes the appeal will be successful and has made no provision for the interest associated with the assessment.  The IRS has also initiated an exam of the 2009 tax year which is ongoing.

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GOODWILL AND INTANGIBLE ASSETS

6 Months Ended

Jun. 30, 2012

Goodwill And Intangible Assets [Abstract]

Goodwill And Intangible Assets

NOTE 4. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company's annual goodwill impairment test is conducted at November 30 of each calendar year and interim evaluations are performed when the Company determines that a triggering event has occurred that would more likely than not reduce the fair value of its goodwill below its carrying value.  During the second quarter of 2012, due to a decline in the market price of the Company's stock, the market capitalization of the Company was below the carrying value, which we considered a triggering event and therefore performed an interim impairment test.

We have updated our annual impairment and year-end analysis as of June 30, 2012.  Based on the step 1 analysis performed, management, with the assistance of a third party valuation specialist, determined on August 2, 2012 that the Company's fair value was below the carrying value of its equity as of June 30, 2012.  As a result, the Company has estimated the range of impairment to be between $12.0 million and $212.0 million and has recorded in the second quarter of 2012 an estimated preliminary impairment charge of $12.0 million.  Due to the timing and complexity of step 2 of the impairment test, which is required to determine the actual impairment, the Company was unable to finalize the amount of impairment prior to filing form 10-Q for the quarter ended June 30, 2012. Step 2 of the impairment test will be completed in the third quarter of 2012.  Any adjustment to the estimated impairment charge made in the second quarter of 2012 will be recorded in the third quarter of 2012.

The following table represents changes in goodwill:

	December 31, 2011		Estimated Goodwill Impairment		June 30, 2012
Goodwill	$	211,805	$	12,000	$	199,805

Intangible Assets

Components of the Company's identifiable intangible assets are as follows:

	Weighted average amortization life (years)		Cost		Accumulated Amortization			Net
Balance at June 30, 2012:
Customer relationships		8.3	$	14,600	$	(2,470	)	$	12,130
Contractual backlog		6.5		6,700		(2,452	)		4,248
Customer contracts		5.4		3,500		(3,401	)		99
Trade name		1.5		600		(398	)		202
Total		7.3	$	25,400	$	(8,721	)	$	16,679

	Weighted average amortization life (years)		Cost		Accumulated Amortization			Net
Balance at December 31, 2011:
Customer relationships		8.3	$	14,600	$	(1,214	)	$	13,386
Contractual backlog		6.5		6,700		(1,943	)		4,757
Customer contracts		5.4		3,500		(3,307	)		193
Non-competition agreements		3.0		1,400		(1,400	)		-
Trade name		1.5		600		(195	)		405
Total		7.0	$	26,800	$	(8,059	)	$	18,741

During the first quarter of 2012, the Company wrote-off $1.4 million of fully amortized intangible assets related to the non-compete agreements acquired in the Kadix acquisition.  The Company recorded amortization expense for its identifiable intangible assets of $1.0 million and $0.4 million for the three months ended June 30, 2012 and 2011, respectively, and $2.1 million and $0.7 million for the first half of 2012 and 2011, respectively.  At June 30, 2012, estimated future amortization expense for the identifiable intangible assets to be recorded in subsequent fiscal years was as follows:

Year ending December 31:
Remainder of 2012		$	2,062
	2013	$	3,722
	2014	$	3,663
	2015	$	2,887
	2016	$	2,139
2017 and thereafter		$	2,206

Valuation of Long-Lived Assets

Long-lived assets, such as property, plant, and equipment, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized in our statement of operations and as a reduction to the asset group if it is concluded that the fair market value of the asset group is less than its carrying value. Due to the same circumstances that required the interim goodwill impairment test above, we evaluated our long lived assets for impairment for the quarter ended June 30, 2012. We determined that the carrying amount of our long-lived assets did not exceed their estimated undiscounted future cash flows, and thus our long-lived assets are not impaired as of June 30, 2012.

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GOODWILL AND INTANGIBLE ASSETS (Tables)

6 Months Ended

Jun. 30, 2012

Goodwill And Intangible Assets [Abstract]

Schedule of Intangible Assets

	December 31, 2011		Estimated Goodwill Impairment		June 30, 2012
Goodwill	$	211,805	$	12,000	$	199,805

	Weighted average amortization life (years)		Cost		Accumulated Amortization			Net
Balance at June 30, 2012:
Customer relationships		8.3	$	14,600	$	(2,470	)	$	12,130
Contractual backlog		6.5		6,700		(2,452	)		4,248
Customer contracts		5.4		3,500		(3,401	)		99
Trade name		1.5		600		(398	)		202
Total		7.3	$	25,400	$	(8,721	)	$	16,679

	Weighted average amortization life (years)		Cost		Accumulated Amortization			Net
Balance at December 31, 2011:
Customer relationships		8.3	$	14,600	$	(1,214	)	$	13,386
Contractual backlog		6.5		6,700		(1,943	)		4,757
Customer contracts		5.4		3,500		(3,307	)		193
Non-competition agreements		3.0		1,400		(1,400	)		-
Trade name		1.5		600		(195	)		405
Total		7.0	$	26,800	$	(8,059	)	$	18,741

Schedule of Expected Amortization Expense

Year ending December 31:
Remainder of 2012		$	2,062
	2013	$	3,722
	2014	$	3,663
	2015	$	2,887
	2016	$	2,139
2017 and thereafter		$	2,206

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BUSINESS SEGMENT, MAJOR CUSTOMERS AND RELATED PARTY INFORMATION

6 Months Ended

Jun. 30, 2012

Business Segment Major Customers And Related Party Information [Abstract]

Business Segment, Major Customers And Related Party Information

NOTE 12. BUSINESS SEGMENT, MAJOR CUSTOMERS AND RELATED PARTY INFORMATION

Business Segment

The Company has concluded that it operates in one segment based upon the information used by its chief operating decision maker in evaluating the performance of its business and allocating resources. This single segment represents the Company's core business, professional services primarily for government clients.

Major Customers

No individual customer accounted for more than 10% of revenue in the three and six months ended June 30, 2012 and 2011 and no individual customer accounted for more than 10% of total contract receivables at June 30, 2012 and December 31, 2011.

Related Party

The Company has a 40% interest in ^HMRTech which is accounted for using the equity method.  Revenues from ^HMRTech for the three and six months ended June 30, 2012 and 2011 and amounts due from ^HMRTech at June 30, 2012 and December 31, 2011 were immaterial.  In addition, ^HMRTech charged the Company $0.4 million and $0.5 million in the three months ended June 30, 2012 and 2011, respectively, relating to contract work, and $0.9 million and $1.1 million, respectively, for the six months then ended.  At June 30, 2012 and December 31, 2011, the Company had a related payable of $0.4 million and $0.5 million, respectively.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

NOTE 8. FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present our assets and liabilities that are measured at fair value on a recurring basis:

		Fair Value Measurements
		At June 30, 2012 Using
Balance Sheet Classification		Level 1		Level 2		Level 3		Total
Assets:
Investments held in Rabbi Trusts	Other noncurrent assets	$	1,374	$	-	$	-	$	1,374
Liabilities:
Interest rate swap	Other long-term liabilities	$	-	$	57	$	-	$	57

		Fair Value Measurements
		At December 31, 2011 Using
Balance Sheet Classification		Level 1		Level 2		Level 3		Total
Assets:
Investments held in Rabbi Trusts	Other noncurrent assets	$	1,395	$	-	$	-	$	1,395
Interest rate swap	Other noncurrent assets	$	-	$	6	$	-	$	6

The following is a description of the valuation methodologies used for these items, as well as the general classification of such items:

Investments Held in Rabbi Trusts - The investments include exchange-traded equity securities and mutual funds. Fair values for these investments were based on quoted prices in active markets and were therefore classified within Level 1 of the fair value hierarchy.

Interest Rate Swap - The derivative is a receive-variable, pay-fixed interest rate swap based on the LIBOR rate and is designated as a cash flow hedge. Fair value was based on a model-driven valuation using the LIBOR rate, which was observable at commonly quoted intervals for the full term of the swap. Therefore, our interest rate swap was classified within Level 2 of the fair value hierarchy.

Changes to a financial asset's or liability's level within the fair value hierarchy are determined as of the end of a reporting period.  There were no changes to these levels during the quarter ended June 30, 2012.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

All other nonfinancial assets and liabilities measured at fair value in the financial statements on a nonrecurring basis are subject to fair value measurements and disclosures. Nonfinancial assets and liabilities included in our condensed consolidated balance sheets and measured on a nonrecurring basis consist of goodwill and long-lived assets, including other acquired intangibles. Goodwill and long-lived assets are measured at fair value to test for and measure impairment, if any, at least annually for goodwill or when necessary for both goodwill and long-lived assets.

We estimate fair value for our goodwill impairment test by employing three different methodologies to calculate a fair value and then weighting the outputs to arrive at an estimated fair value. The valuation methods utilized include an income approach, a comparison to comparable industry companies and a market approach.  Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. The fair value measurement was calculated using unobservable inputs in both the income approach and the comparable industry approach. In the income approach, the value of a business depends on its prospective economic income.  This approach looks at what a business will do in the future and not what it has done in the past. The key inputs used in this approach include risk adjusted discount rates and estimated future cash flows, which include estimates of future revenues, operating costs and operating capital related cash flows. The estimate of future cash flows takes into consideration factors such as growth rates and economic and market information. The key inputs in the comparable industry approach include our historical financial results and multiples that were selected based on data observed from publicly traded comparable companies. The market value approach is primarily driven by the underlying value of our common stock, which can vary significantly depending upon a number of factors, such as overall market conditions and our estimated future profitability. The control premium, applied to the market and comparable industry company approaches, is based on the premium paid in transactions occurring in the past years by acquirers of publicly traded companies who provide management and information technology services to the federal government, which are similar to the services provided by the Company.

The following tables present our assets and liabilities that are measured at fair value on a non-recurring basis:

		Fair Value Measurements
		At June 30, 2012 Using
Balance Sheet Location		Level 1		Level 2		Level 3		Total
Assets:
Goodwill	Goodwill	$	-	$	-	$	199,805	$	199,805

A goodwill impairment charge was recorded in the amount of $12.0 million in the second quarter of 2012.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, contract receivables and accounts payable at June 30, 2012 approximate fair value because of the short-term nature of these instruments.  The carrying value of the senior term loan at June 30, 2012 approximates fair value because the interest rate is variable and therefore deemed to reflect a market rate of interest.  At June 30, 2012, based on a review of similar financing arrangements, the Company determined the fair value of the subordinated debt did not change significantly during the quarter and therefore continues to approximate its carrying value.

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FINANCING ARRANGEMENTS

6 Months Ended

Jun. 30, 2012

Financing Arrangements [Abstract]

Financing Arrangements

NOTE 6. FINANCING ARRANGEMENTS

The Company's outstanding debt consisted of the following:

	Senior
	Term			Subordinated
	Loan			Debt			Revolver			Total
Balance at December 31, 2011	$	76,111		$	38,717		$	-		$	114,828
Borrowings		-			-			53,300			53,300
Repayments		(6,500	)		-			(52,500	)		(59,000	)
Amortization of loan origination fees		677			115			-			792
Balance at June 30, 2012		70,288			38,832			800			109,920
Less:  Current portion of long-term debt		(13,750	)		-			-			(13,750	)
Long term debt, net of current portion	$	56,538		$	38,832		$	800		$	96,170
Weighted average interest rate at December 31, 2011 (1)		4.47	%		13.00	%		-			7.32	%
Weighted average interest rate at June 30, 2012 (1)		3.99	%		13.00	%		5.75	%		7.15	%

(1) The weighted average interest rate includes the effect of the interest rate swap agreements.  See Note 7 for additional information.

Effective June 30, 2012, the Company amended its credit agreements to exclude non-cash expenses resulting from any impairment or write-off of goodwill during the Company's 2012 fiscal year from the definition of 'Consolidated Earnings Before Interest, Tax and Amortization ("EBITDA")' as presented in the Company's financial covenants.  At June 30, 2012, the Company was in compliance with its loan covenants.

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DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS

Effective September 30, 2011, the Company entered into an interest rate swap agreement with an initial notional amount of $40.0 million to manage its exposure to interest rate changes on that portion of the senior term loan.  The swap effectively converts a portion of the Company's variable rate debt under the senior term loan to a fixed rate for a period of two years and without exchanging the notional principal amounts.

Under this agreement, the Company receives a floating rate based on the 90-day LIBOR rate and pays a fixed rate of 4.18% (including the applicable margin of 3.50%) on the outstanding notional amount. The swap fixed rate was structured to mirror the payment terms of the senior term loan for the period hedged.  The fair value of the swap at inception was zero.  It is not expected that any gains or losses will be reported in the statement of operations during the term of the agreement as the swap is expected to be highly effective through its maturity based on the matching terms of the swap and facility agreements.  The interest rate swap agreement matures on September 30, 2013.

If, at any time, the swap is determined to be ineffective, in whole or in part, due to changes in the interest rate swap or underlying debt agreements, the fair value of the portion of the swap determined to be ineffective will be recognized as a gain or loss in the statement of operations for the applicable period.

The fair value effect on the financial statements from the interest rate swap designated as a cash flow hedge is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
		2012		2011		2012			2011
Gain (loss) recognized in other comprehensive income, net of tax	$	7	$	228	$	(37	)	$	282

		June 30,	December 31,
		2012	2011
Other long-term liabilities	$	57	$         -
Other noncurrent assets	$	-	$          6

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DEFINED BENEFIT PENSION PLAN

6 Months Ended

Jun. 30, 2012

Defined Benefit Pension Plan [Abstract]

Defined Benefit Pension Plan

NOTE 9. DEFINED BENEFIT PENSION PLAN

The components of net periodic pension expense for the Company's defined benefit pension plan are as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2012			2011			2012			2011
Interest cost on projected benefit obligation	$	997		$	1,030		$	1,995		$	2,060
Expected return on plan assets		(1,197	)		(1,275	)		(2,394	)		(2,550	)
Recognized actuarial loss		424			302			848			605
Net periodic pension expense	$	224		$	57		$	449		$	115

During the first half of 2012, the Company contributed $1.1 million to fund the pension plan.

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INCOME TAXES (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Income Tax [Abstract]
Income tax expense (benefit)	$ 3,500,000	$ 2,300,000	$ 1,100,000	$ 3,000,000
Effective income tax rate (in hundredths)			34.80%	41.70%
Effective income tax rate (in hundredths), excluding impairment of goodwill charge			40.80%
Unrecognized tax benefits that would impact effective tax rate	300,000		300,000
Unrecognized tax benefits, income tax penalties accrued	300,000		300,000		200,000
2012	4,500,000		4,500,000
2013	4,700,000		4,700,000
2014	4,700,000		4,700,000
2015	5,000,000		5,000,000
2016	5,300,000		5,300,000
2017 and thereafter	43,400,000		43,400,000
Total	67,600,000		67,600,000
Reclass from deferred to current taxes	3,479,000		3,479,000		3,383,000
Reclass from deferred to current tax liability	1,000,000		1,000,000
Interest expense on income taxes not accrued	$ 500,000		$ 500,000

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BUSINESS ACQUISITION (Tables)

6 Months Ended

Jun. 30, 2012

Business Acquisition [Abstract]

Pro Forma Informamation

	Three		Six
	Months		Months
	Ended		Ended
	June 30,		June 30,
		2011		2011
Revenue	$	96,119	$	191,563
Operating income	$	7,431	$	14,366
Net income	$	2,612	$	4,992
Earnings per common share:
Basic	$	0.26	$	0.50
Diluted	$	0.26	$	0.49

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DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2012

Derivative Financial Instruments [Abstract]

Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location

The fair value effect on the financial statements from the interest rate swap designated as a cash flow hedge is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
		2012		2011		2012			2011
Gain (loss) recognized in other comprehensive income, net of tax	$	7	$	228	$	(37	)	$	282

		June 30,	December 31,
		2012	2011
Other long-term liabilities	$	57	$         -
Other noncurrent assets	$	-	$          6

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BUSINESS SEGMENT, MAJOR CUSTOMERS AND RELATED PARTY INFORMATION (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Related Party Transaction [Line Items]
Ownership interest (in hundredths)	40.00%		40.00%
Contract work	$ 0.4	$ 0.5	$ 0.9	$ 1.1
Payable to related party	$ 0.4		$ 0.4		$ 0.5

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Net income (loss)	$ (6,079)	$ 1,437	$ (4,288)	$ 4,145
Other comprehensive income (loss), net of tax
Pension liability adjustment, net of tax of $182:	(278)	0	(278)	0
Unrealized losses on derivative instruments
Unrealized gains (losses) on derivative instruments, net of tax of $5 and $150 for the three months ended June 30, 2012 and 2011, respectively, and $25 and $185 for the six months ended June 30, 2012 and 2011, respectively.	7	228	(37)	282
Other comprehensive income (loss), net of tax	(271)	228	(315)	282
Comprehensive income (loss)	$ (6,350)	$ 1,665	$ (4,603)	$ 4,427

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SUPPLEMENTAL BALANCE SHEET INFORMATION

6 Months Ended

Jun. 30, 2012

Supplemental Balance Sheet Information [Abstract]

Supplemental Balance Sheet Information

NOTE 3. SUPPLEMENTAL BALANCE SHEET INFORMATION

The composition of selected balance sheet accounts are as follows:

	June 30, 2012			December 31, 2011
Contract receivables, net:
Billed receivables	$	29,242		$	25,821
Unbilled receivables(1):
Revenues recorded in excess of milestone billings on fixed price contracts with state and local government agencies		6,075			7,058
Retainages and fee withholdings		573			518
Other unbilled receivables		29,167			33,935
Total unbilled receivables		35,815			41,511
Allowance for doubtful accounts		(985	)		(866	)
Contract receivables, net	$	64,072		$	66,466
Prepaid expenses and other current assets:
Restricted cash	$	251		$	240
Other		3,999			2,326
Prepaid expenses and other current assets	$	4,250		$	2,566
Property and equipment, net:
Software	$	11,338		$	11,334
Furniture and other equipment		10,084			10,185
Leasehold improvements		11,127			10,861
Property and equipment		32,549			32,380
Less accumulated depreciation		(18,898	)		(17,115	)
Property and equipment, net	$	13,651		$	15,265
Other noncurrent assets:
Deferred compensation plan investments	$	1,374		$	1,395
Equity investments		914			1,038
Other		1,686			1,879
Other noncurrent assets	$	3,974		$	4,312
Accrued compensation and employee benefits:
Accrued vacation	$	6,778		$	6,036
Accrued compensation and related taxes		6,224			11,601
Accrued pension liability		5,122			5,480
Other		1,959			1,785
Accrued compensation and employee benefits	$	20,083		$	24,902
Other accrued expenses:
Accrued interest	$	193		$	1,525
Deferred rent liability		1,136			554
Deferred gain on sale of building		676			676
Net working capital payment accrual		-			2,388
Other		3,240			3,413
Other accrued expenses	$	5,245		$	8,556

	June 30, 2012		December 31, 2011
Other long-term liabilities:
Accrued pension liability	$	21,743	$	21,576
Deferred rent liability		6,068		6,610
Deferred gain on sale of building		1,690		2,028
Deferred compensation plan liability		1,374		1,395
Other		970		1,457
Other long-term liabilities	$	31,845	$	33,066

(1) At June 30, 2012 and December 31, 2011, unbilled retainages and fee withholdings of $0.5 million were not anticipated to be billed within one year. Additionally, at December 31, 2011 $0.2 million of the other unbilled receivable balances were not scheduled to be invoiced within one year.

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables present our assets and liabilities that are measured at fair value on a recurring basis:

		Fair Value Measurements
		At June 30, 2012 Using
Balance Sheet Classification		Level 1		Level 2		Level 3		Total
Assets:
Investments held in Rabbi Trusts	Other noncurrent assets	$	1,374	$	-	$	-	$	1,374
Liabilities:
Interest rate swap	Other long-term liabilities	$	-	$	57	$	-	$	57

		Fair Value Measurements
		At December 31, 2011 Using
Balance Sheet Classification		Level 1		Level 2		Level 3		Total
Assets:
Investments held in Rabbi Trusts	Other noncurrent assets	$	1,395	$	-	$	-	$	1,395
Interest rate swap	Other noncurrent assets	$	-	$	6	$	-	$	6

The following tables present our assets and liabilities that are measured at fair value on a non-recurring basis:

		Fair Value Measurements
		At June 30, 2012 Using
Balance Sheet Location		Level 1		Level 2		Level 3		Total
Assets:
Goodwill	Goodwill	$	-	$	-	$	199,805	$	199,805

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DEFINED BENEFIT PENSION PLAN (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Defined Benefit Pension Plan [Abstract]
Interest cost on projected benefit obligation	$ 997,000	$ 1,030,000	$ 1,995,000	$ 2,060,000
Expected return on plan assets	(1,197,000)	(1,275,000)	(2,394,000)	(2,550,000)
Recognized actuarial loss	424,000	302,000	848,000	605,000
Net periodic pension cost	224,000	57,000	449,000	115,000
Pension Contributions			$ 1,100,000

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2012

Commitments And Contingencies [Abstract]

Commitments And Contingencies

NOTE 13. COMMITMENTS AND CONTINGENCIES

As a defense contractor, the Company is subject to many levels of audit and review from various government agencies, including the Defense Contract Audit Agency, various inspectors general, the Defense Criminal Investigation Service, the Government Accountability Office, the Department of Justice and Congressional committees. Both related to and unrelated to its defense industry involvement, the Company is, from time to time, involved in audits, lawsuits, claims, administrative proceedings and investigations. The Company accrues for liabilities associated with these activities when it becomes probable that future expenditures will be made and such expenditures can be reasonably estimated. Except as noted below, the Company does not presently believe it is reasonably likely that any of these matters would have a material adverse effect on the Company's business, financial position, results of operations or cash flows. The Company's evaluation of the likelihood of expenditures related to these matters is subject to change in future periods, depending on then current events and circumstances, which could have material adverse effects on the Company's business, financial position, results of operations and cash flows.

Issuances of our securities require registration under federal and state securities laws or an exemption therefrom, and certain holders of common stock issued by us may be entitled to rescind their purchases. Approximately 148,000 shares issued through DRC's employee stock purchase plan between July 2007 and May 2011, at purchase prices ranging from $6.63 to $14.12 per share, were not registered under the federal securities law.  We intend to offer to rescind the sales of approximately 78,000 shares that retain rights of rescission pursuant to applicable statutes of limitations.  The amount of cash expected to be paid to the original purchasers for the repurchase of these shares is approximately $0.7 million, plus interest. The cost to repurchase these shares, based on the June 29, 2012 stock price of $5.81, exceeded market value by $0.3 million, of which $0.2 million was charged to expense in the second quarter of 2012.