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, 2005

DYNAMICS RESEARCH CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Massachusetts

(State or Other Jurisdiction of Incorporation)

000-023479	04-2211809
(Commission File Number)	(IRS Employer Identification No.)

60 Frontage Road
Andover, Massachusetts	01810
(Address of Principal Executive Offices)	(Zip Code)

(978) 475-9090

(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))

TABLE OF CONTENTS

EX-99.1 PRESS RELEASE DATED NOVEMBER 1, 2005

Section 2 — Financial Information

Item 2.02. Results of Operations and Financial Condition

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.

On November 1, 2005, Dynamics Research Corporation issued a press release announcing financial results as of and for the three and nine months ended September 30, 2005. A copy of the press release is attached hereto as Exhibit 99.1.

Section 9 — Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits

Number
	99.1	Press release dated November 1, 2005.

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)
By:	/s/ David Keleher
	David Keleher
	Senior Vice President and Chief Financial Officer

November 1, 2005

Exhibit Index

Exhibit
Number	Exhibit Name	Location
99.1	Press release dated November 1, 2005.	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

DYNAMICS RESEARCH CORPORATION
REPORTS THIRD QUARTER 2005 RESULTS

Revenue Up 12%, Operating Margin Up 25%, Earnings Per Share Up 36%

Andover, Mass. — November 1, 2005 — Dynamics Research Corporation (Nasdaq: DRCO), a provider of innovative engineering, technical and information technology services and solutions to federal and state governments today announced operating results for the third quarter ended September 30, 2005.

Financial Results

Revenue for the third quarter of 2005 was $79.1 million, up $8.7 million or 12%, compared with $70.5 million for the same period a year ago. Revenue for the nine months ended September 30, 2005 was $228.8 million, up $31.4 million or 16%, compared with $197.5 million for the same period in 2004. The growth in 2005 has resulted principally from acquisitions.

Operating income for the third quarter of 2005 was $6.2 million, or 7.9% of revenue, compared with $4.4 million, or 6.3% of revenue, for the third quarter a year ago. For the nine months ended September 30, 2005 operating income was $15.3 million, or 6.7% of revenue, compared with $11.9 million, or 6.0% of revenue for the first nine months of 2004.

Net income was $3.1 million, or $0.34 per diluted share, for the quarter ended September 30, 2005, compared with $2.3 million, or $0.25 per diluted share, for the third quarter of 2004. For the nine months ended September 30, 2005 net income was $8.5 million, or $0.92 per diluted share, compared with $6.5 million, or $0.72 per diluted share, for the same period in 2004.

Business Highlights

Regarding performance for the quarter, James P. Regan, President, Chairman and CEO, said, “Our profit margin and earnings exceeded expectations for the quarter. In fact, earnings per share for the third quarter grew by 36% and profit margin grew by 25% on year-over-year comparisons. Seeing the results of our profit margin improvement initiatives, we’re delighted with our third quarter earnings performance.

“From a revenue standpoint, our growth in the third quarter of 12% reflects a continuing trend in contract award delays. While we see this situation as temporary, we will remain cautious with our short-term outlook until we see evidence of improvement.

“Several contract wins in the quarter, bids awaiting award backlog of $488 million, a new business opportunity pipeline which stands at an all-time high, and terrific progress in launching the DESP II program underlie our strong optimism looking forward into 2006,” Regan added.

Company Guidance

The company currently estimates revenues in the range of $303 to $306 million and earnings per diluted share in the range of $1.24 to $1.27 including the $0.13 per share impact of the sale of stock during the second quarter. For the fourth quarter of the year the company expects to book revenues in the range of $74 to $77 million and report earnings per diluted share of $0.31 to $0.34.

Conference Call

The company will conduct a conference call tomorrow, November 2, 2005 at 8:30 a.m. ET to discuss its third quarter results and the outlook for the remainder of 2005 and 2006 in more detail. The call will be available via telephone at (800) 946-0744, 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 #4622989 beginning at 10:30 a.m. November 2, 2005 through 11:59 p.m. November 9, 2005.

About Dynamics Research Corporation

Dynamics Research Corporation is an innovative solutions provider that partners with its customers to apply proven processes and technologies. For 50 years, DRC has delivered technical and information technology services that enhance the performance and cost effectiveness of its customers’ mission critical systems. For additional information about DRC please visit the website at www.drc.com.

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.

CONTACT:	Elise Caffrey, Vice President & Treasurer
	(978) 289-1545, ecaffrey@drc.com

ATTACHMENT I

DYNAMICS RESEARCH CORPORATION

RESULTS OF OPERATIONS (unaudited) (in thousands, except share and per share data)

	Three months ended
	September 30,
	2005			2004
Contract revenue	$	77,334		$	68,659
Product sales		1,779			1,792
Total revenue		79,113			70,451
Cost of contract revenue		64,174			58,022
Cost of product sales		1,242			1,274
Selling, general and administrative expenses		6,722			6,141
Amortization of intangible assets		760			573
Total operating costs and expenses		72,898			66,010
Operating income		6,215			4,441
Interest expense, net		(1,061	)		(559	)
Other income		119			48
Income before provision for income taxes		5,273			3,930
Provision for income taxes		2,136			1,662
Net income	$	3,137		$	2,268
Earnings per common share
Basic	$	0.35		$	0.27
Diluted	$	0.34		$	0.25
Weighted average shares outstanding
Weighted average shares outstanding — basic		8,846,245			8,538,353
Dilutive effect of options and restricted stock grants		417,892			551,109
Weighted average shares outstanding — diluted		9,264,137			9,089,462

ATTACHMENT II

DYNAMICS RESEARCH CORPORATION

RESULTS OF OPERATIONS (unaudited) (in thousands, except share and per share data)

	Nine months ended
	September 30,
	2005			2004
Contract revenue	$	223,712		$	192,361
Product sales		5,131			5,108
Total revenue		228,843			197,469
Cost of contract revenue		187,927			164,017
Cost of product sales		3,948			3,774
Selling, general and administrative expenses		19,429			16,411
Amortization of intangible assets		2,279			1,335
Total operating costs and expenses		213,583			185,537
Operating income		15,260			11,932
Interest expense, net		(3,193	)		(1,133	)
Other income		2,221			485
Income before provision for income taxes		14,288			11,284
Provision for income taxes		5,787			4,773
Net income	$	8,501		$	6,511
Earnings per common share
Basic	$	0.97		$	0.77
Diluted	$	0.92		$	0.72
Weighted average shares outstanding
Weighted average shares outstanding — basic		8,761,800			8,464,854
Dilutive effect of options and restricted stock grants		446,254			567,252
Weighted average shares outstanding — diluted		9,208,054			9,032,106

ATTACHMENT III

DYNAMICS RESEARCH CORPORATION

CONDENSED BALANCE SHEETS (in thousands)

	September 30,		December 31,
	2005		2004
	(unaudited)		(audited)
Assets
Cash and cash equivalents	$	1,639	$	925
Accounts receivable, net		36,920		45,978
Unbilled expenditures and fees on contracts in process		65,817		48,119
Prepaid expenses and other current assets		1,675		5,668
Total current assets		106,051		100,690
Property, plant and equipment, net		22,689		22,139
Goodwill		63,055		63,055
Intangible assets, net		9,240		11,519
Deferred income taxes		296		—
Unbilled expenditures and fees on contracts in process		262		2,203
Other noncurrent assets		3,138		5,528
Total assets	$	204,731	$	205,134
Liabilities and stockholders’ equity
Current portion of long-term debt	$	8,357	$	8,357
Notes payable and revolver		7,889		10,000
Accounts payable		26,170		20,550
Accrued payroll and employee benefits		12,970		17,914
Deferred income taxes		16,447		15,418
Other accrued expenses		4,628		4,869
Total current liabilities		76,461		77,108
Long-term debt		45,217		51,485
Deferred income taxes		—		591
Accrued pension liability		7,576		11,336
Other long-term liabilities		3,439		3,296
Stockholders’ equity		72,038		61,318
Total liabilities and stockholders’ equity	$	204,731	$	205,134

ATTACHMENT IV

DYNAMICS RESEARCH CORPORATION

SUPPLEMENTAL INFORMATION (unaudited) (dollars in thousands)

	Three months ended				Nine months ended
	September 30,				September 30,
	2005		2004		2005		2004
Capital expenditures	$	947	$	1,149	$	3,373	$	3,331
Depreciation	$	915	$	876	$	2,823	$	2,648
Bookings	$	72,305	$	70,096	$	210,938	$	190,199

	September 30,
	2005		2004
Funded backlog	$	147,470	$	151,042
Employees		1,829		1,975